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SEC Clarifies Proxy Disclosure Changes for Investment Companies

Last week, the SEC issued additional guidance about the effective dates and transition for registered investment companies the Commission’s recently issued Proxy Disclosure Enhancements Release (Nos. 33-9089, 34-61175, IC-29092 [December 16, 2009]).  These amendments to Schedule 14A and Forms N-1A, N-2, and N-3 change the information provided to shareholders in proxy materials about risk, compensation, and corporate governance.

In response to inquiries, the Commission has prepared a frequently asked questions document ("FAQ") to clarify how the effective date applies to the filing of proxy statements, as well as registration statements and post-effective amendments under the Securities Act of 1933 and the Investment Company Act. A companion FAQ document has also been issued by the Division of Corporation Finance for non-investment company filers.

The Division of Investment Management's FAQ provides answers to four questions:

 

    1. The Proxy Disclosure Enhancements Release amends Schedule 14A and Forms N-1A, N-2, and N-3 for funds, effective February 28, 2010. How does the effective date apply to an existing fund’s proxy statements and Investment Company Act and Securities Act registration statements and post-effective amendments to registration statements?
       

 

    1. If an existing fund has multiple series with different fiscal year ends, how does the effective date apply to the fund’s post-effective amendments to Investment Company and Securities Act registration statements?

 

    1. How does the February 28, 2010 effective date affect a new fund?

 

    1. May a fund that is not required to comply with the new disclosure requirements do so on a voluntary basis?

 


Generally speaking, funds with fiscal years ending on or after December 20, 2009 must follow the new rules for proxy and registration statements (or post-effective amendments) for their filings on or after February 28, 2010.  For funds required to file preliminary proxy statements, the preliminary material must comply with the new rules, even if filed before February 28.  Funds whose fiscal year ended before December 20, 2009 do not have to comply with the new disclosure rules until they make filings after the end of their fiscal year 2010, even if the filings are made on or after February 28, 2010.

New funds filing registration statement or adding a new series on or after December 20, 2009, must comply with the new disclosure rules for the registration statement or post-effective amendment to be declared effective, or to become effective automatically, on or after February 28, 2010.

Funds not yet required to make the newly required disclosures may comply voluntarily with some or all of the new disclosure rules.

The full text of the FAQ is available at:  http://www.sec.gov/divisions/investment/guidance/icproxydisclosuretransition.htm