Disclosure of Divestment by Registered Investment Companies in Accordance with Sudan Accountability and Divestment Act of 2007
A Small Entity Compliance Guide1
On December 31, 2007, the President signed the Sudan Accountability and Divestment Act of 2007 into law. Among other things, the Act provides that no person may bring any civil, criminal, or administrative action against any registered investment company, or any employee, officer, director, or investment adviser of the investment company, based solely upon the investment company divesting from, or avoiding investing in, securities issued by persons that the investment company determines, using credible information that is available to the public, conduct or have direct investments in certain business operations in Sudan. This limitation on actions does not apply to a registered investment company, or any of its employees, officers, directors, or investment advisers, unless the investment company makes disclosures about the divestments in accordance with regulations prescribed by the SEC.
Disclosure of Divestments in Accordance with the Sudan Divestment Act
Each registered investment company that divests securities in accordance with the Act is required to disclose the divestment in the next Form N-CSR or Form N-SAR that it files following the divestment. Management investment companies will provide this disclosure on Form N-CSR, and unit investment trusts will provide it on Form N-SAR. A registered investment company that divests securities in accordance with the Sudan Divestment Act during the period that begins on the fifth business day before the date of filing a Form N-CSR or Form N-SAR and ends on the date of filing may disclose the divestment in either that filing or an amendment thereto. The amendment must be filed not later than five business days after the date of filing the Form N CSR or Form N-SAR.
The following information must be disclosed regarding the securities divested: the issuer's name; exchange ticker symbol; CUSIP number; total number of shares or, for debt securities, principal amount divested; and dates that the securities were divested. In addition, if the registered investment company continues to hold any securities of the divested issuer, it is required to disclose the exchange ticker symbol; CUSIP number; and total number of shares or, for debt securities, principal amount of such securities, held on the date of filing.
For purposes of determining when a divestment should be reported, if a registered investment company divests its holdings in a particular security in a related series of transactions, the company may deem the divestment to occur at the time of the final transaction in the series. A registered investment company is not required to disclose divestments of securities of an issuer that conducts or has direct investments in certain business operations in Sudan, but the limitation on actions provided in the Act will not apply with respect to a divestment that is not disclosed.
A registered investment company that makes a divestment in accordance with the Act between December 31, 2007 and April 30, 2008, and that filed a Form N CSR or Form N SAR after the divestment but before April 30, 2008, may disclose the divestment on an amendment to that Form N CSR or Form N SAR filed no later than May 14, 2008.
The adopting release for disclosure of divestment by registered investment companies in accordance with the Sudan Accountability and Divestment Act of 2007 can be found on the SEC's website at http://www.sec.gov/rules/final/2008/34-57711.pdf.
Form N-CSR and Form N-SAR can be accessed through the "Investment Management" section of the SEC's website at http://www.sec.gov/divisions/investment.shtml.
Contacting the SEC
The SEC's Division of Investment Management is happy to assist small companies with questions regarding disclosure of divestment by registered investment companies in accordance with Sudan Accountability and Divestment Act of 2007. The Division's Office of Chief Counsel answers questions submitted by e-mail and telephone. You can submit a question by e-mail to firstname.lastname@example.org and a staff member of the office will call you to discuss your question. In addition, you can contact the Office of Chief Counsel at (202) 551-6825.
1 This guide was prepared by the staff of the U.S. Securities and Exchange Commission as a "small entity compliance guide" under Section 212 of the Small Business Regulatory Enforcement Fairness Act of 1996, as amended. The guide summarizes and explains rules adopted by the SEC, but is not a substitute for any rule itself. Only the rule itself can provide complete and definitive information regarding its requirements.