On June 19, 2020, the SEC issued an exemptive order that superseded a prior order issued on March 25, 2020 (Prior Order) that provided funds and business development companies (BDCs) relief from the in-person board meeting requirements of the 1940 Act and certain rules thereunder as a result of the impacts of COVID-19 (Order). The relief permits boards of funds and BDCs to continue to hold telephonic and other types of virtual board meetings in lieu of in-person meetings in recognition of the challenges board members currently face in travelling to the locations of in-person meetings. The Order extends the time period for the relief of the Prior Order through at least December 31, 2020. The date on which the Order expires will be two weeks from the date of a future notice from the SEC.
The Order incorporates the same conditions of the Prior Order for a fund or BDC to rely on the Order, which require that: (i) a virtual board meeting is necessary or appropriate due to circumstances related to the current or potential effects of COVID-19; (ii) the board members can participate in the virtual board meeting using a means of communication that allows them to hear each other simultaneously; and (iii) the actions taken at virtual board meetings held in reliance on the Order are ratified by the board, including a majority of the independents, at the next in-person board meeting.
The Order and related press release are available at the links below:
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