March 28, 2019

Proposed Securities Offering and Communications Reforms for BDCs and Closed-End Funds


Late last week, the Securities and Exchange Commission (SEC) proposed rule amendments that are intended to modernize the offering related provisions of the Securities Act of 1933 (the Securities Act) and the communications safe harbors available to business development companies (BDCs) and closed-end funds (CEFs) in order to harmonize these with the provisions applicable to operating companies. The SEC also proposed accompanying amendments to Form N-2. The SEC was required to undertake rulemaking with respect to BDCs by the Small Business Credit Availability Act, and to undertake rulemaking with respect to CEFs by the Economic Growth, Regulatory Relief and Consumer Protection Act, often referred to as the Crapo Act. Pursuant to the provisions of the Small Business Credit Availability Act, certain amendments became self-effectuating on the Act’s one-year anniversary, which has now passed; however, BDCs may want to consider whether to rely on those provisions, or await SEC Staff guidance regarding the transition period since the amendments address the same matters.

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