SEC Confirms Indefinite Extension of Exemptive Relief Regarding Board In-Person Voting Requirements

January 13, 2021

The Securities and Exchange Commission (SEC) recently confirmed the indefinite extension of certain conditional relief previously granted to assist boards of directors of registered management investment companies and business development companies (funds) impacted by COVID-19 (boards).1 The SEC, in March 2020, initially granted the relief (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 (1940 Act) and rules thereunder, in light of the COVID-19 pandemic.

In June 2020, the SEC extended the March 2020 exemptive relief through at least December 31, 20202 and until the SEC provides at least two weeks’ prior notice of withdrawal. The March 2020 exemptive relief provides that funds (and any investment adviser of or principal underwriter for such funds) are exempt from the in-person board meeting requirements imposed under sections 15(c) and 32(a) of the 1940 Act and Rules 12b-1(b)(2) and 15a-4(b)(2)(ii) thereunder,3 subject to the following conditions:

  • reliance on the relief is necessary or appropriate due to circumstances related to current or potential effects of COVID-19;
  • the votes required to be cast at an in-person meeting are instead cast at a meeting in which directors may participate by any means of communication that allows all directors participating to hear each other simultaneously during the meeting; and
  • the company’s board of directors, including a majority of the directors who are not interested persons, ratifies the action taken pursuant to the exemption by vote cast at the next in-person meeting.

The relief continued by the SEC will remain in effect until it is terminated by the staff of the SEC’s Division of Investment Management (Staff). The termination date will be specified in a public notice at least two weeks from the date of the notice. The Staff, however, anticipates providing ample advance notice before setting any termination date for this relief, given that restrictions and concerns relating to travel are likely to continue for some time and that directors and meeting participants may need significant lead time to make appropriate travel plans.

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If you have any questions regarding the matters covered in this memo, please contact any member of our Registered Funds Group.


1 See SEC Public Statement: An Update on the Commission’s Targeted Regulatory Relief to Assist Market Participants Affected by COVID-19 and Ensure the Orderly Function of Our Markets (June 26, 2020, updated January 5, 2021), available at

2 See Investment Company Act Release No. 33817 (Mar. 13, 2020), available at and Investment Company Act Release No. 33824 (Mar. 25, 2020), available at, superseded by Investment Company Act Release No. 33897 (June 19, 2020), available at

3 Section 15(c) of the 1940 Act requires that the terms of an investment advisory contract or principal underwriting agreement and any renewal thereof be approved by the vote of a majority of the fund’s directors who are not parties to the contract or agreement or “interested persons” (as defined in Section 2(a)(19) of the 1940 Act) (interested persons) of any such party. Rule 12b-1 under the 1940 Act requires that a plan regarding an open-end fund’s distribution-related payments pursuant to that Rule (12b-1 Plan) be approved by a vote of the fund’s board of directors, and of the directors who are not interested persons of the fund (independent directors) and have no direct or indirect financial interest in the operation of the 12b-1 Plan or in any agreements related to the 12b-1 Plan. Rule 15a-4(b)(2) under the 1940 Act requires that certain interim contracts be approved by the vote of the fund’s board of directors, including a majority of independent directors. Section 32(a) of the 1940 Act requires that independent public accountants be selected by a vote of a majority of the fund’s independent directors. In each case, the required votes must be cast in person.