SEC Form N-2

What is the SEC Form N-2?

SEC Form N-2 is a filing with the Security and Exchange Commission (SEC) which must be submitted by closed management investment companies to register under the Investment Companies Act 1940 and to offer their shares under the regime Securities Act of 1933.

Form N-2 can be compared to SEC Form N-1Arather required by open-ended investment companies.

Key points to remember

  • SEC Form N-2 is a regulatory document required to form a closed-end fund manager in the United States
  • The form must be completed in accordance with the Securities Act of 1933 and the Investment Company Act of 1940.
  • Companies filing Form N-2 must provide information about the fund in the form of a prospectus as well as supporting materials.

Understanding the SEC Form N-2

SEC Form N-2 is required by closed-end investment companies. A closed-end fund is a pooled portfolio of assets that raises a fixed amount of capital through a initial public offering then lists the stocks to be traded on the exchange. Examples may include closed-end mutual funds Where exchange traded funds. In contrast, open end shares in the fund are issued and redeemed daily by the fund promoter (the fund issuer). By design, these funds are always traded at their actual cash valuealso known as net asset valuewhich is calculated on a per share basis before the application of acquisition costs.

Part A of SEC Form N-2, the prospectus, must contain clearly written information about the investment that the average investor (who may not have a specialized background in finance or law) can understand. This information should describe investment expenses, financial highlights, distribution plan, use of proceeds, management, share capital, long-term debt, defaults and arrears on prime securities. rank and ongoing legal proceedings. Part B contains additional information that may be of interest to certain investors, such as investment objectives and policies, principal security holders and financial statements.

There is an exception for small business investment companies licensed by the Small Business Administration.The SEC Form N-2 is intended to provide investors with information about closed-end management companies that is useful in determining the attractiveness of an investment company.

Form N-2 is also commonly referred to simply as a “registration statement”.

Elements of an SEC Form N-2

Form N-2 is a three-part registration statement consisting of a prospectus, declaration of additional information (SAI) and certain other information.

  1. The prospectus is designed to provide shareholders with essential information about the fund and should be written in clear and concise language (that’s to saypure English).
  2. The IAS is designed to provide shareholders with additional and more detailed information about a fund, its management and service providers, and its policies. The SAI is not issued to shareholders but must be available free of charge upon request.
  3. Other information included in the registration statement includes corporate organizational documents and certain contracts and compliance policies.
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