Release No. 33-7759

Release No. 34-42054

Release No. 39-2378

International Series Rel. No. 1208

64 Fed. Reg. 61382 - Nov. 10, 1999

Securities and Exchange Commission

Cross-Border Tender and Exchange Offers, Business Combinations
and Rights Offerings
 

Table of Contents

Section II.E

II. Discussion

E. Investment Companies

As proposed, Rules 801 and 802 would not have been available for securities issued by an investment company, whether foreign or domestic, that is registered or required to be registered under the Investment Company Act. The proposal excluded foreign investment companies from these exemptions because the Investment Company Act generally prohibits foreign investment companies from publicly offering their securities in the United States or to U.S. persons.⁶⁴ Domestic investment companies were excluded because, unlike other issuers, investment companies that are registered or required to be registered under the Investment Company Act generally must register the securities that they offer or sell outside the United States.⁶⁵ The proposing release noted, however, that a closed-end investment company that is registered under the Investment Company Act, like other non-investment company issuers, may be able to rely on the safe harbor provided by Regulation S under the Securities Act to issue securities abroad without registering those securities under the Securities Act.⁶⁶ We requested comment whether Rule 802 should be available to registered closed-end investment companies.

In response to commenters' suggestions, both Rules 801 and 802, as adopted, are available for securities issued by closed-end investment companies that are registered under the Investment Company Act. We believe that this result is consistent with the Commission's previous decision to permit closed-end investment companies to rely on the Regulation S safe harbor to issue unregistered securities abroad.⁶⁷ These rules, however, are not available to any other type of investment company, whether foreign or domestic, that is registered or required to be registered under the Investment Company Act.⁶⁸

As proposed, the Tier I and Tier II tender offer exemptions also would not have been available if the subject company was an investment company registered or required to be registered under the Investment Company Act. As adopted these exemptions are available if the subject company is a closed-end investment company registered under the Investment Company Act.⁶⁹ Consistent with the Commission's application of Regulation S and the exemptions in Rules 801 and 802, the Tier I and Tier II tender offer exemptions as adopted are available if the subject company is a closed-end investment company registered under the Investment Company Act.

Footnotes

⁶⁴ See proposing release, supra note 8, at note 126 and accompanying text.

⁶⁵ See id. at note 127 and accompanying text.

⁶⁶ See id. at note 127.

⁶⁷ See Offshore Offers and Sales, Securities Act Release No. 6863 (April 24, 1990) [55 FR 18306], at notes 151-53 and accompanying text.

⁶⁸ As explained in the proposing release, both foreign and domestic issuers that are excepted from the definition of "investment company" under the Investment Company Act would be permitted to use these exemptions, so long as reliance on the exemptions is consistent with their unregistered status under the Investment Company Act. See proposing release, supra note 8, at notes 128-29 and accompanying text.

⁶⁹ See supra note 67 and accompanying text. One commenter suggested generally that these exemptions be made available whenever the subject company is a foreign investment company. Because we have not received any requests for relief in connection with a tender offer for a foreign investment company, we have not expanded the Tier I or Tier II exemptions to cover subject companies that are foreign open-end investment companies.