SEC May Permit Board to Approve Subadviser Change in Non-In Person Meetings

A recent SEC order could allow a fund board to approve new and material amendments to subadviser contracts without complying with the 1940 Act’s in-person meeting requirements. The public may request a hearing on the SEC’s order until February 18, 2020. The relief is to be granted only to Blackstone Alternative Investment Funds, which must comply with the following conditions:

• Board members may participate in the non-in-person meeting by any means of communication that allows those board members participating to hear each other simultaneously during the meeting.
• Management will represent that the materials provided to the board for the non in-person meeting include the same information the board would have received if a subadviser change were sought at an in-person board meeting.
• The notice of the meeting will explain the need for considering the sub-adviser change at a non-in-person meeting, and board members will be given the opportunity to object to the non-in-person board meeting. If a board member requests that the subadviser change be considered in-person, the board will consider the subadviser change at an in-person meeting, unless such request is rescinded.
• A fund’s ability to rely on the non-in-person meeting relief will be disclosed in its registration statement.