In response to requests for comment from the U.S. Securities and Exchange Commission (SEC), Sutherland Asbill & Brennan LLP recently submitted comment letters on two SEC rulemaking projects pertinent to business development companies (BDCs), including the regulation of unfunded commitments under the Investment Company Act of 1940 and the incorporation by reference of information into Form N-2 registration statements.  

Regulation of Unfunded Commitments under the Investment Company Act of 1940

The first comment letter is related to the SEC’s Proposed Rule 18f-4 under the Investment Company Act of 1940. While Proposed Rule 18f-4 has a number of important parts, Sutherland’s comments focus only on the regulation of unfunded commitments under the proposed rule and the Investment Company Act. Sutherland’s comment letter was submitted on behalf of itself and 18 BDC clients.

Incorporation by Reference of Information into Form N-2 Registration Statements

The second comment letter is related to whether the interim final rules the SEC has adopted to implement Sections 71003 and 84001 of the Fixing America’s Surface Transportation Act (the FAST Act Amendments) should be expanded to include BDCs and Form N-2 registration statements used by BDCs. Sutherland’s comment letter related to the FAST Act Amendments argues that BDCs should be permitted to incorporate information into Form N-2 registration statements by reference to periodic reports filed under the Securities Exchange Act of 1934 to the same extent allowed for registrants eligible to use Form S-1 (which, as a result of the FAST Act Amendments, now permits backward and forward incorporation by reference in certain circumstances).