Who Does This Rule Apply To?
The New SEC Rule 2a-5 of the Investment Company Act of 1940 applies to all Registered Investment Companies & Business Development Companies (“Funds”) regardless of classification or investment objectives.
What Is Required Of Funds?
The SEC Rule 2a-5 was made effective by the SEC on March 8, 2021, and has a compliance date of September 8, 2022.
The Rule requires the following functions of Funds:
- Periodical assessment & management of material risks associated with the determination of the fund’s fair value
- Establishment, application, and maintenance of fair value methodologies
- Test fair value methodologies for accuracy & appropriateness
- Oversight of pricing services
These functions can be carried out by either the Board of the Fund or a valuation designee, subject to the Board’s oversight.
Vigilant’s Final Conclusion
With the Compliance Date coming into effect for the New Rule, Vigilant provides 2a-5 Compliance Services where we:
- Provide/Review Initial and Regular Risk Assessments;
- Establish/Assist with Fair Value Methodologies;
- Evaluate Pricing;
- Periodic Reporting to the Board; and
- Annual Assessment of the Adequacy and the Effectiveness of the Evaluation Designees Process or Fair Value Determination Process.