IXBRL FOR CLOSED-END FUNDS (CEF) & BUSINESS DEVELOPMENT COMPANIES (BDC) REQUIREMENTS
The Securities and Exchange Commission (the “Commission”) is adopting rules that will modify the registration, communications, and offering processes for business development companies (“BDCs”) and other closed-end investment companies under the Securities Act of 1933
The new provisions are instituted with the hope of providing more effective disclosures while reforming regulations to benefit small and medium-sized businesses that rely on these funds for capital formation. The adoption of these amendments will have the following effects:
- BDCs must submit financial statements using Inline XBRL (iXBRL) format.
- Registered CEFs and BDCs must tag the cover page information, excluding the Calculation of Registration Fee Table, on Form N-2 in iXBRL.
- Filings of Forms 24F-2 must be submitted in eXtensible Markup Language (XML).
A detailed description of the different impacts this rule will have can be found here.
Although some of the provisions will apply to most of the affected funds, many of the provisions will only apply to “seasoned funds”. This only includes affected funds that are current on their reporting and eligible to file a short-form registration statement given they have at least $75 million in public float. The rule requires seasoned funds to tag the Fee Table, Senior Securities Table, Investment Objectives and Policies, Risk Factors, Share Price Data, Capital Stock, Long-Term Debt, and Other Securities using iXBRL.
These amendments took effect on August 1, 2020, excluding the amendments related to registration fee payments by interval funds and other exchange-traded products, which will take effect on August 1, 2021. For affected funds who are eligible to file a short-form registration statement, iXBRL compliance is required 24 months after the effective date. All others are required to comply by February 1, 2023.
|Affected funds include all BDCs and registered CEFs, including interval funds.
|Seasoned funds are affected funds that are current and timely in their reporting and therefore generally eligible to file a short-form registration statement if they have at least $75 million in “public float.”
|Well-Known Seasoned Issuers (WKSIs)
|WKSIs are seasoned funds that generally have at least $700 million in “public float.”
|Exchange-Traded Products (ETPs)
|ETPs are issuers that are not registered investment companies and whose assets consist primarily of commodities, currencies, or derivative instruments that reference commodities or currencies; whose securities are listed for trading on a national securities exchange; and that purchase or redeem securities for a ratable share of their assets at NAV.
Structured Data Reporting Requirements
Structured Data Reporting Requirements
|A requirement that BDCs tag their financial statements using Inline eXtensible Business Reporting Language (“Inline XBRL”) format.
|Affected Funds – Prospectus Structured Data Requirements
|A requirement that registrants tag certain information required by Form N-2 using Inline XBRL.
|Form 24F-2 Filers, including open-end funds and unit investment trusts –
Form 24F-2 Structured Format
|A requirement that filings on Form 24F-2 be submitted in a structured format.
|Aug. 1, 2020:
|The effective date for the new rule and most form amendments
|Aug. 1, 2021:
|The effective date for amendments related to registration fee payments by interval funds and certain exchange-traded products
|Aug. 1, 2021:
|The compliance date for CEFs to provide MDFP in annual reports
|Aug. 1, 2022:
|The compliance date for funds eligible to file a short-form registration statement to meet inline XBRL reporting requirements for financial statement, registration statement information, and prospectus information
|Feb. 1, 2022:
|The compliance date for Form 24F-2 reports be filed in XML format
|Feb. 1, 2023:
|The compliance date for all other funds to meet inline XBRL reporting requirements for financial statement, registration statement information, and prospectus information
CLOSED-END FUND (CEF) DRAFT TAXONOMY:
As part of the “Securities Offering Reform for Closed-End Investment Companies” final rule, the Commission has adopted certain structured data reporting requirements for business development companies and registered closed-end investment companies. The rule also requires open-end funds, face-amount certificate companies, unit investment trusts, and certain closed-end funds to submit Form 24F-2 in a structured format.
As part of the Securities Offering Reform for Closed-End Investment Companies release, the Commission adopted a requirement that filings on Form 24F-2 be submitted in a structured format. EDGAR will be updated to convert Form 24F-2 to an online form. Variants of these forms are:
The next major update to the EDGAR system, expected in September 2021, will introduce a pilot phase for filing Form 24F-2 in a structured format with the following features:
- EDGAR has been updated to convert Form 24F-2 (variants 24F-2NT and 24F-2NT/A) to an online form.
- Form 24F-2 may be filed using a new online version which will be available on the EDGAR Filing Website or constructed by filers according to new technical specifications which will be made available with the next major update to the EDGAR system.
- Filers will be prevented from submitting 24F-2NT and 24F-2NT/A form types using the EDGARLink Online interface or as EDGARLink Online filer-constructed submissions beginning February 1, 2022.
- Beginning February 1, 2022, form types 24F-2NT and 24F-2NT/A created in a structured format will be accepted as LIVE and TEST online submissions.
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Benefits of partnering with Ez XBRL
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