Rule Text 1

§ 270.23c–2

17 CFR Ch. II (4–1–09 Edition)

(10) If the security is a stock, the
issuer has, within the preceding six
months, informed stockholders of its
intention to purchase stock of such
class by letter or report addressed to
all the stockholders of such class.
(11) The issuer files with the Commission, as an exhibit to Form N-CSR
(§ 249.331 and § 274.128), a copy of any
written solicitation to purchase securities under this section sent or given
during the period covered by the report
by or on behalf of the issuer to 10 or
more persons.
(b) Notwithstanding the conditions of
paragraph (a) of this section, a closedend company may purchase fractional
interests in, or fractional rights to receive, any security of which it is the
issuer.
(c) This rule does not apply to purchase of securities made pursuant to
section 23(c)(1) or (2) of the Act (54
Stat. 825; 15 U.S.C. 80a–23). A registered
closed-end company may file an application with the Commission for an
order under section 23(c)(3) of the Act
permitting the purchase of any security of which it is the issuer which does
not meet the conditions of this rule
and which is not to be made pursuant
to section 23(c)(1) or (2) of the Act.
(d) This rule relates exclusively to
the requirements of section 23(c) of the
Act, and the provisions hereof shall not
be construed to authorize any action
which contravenes any other applicable
law, statutory or otherwise, or the provision of any indenture or other instrument pursuant to which securities of
the issuer were issued.
[Rule N–23C–1, 7 FR 10424, Dec. 15, 1942, as
amended at 68 FR 64975, Nov. 17, 2003]

dwashington3 on PROD1PC60 with CFR

CROSS REFERENCE: For interpretative release applicable to § 270.23c–1, see No. 78 in
tabulation, part 271 of this chapter.

§ 270.23c–2 Call and redemption of securities issued by registered closedend companies.
(a) Notwithstanding the provisions of
§ 270.23c–1 (Rule N–23c–1), a registered
closed-end investment company may
call or redeem any securities of which
it is the issuer, in accordance with the
terms of such securities or the charter,
indenture or other instrument pursuant to which such securities were
issued: Provided, That, if less than all

the outstanding securities of a class or
series are to be called or redeemed the
call or redemption shall be made by
lot, on a pro rata basis, or in such
other manner as will not discriminate
unfairly against any holder of the securities of such class or series.
(b) A registered closed-end investment company which proposes to call
or redeem any securities of which it is
the issuer shall file with the Commission notice of its intention to call or
redeem such securities at least 30 days
prior to the date set for the call or redemption; Provided, however, That if
notice of the call or the redemption is
required to be published in a newspaper
or otherwise, notice shall be given to
the Commission at least 10 days in advance of the date of publication. Such
notice shall be filed in triplicate and
shall include (1) the title of the class of
securities to be called or redeemed, (2)
the date on which the securities are to
be called or redeemed, (3) the applicable provisions of the governing instrument pursuant to which the securities
are to be called or redeemed and, (4) if
less than all the outstanding securities
of a class or series are to be called or
redeemed, the principal amount or
number of shares and the basis upon
which the securities to be called or redeemed are to be selected.
[Rule N–23C–2, 7 FR 6669, Aug. 25, 1942]

§ 270.23c–3 Repurchase
offers
by
closed-end companies.
(a) Definitions. For purposes of this
section:
(1) Periodic interval shall mean an interval of three, six, or twelve months.
(2) Repurchase offer shall mean an
offer pursuant to this section by an investment company to repurchase common stock of which it is the issuer.
(3) Repurchase offer amount shall
mean the amount of common stock
that is the subject of a repurchase
offer, expressed as a percentage of such
stock outstanding on the repurchase
request deadline, that an investment
company offers to repurchase in a repurchase offer. The repurchase offer
amount shall not be less than five percent nor more than twenty-five percent
of the common stock outstanding on a
repurchase request deadline. Before
each repurchase offer, the repurchase

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Securities and Exchange Commission

