US Business Development Companies (BDCs)
A business development company is a type of closed-end fund registered with the Securities and Exchange Commission (SEC) that makes investments in developing companies and in firms that are financially distressed.
The SEC's new use of derivatives rules came into effect on February 19, 2021 and registered investment companies and business development companies must comply by August 19, 2022. Early compliance is possible but can only be complete compliance; selective early compliance is not permitted.
AIMA is in the process of developing an implementation guide to assist affected firms in their efforts to come into compliance with the new use of derivatives requirements.
The SEC's final rule on valuation practices and the role of the board of directors with respect to determining the fair value of the investments of a registered investment company or business development company came into effect on March 8, 2021 and affected firms have until September 8, 2022 to come into compliance. Early compliance is possible, but funds choosing early compliance will not be permitted to rely concurrently on other SEC guidance and staff letters (which will be withdrawn as of September 8, 2022).
(Last updated: 29 June 2021)