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Federal Register / Vol. 86, No. 126 / Tuesday, July 6, 2021 / Notices
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investment company will be a voting stock and have equal voting rights with every other outstanding voting stock.
Applicants state that permitting multiple classes of Shares of a Fund may violate section 18i of the 1940 Act because each class would be entitled to exclusive voting rights with respect to matters solely related to that class.
4. Section 6c of the 1940 Act provides that the Commission may exempt any person, security, or transaction, or any class or classes of persons, securities, or transactions, from any provision of the 1940 Act, or from any rule or regulation under the 1940
Act, if and to the extent that such exemption is necessary or appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the 1940 Act.
Applicants request an exemption under section 6c from sections 18a2, 18c, and 18i to permit the Funds to issue multiple classes of Shares.
5. Applicants submit that the proposed allocation of expenses relating to distribution and voting rights is equitable and will not discriminate against any group or class of shareholders. Applicants submit that the proposed arrangements would permit each Fund to facilitate the distribution of its Shares and provide investors with a broader choice of shareholder options. Applicants assert that the proposed closed-end management investment company multiple class structure does not raise the concerns underlying section 18 of the 1940 Act to any greater degree than open-end management investment companies multiple class structures that are permitted by rule 18f3 under the 1940 Act. Applicants state that each Fund will comply with the provisions of rule 18f3 as if it were an open-end management investment company.
Early Withdrawal Charges 1. Section 23c of the 1940 Act provides, in relevant part, that no registered closed-end management investment company shall purchase securities of which it is the issuer, except: a On a securities exchange or other open market; b pursuant to tenders, after reasonable opportunity to submit tenders given to all holders of securities of the class to be purchased;
or c under other circumstances as the Commission may permit by rules and regulations or orders for the protection of investors.
2. Rule 23c3 under the 1940 Act permits an interval fund to make repurchase offers of between five and twenty-five percent of its outstanding
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shares at net asset value at periodic intervals pursuant to a fundamental policy of the interval fund. Rule 23c 3b1 under the 1940 Act permits an interval fund to deduct from repurchase proceeds only a repurchase fee, not to exceed two percent of the proceeds, that is paid to the interval fund and is reasonably intended to compensate the fund for expenses directly related to the repurchase.
3. Section 23c3 of the 1940 Act provides that the Commission may issue an order that would permit a closed-end management investment company to repurchase its shares in circumstances in which the repurchase is made in a manner or on a basis that does not unfairly discriminate against any holders of the class or classes of securities to be purchased.
4. Applicants request relief under section 6c, discussed above, and section 23c3 from rule 23c3 to the extent necessary for each Fund to impose early withdrawal charges on shares of the Fund submitted for repurchase that have been held for less than a specified period.
5. Applicants state that the early withdrawal charges they may seek intend to impose are functionally similar to CDSLs imposed by open-end management investment companies under rule 6c10 under the 1940 Act.
Rule 6c10 permits open-end management investment companies to impose CDSLs, subject to certain conditions. Applicants note that rule 6c10 is grounded in policy considerations supporting the employment of CDSLs where there are adequate safeguards for the investor.
Applicants state that these same policy considerations support imposition of early withdrawal charges in the interval fund context, and are a solid basis for the Commission to grant exemptive relief to permit interval funds to impose early withdrawal charges. In addition, applicants state that early withdrawal charges may be necessary for the Funds Distributor to recover distribution costs from shareholders who exit their investments early. Applicants represent that any early withdrawal charge imposed by a Fund will comply with rule 6c10 under the 1940 Act as if the rule were applicable to closed-end management investment companies.
Each Fund will disclose early withdrawal charges in accordance with the requirements of Form N1A
concerning CDSLs.
Asset-Based Service and/or Distribution Fees 1. Section 17d of the 1940 Act and rule 17d1 thereunder prohibit an
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affiliated person of a registered investment company, or an affiliated person of such person, acting as principal, from participating in or effecting any transaction in connection with any joint enterprise or other joint arrangement in which the investment company participates unless the Commission issues an order permitting the transaction. In reviewing applications submitted under section 17d and rule 17d1, the Commission considers whether the participation of the investment company in a joint enterprise or joint arrangement is consistent with the provisions, policies, and purposes of the 1940 Act, and the extent to which the participation is on a basis different from or less advantageous than that of other participants.
2. Rule 17d3 under the 1940 Act provides an exemption from section 17d and rule 17d1 to permit openend management investment companies to enter into distribution arrangements pursuant to rule 12b1 under the 1940
Act. Applicants request an order pursuant to section 17d of the 1940
Act and rule 17d1 thereunder to the extent necessary to permit each Fund to impose asset-based service and/or distribution fees in a manner similar to rule 12b1 fees for an open-end management investment company.
Applicants have agreed to comply with rules 12b1 and 17d3 as if those rules apply to closed-end management investment companies, which they believe will resolve any concerns that might arise in connection with a Fund financing the distribution of its Shares through asset-based service and/or distribution fees.
For the reasons stated above, applicants submit that the exemptions requested under section 6c are necessary and appropriate in the public interest and are consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the 1940 Act. Applicants further submit that the relief requested pursuant to section 23c3 will be consistent with the protection of investors and will insure that applicants do not unfairly discriminate against any holders of the class of securities to be purchased. Finally, applicants state that the Funds imposition of asset-based service and/or distribution fees is consistent with the provisions, policies, and purposes of the 1940 Act and does not involve participation on a basis different from or less advantageous than that of other participants.

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