§ 270.23c–3

offer amount for that repurchase offer
shall be determined by the directors of
the company.
(4) Repurchase payment deadline with
respect to a tender of common stock
shall mean the date by which an investment company must pay securities
holders for any stock repurchased. A
repurchase payment deadline shall
occur seven days after the repurchase
pricing date applicable to such tender.
(5) Repurchase pricing date with respect to a tender of common stock
shall mean the date on which an investment company determines the net
asset value applicable to the repurchase of the securities. A repurchase
pricing date shall occur no later than
the fourteenth day after a repurchase
request deadline, or the next business
day if the fourteenth day is not a business day. In no event shall an investment company determine the net asset
value applicable to the repurchase of
the stock before the close of business
on the repurchase request deadline.
(i) For an investment company making a repurchase offer pursuant to
paragraph (b) of this section, the number of days between the repurchase request deadline and the repurchase pricing date for a repurchase offer shall be
the maximum number specified by the
company
pursuant
to
paragraph
(b)(2)(i)(D) of this section.
(ii) For an investment company making a repurchase offer pursuant to
paragraph (c) of this section, the repurchase pricing date shall be such date as
the company shall disclose to security
holders in the notification pursuant to
paragraph (b)(4) of this section with respect to such offer.
(iii) For purposes of paragraph (b)(1)
of this section, a repurchase pricing
date may be a date earlier than the
date determined pursuant to paragraph
(a)(5) (i) or (ii) of this section if, on or
immediately following the repurchase
request deadline, it appears that the
use of an earlier repurchase pricing
date is not likely to result in significant dilution of the net asset value of
either stock that is tendered for repurchase or stock that is not tendered.
(6) Repurchase request shall mean the
tender of common stock in response to
a repurchase offer.

(7) Repurchase request deadline with
respect to a repurchase offer shall
mean the date by which an investment
company must receive repurchase requests submitted by security holders in
response to that offer or withdrawals
or modifications of previously submitted repurchase requests. The first
repurchase request deadline after the
effective date of the registration statement for the common stock that is the
subject of a repurchase offer, or after a
shareholder vote adopting the fundamental policy specifying a company’s
periodic interval, whichever is later,
shall occur no later than two periodic
intervals thereafter.
(b) Periodic repurchase offers. A registered closed-end company or a business development company may repurchase common stock of which it is the
issuer from the holders of the stock at
periodic intervals, pursuant to repurchase offers made to all holders of the
stock, Provided that:
(1) The company shall repurchase the
stock for cash at the net asset value
determined on the repurchase pricing
date and shall pay the holders of the
stock by the repurchase payment deadline except as provided in paragraph
(b)(3) of this section. The company may
deduct from the repurchase proceeds
only a repurchase fee, not to exceed
two percent of the proceeds, that is
paid to the company and is reasonably
intended to compensate the company
for expenses directly related to the repurchase. A company may not condition a repurchase offer upon the tender
of any minimum amount of shares.
(2)(i) The company shall repurchase
the security pursuant to a fundamental
policy, changeable only by a majority
vote of the outstanding voting securities of the company, stating:
(A) That the company will make repurchase offers at periodic intervals
pursuant to this section, as this section may be amended from time to
time;
(B) The periodic intervals between
repurchase request deadlines;
(C) The dates of repurchase request
deadlines or the means of determining
the repurchase request deadlines; and
(D) The maximum number of days between each repurchase request deadline
and the next repurchase pricing date.

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§ 270.23c–3

17 CFR Ch. II (4–1–09 Edition)

(ii) The company shall include a
statement in its annual report to
shareholders of the following:
(A) Its policy under paragraph
(b)(2)(i) of this section; and
(B) With respect to repurchase offers
by the company during the period covered by the annual report, the number
of repurchase offers, the repurchase
offer amount and the amount tendered
in each repurchase offer, and the extent to which in any repurchase offer
the company repurchased stock pursuant to the procedures in paragraph
(b)(5) of this section.
(iii) A company shall be deemed to be
making repurchase offers pursuant to a
policy within paragraph (b)(2)(i) of this
section if:
(A) The company makes repurchase
offers to its security holders at periodic intervals and, before May 14, 1993,
has disclosed in its registration statement its intention to make or consider
making such repurchase offers; and
(B) The company’s board of directors
adopts a policy specifying the matters
required by paragraph (b)(2)(i) of this
section, and the periodic interval specified therein conforms generally to the
frequency of the company’s prior repurchase offers.
(3)(i) The company shall not suspend
or postpone a repurchase offer except
pursuant to a vote of a majority of the
directors, including a majority of the
directors who are not interested persons of the company, and only:
(A) If the repurchase would cause the
company to lose its status as a regulated investment company under Subchapter M of the Internal Revenue
Code [26 U.S.C. 851–860];
(B) If the repurchase would cause the
stock that is the subject of the offer
that is either listed on a national securities exchange or quoted in an interdealer quotation system of a national
securities association to be neither
listed on any national securities exchange nor quoted on any inter-dealer
quotation system of a national securities association;
(C) For any period during which the
New York Stock Exchange or any
other market in which the securities
owned by the company are principally
traded is closed, other than customary
week-end and holiday closings, or dur-

