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Vedder Thinking | Articles SEC Issues Notice of Intention to Grant Exemption from Board’s In-Person Meeting Requirement to Approve Sub-Advisory Agreements


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On January 21, 2020, the SEC issued a notice of its intention to grant exemptive relief to a registered fund and its investment adviser that would permit the fund’s board to approve new sub-advisory agreements and material amendments to existing sub-advisory agreements without complying with the in-person meeting requirement of Section 15(c) of the Investment Company Act of 1940. Under the requested relief, the independent board members could approve a sub-adviser change at a meeting at which members of the board could participate by any means of communication that allows them to hear each other simultaneously during the meeting.

In seeking exemptive relief, the applicants asserted that during the period between board meeting dates, market conditions may change or investment opportunities may arise such that the fund’s investment adviser may wish to make a sub-adviser change. The applicants asserted that in these instances it may be impractical and costly to hold an additional in-person board meeting, particularly given the geographic diversity of board members and the cost associated with holding an additional in-person meeting. The applicants also stated that the relief’s condition requiring that board members be able to hear each other simultaneously during the meeting mitigates the concern with absentee approval of advisory agreements that Section 15(c) was intended to address.

Other conditions to the exemptive relief are as follows:

  • Meeting Materials. Management must represent that the materials provided to the board for the meeting include the same information the board would have received if a sub-adviser change were sought at an in-person meeting;
  • Notice of Meeting and Right to Object. Notice of the meeting must explain why the sub-adviser change needs to be considered at a non-in-person meeting and, once notice is sent, board members will have the opportunity to object to considering the change at a non-in-person meeting. The board must then consider the sub-adviser change at an in-person meeting, unless the objecting board member rescinds the request for an in-person meeting.
  • Disclosure. A fund’s ability to rely on the requested relief must be disclosed in its registration statement.

The requested relief does not apply to the funds’ investment advisory agreements.

The notice is available here.


John S. Marten


Nathaniel Segal


Jacob C. Tiedt