Morgan Lewis Obtains SEC Staff No-Action Relief Relating to Closed-End Fund Shelf Offering
Morgan Lewis recently obtained a noa-ction letter for the Nuveen Virginia Premium Income Municipal Fund (Fund) in which the SEC staff stated that it would not recommend an enforcement action under either Section 5 or 6(a) of the Securities Act of 1933 (the Securities Act) if the Fund conducts a delayed “at the market” public offering of its common shares pursuant to the shelf registration provisions of Rule 415(a)(1)(x) and Rule 415(a)(4) under the Securities Act without filing and sending to shareholders quarterly reports that comply in all material respects with the disclosure requirements of Form 10-Q.
The Fund sought to conduct an at the market offering of its common shares under Rule 415(a)(l)(x). Such an offering would allow the Fund to issue new shares when the Fund’s shares are trading at a premium to net asset value. Rule 415(a) under the Securities Act allows issuers to register certain offerings on a delayed or continuous basis (shelf offering). Rule 415(a)(4) permits an issuer to register an at the market offering of equity securities where the offering falls within Rule 415(a)(1)(x). An at the market offering means “an offering of securities into an existing trading market for outstanding shares of the same class at other than a fixed price.” Rule 415(a)(l)(x) applies to securities “registered (or qualified to be registered) on Form S-3 or Form F-3 which are to be offered and sold on a continuous or delayed basis” by or on behalf of the registrant. The incoming letter noted that the Fund is organized as a closed-endmanagement investment company, therefore, the Fund is required to use Form N-2 to register its securities and will not otherwise use Form S-3 as required in Rule 415(a)(1)(x). Moreover, the incoming letter asserted that because the Fund and the offering would meet the requirements of Form S-3, the Fund’s shares are “qualified to be registered” on Form S-3, as required under Rule 415(a)(1)(x).
The incoming letter also asserted that the Fund already meets the reporting requirements of the instructions to Form S-3. In particular, these instructions require registrants to be subject to Section 12 or 15(d) of the Exchange Act and requires the timely filing of all reports required by Sections 13, 14, or 15(d) for the 12 calendar month period preceding the filing of a registration statement and for any portion of a month immediately preceding the filing of the registration statement. The incoming letter asserted that the Fund was subject to the requirements of Section 12 of the Exchange Act for more than 12 months and was also subject to the reporting requirements of the Investment Company Act of 1940 (the 1940 Act) during that period. Moreover, under the 1940 Act, the Fund is required to file reports on Form N-CSR, which satisfies the requirement to file annual and quarterly reports pursuant to Section 13(a) and 15(d) of the Exchange Act. Additionally, under the Exchange Act investment companies that are required to file semi-annual reports on Form N-SAR are excluded from the quarterly reporting obligation under the Exchange Act. Accordingly, the incoming letter noted that the Fund had timely filed Forms N-SAR, N-CSR, and N-Q during the requisite period of time in accordance with these requirements.
Finally, the Fund also noted that its request was similar to one made by the Pilgrim America Prime Rate Trust (Pilgrim) in 1998. While the relief granted to Pilgrim was based, in part, on an undertaking by Pilgrim to file and mail to shareholders quarterly reports that comply in all material respects with the disclosure requirements of Form 10-Q, the incoming letter asserted that recent enhancements in closed-end fund reporting requirements under the Exchange Act make the additional quarterly reporting obligations imposed on Pilgrim unnecessary.
Based on the facts and representations made in the incoming letter, the SEC staff provided the requested no-action relief.
Investment Management FYI is a service of the Investment Management Practice Group of Morgan Lewis. If you have any questions concerning these important legal developments reflected herein, please contact either of the following Morgan Lewis attorneys:
David A. Sirignano
Morgan, Lewis & Bockius LLP
1111 Pennsylvania Ave, NW
Washington, D.C. 20004
Telephone: 202.739.5420
Fax: 202.739.3001
dsirignano@morganlewis.com
Thomas S. Harman
Morgan, Lewis & Bockius LLP
1111 Pennsylvania Ave, NW
Washington, D.C. 20004
Telephone: 202.739.5662
Fax: 202.739.3001
tharman@morganlewis.com