ing which trading in such market is restricted;
(D) For any period during which an
emergency exists as a result of which
disposal by the company of securities
owned by it is not reasonably practicable, or during which it is not reasonably practicable for the company
fairly to determine the value of its net
assets; or
(E) For such other periods as the
Commission may by order permit for
the protection of security holders of
the company.
(ii) If a repurchase offer is suspended
or postponed, the company shall provide notice to security holders of such
suspension or postponement. If the
company renews the repurchase offer,
the company shall send a new notification to security holders satisfying the
requirements of paragraph (b)(4) of this
section.
(4)(i) No less than twenty-one and no
more than forty-two days before each
repurchase request deadline, the company shall send to each holder of
record and to each beneficial owner of
the stock that is the subject of the repurchase offer a notification providing
the following information:
(A) A statement that the company is
offering to repurchase its securities
from security holders at net asset
value;
(B) Any fees applicable to such repurchase;
(C) The repurchase offer amount;
(D) The dates of the repurchase request deadline, repurchase pricing
date, and repurchase payment deadline,
the risk of fluctuation in net asset
value between the repurchase request
deadline and the repurchase pricing
date, and the possibility that the company may use an earlier repurchase
pricing date pursuant to paragraph
(a)(5)(iii) of this section;
(E) The procedures for security holders to tender their shares and the right
of the security holders to withdraw or
modify their tenders until the repurchase request deadline;
(F) The procedures under which the
company may repurchase such shares
on a pro rata basis pursuant to paragraph (b)(5) of this section;
(G) The circumstances in which the
company may suspend or postpone a

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Securities and Exchange Commission

§ 270.23c–3

repurchase offer pursuant to paragraph
(b)(3) of this section;
(H) The net asset value of the common stock computed no more than
seven days before the date of the notification and the means by which security holders may ascertain the net
asset value thereafter; and
(I) The market price, if any, of the
common stock on the date on which
such net asset value was computed, and
the means by which security holders
may ascertain the market price thereafter.
(ii) The company shall file three copies of the notification with the Commission within three business days
after sending the notification to security holders. Those copies shall be accompanied by copies of Form N–23c–3
(§ 274.221 of this chapter) (‘‘Notification
of Repurchase Offer’’). The format of
the copies shall comply with the requirements for registration statements
and reports under § 270.8b–12 of this
chapter.
(iii) For purposes of sending a notification to a beneficial owner pursuant
to paragraph (b)(4)(i) of this section,
where the company knows that shares
of common stock that is the subject of
a repurchase offer are held of record by
a broker, dealer, voting trustee, bank,
association or other entity that exercises fiduciary powers in nominee
name or otherwise, the company shall
follow the procedures for transmitting
materials to beneficial owners of securities that are set forth in § 240.14a–13 of
this chapter.
(5) If security holders tender more
than the repurchase offer amount, the
company may repurchase an additional
amount of stock not to exceed two percent of the common stock outstanding
on the repurchase request deadline. If
the company determines not to repurchase more than the repurchase offer
amount, or if security holders tender
stock in an amount exceeding the repurchase offer amount plus two percent
of the common stock outstanding on
the repurchase request deadline, the
company shall repurchase the shares
tendered on a pro rata basis; Provided,
however, That this provision shall not
prohibit the company from:
(i) Accepting all stock tendered by
persons who own, beneficially or of

record, an aggregate of not more than
a specified number which is less than
one hundred shares and who tender all
of their stock, before prorating stock
tendered by others; or
(ii) Accepting by lot stock tendered
by security holders who tender all
stock held by them and who, when tendering their stock, elect to have either
all or none or at least a minimum
amount or none accepted, if the company first accepts all stock tendered by
security holders who do not so elect.
(6) The company shall permit tenders
of stock for repurchase to be withdrawn or modified at any time until
the repurchase request deadline but
shall not permit tenders to be withdrawn or modified thereafter.
(7)(i) The current net asset value of
the company’s common stock shall be
computed no less frequently than
weekly on such day and at such specific time or times during the day that
the board of directors of the company
shall set.
(ii) The current net asset value of the
company’s common stock shall be computed daily on the five business days
preceding a repurchase request deadline at such specific time or times during the day that the board of directors
of the company shall set.
(iii) For purposes of section 23(b) [15
U.S.C. 80a–23(b)], the current net asset
value applicable to a sale of common
stock by the company shall be the net
asset value next determined after receipt of an order to purchase such
stock. During any period when the
company is offering its common stock,
the current net asset value of the common stock shall be computed no less
frequently than once daily, Monday
through Friday, at the specific time or
times during the day that the board of
directors of the company shall set, except on:
(A) Days on which changes in the
value of the company’s portfolio securities will not materially affect the
current net asset value of the common
stock;
(B) Days during which no order to
purchase its common stock is received,
other than days when the net asset
value would otherwise be computed
pursuant to paragraph (b)(7)(i) of this
section; or

