SEC Proposes Interval Fund Updates, Extension Of Multi-Class Relief For Closed-End Funds And BDCs

Key Takeaways

• The U.S. Securities and Exchange Commission proposed amendments on September 30, 2026, to “modernize” the rule governing the operation of interval funds.
• The interval fund proposal would, among other changes: allow interval funds to defer their first repurchase offer for up to two years; codify relief for a monthly periodic interval option; and replace the rule’s 100% asset coverage liquidity test with a principles-based approach.
• In the same Release, the SEC proposed to permit non-traded registered closed-end funds and business development companies (“BDCs”) to offer multiple share classes without first obtaining individual exemptive relief.
• The multiple share class proposal would codify existing exemptive relief for multiple share class closed-end funds and BDCs. Notably, unlike current exemptive orders, compliance with FINRA distribution fee rules (FINRA Rule 2341 or Rule 2310) would not be a condition of this rule-based relief.