Applicants Withdraw Exemptive Request Regarding “Interested Person” Definition
A fund group and adviser recently withdrew a request for an exemption from the 1940 Act’s definition of “interested person” for independent directors who may own small amounts of stock of a publicly traded unaffiliated subadvisor, marking another setback to obtain this type of relief. According to the request filed with the SEC, directors could have obtained permission to own an unaffiliated subadviser’s stock based on specified conditions. For instance, the relief would have permitted independent directors to own only a de minimis amount of the subadviser’s stock, or would have prohibited a director from owning a subadviser’s stock if that subadviser derived more than 1% of its annual revenue from its relationship with the funds; or would otherwise have allowed directors a set time to dispose of shares of the subadviser that were acquired inadvertently and did not meet the specified conditions. According to industry media, the applicants withdrew the application because SEC approval appeared unlikely.