SEC Adopts Amendments To Fund Names Rule

On September 20, 2023, the Securities and Exchange Commission (the "SEC") voted to adopt final amendments to modernize Rule 35d-1 of the Investment Company Act of 1940, as amended (the "1940 Act").¹ This rule, commonly referred to as the "Names Rule", regulates the use of names for registered investment companies and business development companies ("BDCs")² that may be materially misleading or deceptive.

The amendments largely implement changes first proposed by the SEC last year and are intended to address interpretive issues and industry developments that have arisen since the Names Rule was first adopted in 2001.³ In the adopting release for the final amendments, the SEC highlighted growing interest in regulated funds with a "thematic" investment focus, particularly those that consider environmental, social, or governance ("ESG") factors in their investment decisions, as an area of particular concern. The SEC noted that the breadth of ESG-related terms used in