SEC Division of Investment Management Provides Guidance on Independent Legal Counsel Requirements Under New Fund Governance Rules
In a letter to the Investment Company Institute, the staff of the Division of Investment Management of the SEC (the "Staff") addressed various issues raised by new requirements governing who may act as counsel to the independent directors of registered investment companies. Under these requirements, which become effective July 1, 2002, a registered investment company relying on certain exemptive rules (the "Exemptive Rules") under the Investment Company Act of 1940, as amended (the "1940 Act"), e.g., Rule 12b-1, must determine that legal counsel retained to represent the independent directors is an "independent legal counsel" within the meaning of Rule 0-1(a)(6) under the 1940 Act. The Staff indicated that, in the absence of facts demonstrating that independent directors had failed to act in good faith or exercise adequate care in examining the conflicts
