On March 12, the Securities and Exchange Commission’s Office of Chief Counsel, Division of Investment Management, released a no-action letter to Kohlberg Capital Corporation (Kohlberg) saying it would not recommend enforcement action where a BDC was to sell its common stock at a price below its current NAV within one year after obtaining shareholder approval of such sale at a special meeting, rather than at an annual meeting of shareholders.1  

The Staff agreed with the assertions of Kohlberg that, although the language of § 63(2)(A) of the 1940 Act provides for shareholder approval at an annual meeting of shareholders, Congress did not intend to distinguish between approval obtained at an annual meeting or a special meeting, so long as approval was obtained within one year immediately prior to the transaction.  

This position reinforces similar relief granted to a BDC in 1983.2