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On December 3, the SEC unanimously adopted new Rule 2a-5 (the Rule) under the Investment Company Act of 1940, as amended (the 1940 Act) to update the existing valuation framework for registered investment companies and business development companies. [1][2] Rule 2a-5 continues the SEC’s initiative to modernize various responsibilities of fund boards.
Rule 2a-5 and related requirements approved in conjunction with the Rule, such as new Rule 31a-4, contain several noteworthy changes from the Rule as proposed in April. The SEC received more than 60 comment letters to the proposal. The changes to the Rule as proposed, and other important aspects of the rulemaking, are discussed in further detail below.