Expertise Beyond the Numbers

SEC Adopts Rule Permitting Online-Only Shareholder Reports

On June 5, 2018, the Securities and Exchange Commission adopted Rule 30e-3 under the Investment Company Act of 1940.

What does this mean for registered investment companies?  In short, you can expect a lot less paper hitting your printer in the future. Rule 30e-3 provides certain registered investment companies with an optional method to transmit shareholder reports by making such reports and other materials accessible at a website address specified in a notice to investors. Under the new rule, only a paper notice will be mailed to investors to notify them when a report is available on the website.

The shift to electronic delivery is a step towards modernizing the manner in which information is made available to investors while also protecting the rights of investors that prefer to receive information in the paper form as they do today. Investors who prefer to receive the full reports in paper may opt out of electronic delivery at any time.

The new rule is not only expected to improve the experience of investors, but also reduce the expenses associated with printing and mailing shareholder reports that are incurred by investment companies and ultimately the investor.

Investment companies may rely on the new rule beginning no earlier than January 1, 2021. If you have any questions on Rule 30e-3 or would like to discuss how SC&H Group can serve your company, please don’t hesitate to contact us.