Many fund boards have continued to rely on the conditional relief initially granted by the SEC in March 2020 (March 2020 exemptive relief) to facilitate virtual board meetings and remote approvals of certain agreements, plans or arrangements, in recognition of the challenges faced by boards in satisfying the in-person voting requirements under the Investment Company Act of 1940 and rules thereunder, in light of the COVID-19 pandemic.1 The SEC has indicated that its relief will remain in effect until it is terminated by the staff of the SEC’s Division of Investment Management. The termination date will be specified in a public notice at least two weeks from the date of the notice.
In light of the recent easing of public health restrictions (e.g., capacity and distancing restrictions for businesses and activities) in many geographical areas and increasing vaccination coverage, some fund boards are beginning to resume or contemplating resuming in-person board meetings. Before returning to in-person board meetings, fund boards should review the March 2020 exemptive relief to ensure they will comply with the conditions of the relief.2
Specifically, the March 2020 exemptive relief requires that the fund board, including a majority of the directors who are not interested persons, ratify the actions taken pursuant to the exemption by vote cast at the next in-person meeting. In this regard, prior to the next in-person board meeting, a fund board should identify all approvals obtained remotely in reliance on the relief and ensure that such approvals appear on that meeting’s agenda for ratification by the board, in accordance with the March 2020 exemptive relief.
In addition to complying with the March 2020 exemptive relief, fund boards that resolve to resume in-person meetings should be mindful of federal and local COVID-19 protocols and make sure that board meeting attendees are apprised of them.
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If you have any questions regarding the matters covered in this memorandum, please contact any member of our Registered Funds Group.