SEC Approves Exemption for Business Development Companies with Multiple Classes of Shares

Strategic Insights -

The Securities and Exchange Commission has issued a notice allowing certain registered closed-end investment companies to issue multiple classes of shares with varying sales loads and asset-based distribution and/or service fees. This exemption is contingent upon the companies agreeing to certain conditions and restrictions outlined in their application. The applicants, Third Point Private Capital LLC and Third Point Private Capital Partners, filed their request on June 4, 2025.

The requested exemption is aimed at facilitating the registration of business development companies (BDCs) that wish to issue multiple classes of shares. BDCs are a type of investment company that invests in smaller, private companies and is regulated by the SEC under the Investment Company Act of 1940. The proposed exemption would grant BDCs the flexibility to issue multiple classes of shares with varying fees and sales loads, potentially attracting more investors and increasing liquidity in the market.

Key Takeaways:

  • The SEC has approved an exemption for certain registered closed-end investment companies to issue multiple classes of shares with varying sales loads and asset-based distribution and/or service fees.
  • The applicants, Third Point Private Capital LLC and Third Point Private Capital Partners, filed their request on June 4, 2025.
  • BDCs that wish to issue multiple classes of shares must agree to certain conditions and restrictions outlined in their application.
  • The proposed exemption is aimed at facilitating the registration of BDCs and increasing market liquidity.
  • The SEC has delegated authority to the Division of Investment Management to oversee the implementation of this exemption.

Statistics:

  • 2 registered closed-end investment companies have applied for the exemption (Third Point Private Capital LLC and Third Point Private Capital Partners).
  • 1 application was filed on June 4, 2025.
  • The exemption applies to business development companies (BDCs) regulated under the Investment Company Act of 1940.
  • Data on the potential market impact of this exemption is not provided.

Sources:

  • [1] Securities and Exchange Commission, "Notice of Application under Section 6(c) of the Investment Company Act of 1940 for an Exemption" (File No. 335-22936).