The SEC adopted, substantially as proposed, amendments to Forms N-CSR and N-SAR that enable a registered investment company to rely on protections provided under the Sudan Accountability and Divestment Act of 2007 (the “Sudan Divestment Act”) when it divests from securities of issuers that it determines conduct or have direct investments in certain business operations in Sudan (“Sudan-Related Issuers”). The Sudan Divestment Act limits civil, criminal, and administrative actions that may be brought against a registered investment company that divests itself of securities of Sudan-Related Issuers, provided that the investment company makes disclosures in accordance with SEC rules.
Under the amendments, disclosure of a divestment would generally have to appear in the next report filed on Form N-CSR for mutual funds and other management investment companies, and in the next report filed on Form N-SAR for unit investment trusts. Form N-CSR is used to file shareholder reports and related certifications with the SEC, while semi-annual Form N-SAR filings provide the SEC with information on specified topics primarily related to a registered investment company’s financial statements; both forms are filed electronically and made publicly available on the SEC’s website.
A registered investment company that continues to hold any securities of an issuer whose securities are reflected in a Form N-CSR/N-SAR divestment disclosure must disclose certain information about that holding. The SEC’s proposal does not require a registered investment company to disclose divestments of securities of Sudan-Related Issuers; however, the protections of the Sudan Divestment Act do not apply to a divestment that is not disclosed. The form amendments are effective April 30, 2008. The amendments include a transition provision for situations where a fund has (a) made a divestment after the Act’s December 31, 2007 enactment date but before April 30, 2008 and (b) filed a Form N-CSR or N-SAR after the divestment but before April 30, 2008; under those circumstances, the fund could rely on the safe harbor for the divestment if it filed a revised Form N-CSR or N-SAR that disclosed the divestment in accordance with the form amendments no later than May 14, 2008.