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§ 270.24b–1

17 CFR Ch. II (4–1–09 Edition)

(C) Customary national, local, and
regional business holidays described or
listed in the prospectus.
(8) The board of directors of the investment company satisfies the fund
governance standards defined in § 270.0–
1(a)(7).
(9) Any senior security issued by the
company or other indebtedness contracted by the company either shall
mature by the next repurchase pricing
date or shall provide for the redemption or call of such security or the repayment of such indebtedness by the
company by the next repurchase pricing date, either in whole or in part,
without penalty or premium, as necessary to permit the company to repurchase securities in such repurchase
offer amount as the directors of the
company shall determine in compliance with the asset coverage requirements of section 18 [15 U.S.C. 80a–18] or
61 [15 U.S.C. 80a–60], as applicable.
(10)(i) From the time a company
sends a notification to shareholders
pursuant to paragraph (b)(4) of this section until the repurchase pricing date,
a percentage of the company’s assets
equal to at least 100 percent of the repurchase offer amount shall consist of
assets that can be sold or disposed of in
the ordinary course of business, at approximately the price at which the
company has valued the investment,
within a period equal to the period between a repurchase request deadline
and the repurchase payment deadline,
or of assets that mature by the next repurchase payment deadline.
(ii) In the event that the company’s
assets fail to comply with the requirements in paragraph (b)(10)(i) of this
section, the board of directors shall
cause the company to take such action
as it deems appropriate to ensure compliance.
(iii) In supervising the company’s operations and portfolio management by
the investment adviser, the company’s
board of directors shall adopt written
procedures reasonably designed, taking
into account current market conditions and the company’s investment
objectives, to ensure that the company’s portfolio assets are sufficiently
liquid so that the company can comply
with its fundamental policy on repurchases, and comply with the liquidity

requirements of paragraph (b)(10)(i) of
this section. The board of directors
shall review the overall composition of
the portfolio and make and approve
such changes to the procedures as the
board deems necessary.
(11) The company, or any underwriter
for the company, shall comply, as if
the company were an open-end company, with the provisions of section
24(b) [15 U.S.C. 80a–24(b)] and rules
issued thereunder with respect to any
advertisement,
pamphlet,
circular,
form letter, or other sales literature
addressed to or intended for distribution to prospective investors.
(c) Discretionary repurchase offers. A
registered closed-end company or a
business development company may repurchase common stock of which it is
the issuer from the holders of the stock
pursuant to a repurchase offer that is
not made pursuant to a fundamental
policy and that is made to all holders
of the stock not earlier than two years
after another offer pursuant to this
paragraph (c) if the company complies
with the requirements of paragraphs
(b) (1), (3), (4), (5), (6), (7)(ii), (8), (10)(i),
and (10)(ii) of this section.
(d) Exemption from the definition of redeemable security. A company that
makes repurchase offers pursuant to
paragraph (b) or (c) of this section shall
not be deemed thereby to be an issuer
of redeemable securities within section
2(a)(32) [15 U.S.C. 80a–2(a)(32)].
[58 FR 19343, Apr. 14, 1993; 58 FR 29695, May
21, 1993, as amended at 66 FR 3759, Jan. 16,
2001; 69 FR 46390, Aug. 2, 2004]

§ 270.24b–1 Definitions.
(a) The term form letter as used in section 24(b) of the Act includes (1) one of
a series of identical sales letters, and
(2) any sales letter a substantial portion of which consists of a statement
which is in essence identical with similar statements in sales letters sent to
25 or more persons within any period of
90 consecutive days.
(b) The term distribution as used in
section 24(b) of the Act includes the
distribution or redistribution to prospective investors of the content of any
written sales literature, whether such
distribution or redistribution is effected by means of written or oral representations or statements.

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