SEC Defers Names Rule Compliance Date; Permits Rolling Compliance for Existing Funds

On March 14, 2025, the SEC issued a release (the “Release”) that (i) for new funds, defers by six months the compliance date for amendments to Rule 35d-1 under the 1940 Act (the “Names Rule”) (described in a Ropes & Gray Alert), and (ii) for existing funds, replaces the amendments’ compliance date (formerly, December 11, 2025 for larger entities and June 11, 2026 for smaller entities¹) with deferred rolling compliance dates based on specific annual disclosure and reporting obligations tied to each fund’s fiscal year-end. The Names Rule amendments were adopted by the SEC on September 20, 2023. Specifically, after giving effect to the Release:

• A new fund will be required to comply with the Names Rule amendments at the time of the effective date of its initial registration statement on or following the new compliance dates – June 11, 2026 (larger entities) or December 11, 2026 (smaller entities).
• An existing open-end fund (or other continuously offered fund) will be required to comply with the Names Rule amendments at the time of the effective date of its first “on-cycle” annual prospectus update filed on or following June 11, 2026 (larger entities) or December 11, 2026 (smaller entities).
  • For example, a larger-entity fund with a fiscal year-end of May 31 will be required to comply in connection with its fiscal year ending May 31, 2027 and, therefore, file an on-cycle annual amendment to its registration statement that complies with the Names Rule amendments by late September 2027.
• An existing closed-end fund that relies on Rule 8b-16(b) under the 1940 Act (to exempt the fund from Rule 8b-16(a)’s requirement to annually update its Form N-2) will be required to comply with the Names Rule amendments at the time of the transmittal of its first annual report to shareholders on or following June 11, 2026 (larger entities) or December 11, 2026 (smaller entities).
• An existing business development company that is not engaged in a continuous offering will need to comply with the Names Rule amendments at the time of the filing of its first annual report on Form 10-K on or following June 11, 2026 (larger entities) or December 11, 2026 (smaller entities).

Observations

The Release follows the departures of Chair Gary Gensler and Commissioner Jaime Lizárraga from the SEC. Since these departures, among other things, the SEC also (i) deferred by one year the compliance date for a new rule requiring institutional investment managers to report their short positions and short-sales activities and (ii) filed an unopposed motion with the U.S. Court of Appeals for the Fifth Circuit in Registered Funds Association v. SEC, requesting the court to stay further proceedings in the Registered Funds Association’s challenge to pending Form N-PORT amendments that would require monthly portfolio holdings disclosure.² In short, the Release is not surprising in light of the SEC departures.

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1. Larger entities are funds that, together with other investment companies in the same “group of related investment companies,” have net assets of $1 billion or more, and smaller entities are funds that, together with other investment companies in the same “group of related investment companies,” have net assets of less than $1 billion.
2. The SEC requested the stay so that it could review the underlying rulemaking in light of President Trump’s January 20, 2025 Executive Order.