CURRENT MONTH (March 2025)
SEC Extends Compliance Dates for 2023 Names Rule
By Karen Liu, Reid & Wise LLC
On March 14, 2025, the U.S. Securities and Exchange Commission (the “SEC”) announced a six-month extension (the “Extension”) of the compliance dates for the 2023 amendments to Rule 35d-1 (the “2023 Names Rule”) under the Investment Company Act of 1940 (the “Company Act”). The 2023 Names Rule was adopted by the SEC on September 20, 2023, and effective as of December 11, 2023. The effective date for the Extension is March 20, 2025.
Pursuant to the Extension, the compliance dates for the 2023 Names Rule are as follows depending on the size of funds as of the end of their most recent fiscal year:
Size of Funds | Compliance Date |
Fund groups with net assets of $1 billion or more | June 11, 2026 |
Fund groups with less than $1 billion in net assets | December 11, 2026 |
In addition, the Extension further aligned the compliance dates with the timing of certain annual disclosure and reporting obligations that are tied to a fund’s fiscal year-end, which may effectively give more time to comply for certain disclosure/reporting obligations for certain funds, specifically:
Type of Funds | Compliance Date |
New Fund | At the time of the effective date of its initial registration statement that the fund files on or following June 11, 2026 (for larger entities), or December 11, 2026 (for smaller entities) |
Existing open-end fund (or other continuously offered fund) | At the time of the effective date of its first “on-cycle” annual prospectus update that the fund files on or following June 11, 2026 (for larger entities), or December 11, 2026 (for smaller entities) |
Existing registered closed-end fund that relies on rule 8b-16(b) | At the time of the transmittal of its first annual report to shareholders on or following June 11, 2026 (for larger entities), or December 11, 2026 (for smaller entities) |
Fund that registers with the SEC solely under the Company Act and does not rely on rule 8b-16(b) | On the date the fund files its annual update required by rule 8b-16(a) on or following June 11, 2026 (for larger entities), or December 11, 2026 (for smaller entities) |
Existing business development company (“BDC”) that is not engaged in a continuous offering | At the time of the filing of its first annual report on Form 10-K on or following June 11, 2026 (for larger entities), or December 11, 2026 (for smaller entities) |
Privately offered BDC | On the effective date of the BDC’s filing on Form 10, or the filing of its election to be regulated as a BDC on Form N-54A, on or following June 11, 2026 (for larger entities), or December 11, 2026 (for smaller entities) |
The SEC made the Extension in response to two industry letters requesting additional time for funds to properly adjust their compliance systems in line with the 2023 Names Rule and avoid costs associated with “off-cycle” disclosures, while at the same time balancing the investor benefit of the 2023 Names Rule.
Before the applicable extended compliance dates arrive, it is advisable for funds to take advantage of the additional time granted by the Extension to develop a names rule compliance plan; change fund names and strategies (if warranted); coordinate internally and with third-party vendors; adjust policies and procedures; improve recordkeeping and reporting processes; update applicable disclosures; design/build/test technological systems for trade management, compliance, and recordkeeping functions; and seek board (and if necessary, shareholder) approvals.
SEC Expands Accommodations for Issuers Submitting Draft Registration Statements
By Brian Hirshberg, Anna T. Pinedo, Liz Walsh, and Jennifer Zepralka, Mayer Brown LLP
On March 3, 2025, the Staff of the Division of Corporation Finance of the Securities and Exchange Commission (the “SEC”) announced a new policy, with immediate effect, expanding the accommodations available for issuers that submit draft registration statements for confidential review. The new enhanced accommodations:
- expand the availability of the SEC’s confidential review process for the initial registration of a class of securities under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), to include both Section 12(b) and Section 12(g) registration statements on Forms 10, 20-F, or 40-F;
- permit issuers to submit draft registration statements regardless of how much time has passed since the issuers became subject to the reporting requirements of Section 13(a) or 15(d) of the Exchange Act;
- expand the availability of the confidential review process for a de-SPAC transaction in situations where the SPAC is the surviving entity (i.e., SPAC-on-top structure) as long as the target is eligible to submit a draft registration statement; and
- permit issuers to omit the name of the underwriter(s) from their initial draft registration statement submissions, when otherwise required by Items 501 and 508 of Regulation S-K, provided that they include the name of the underwriter(s) in subsequent submissions and public filings.
The accommodations raise a number of practical and legal considerations and questions that are highlighted in the author’s longer Legal Update.
Prepare for “EDGAR Next”: Transition Began March 24, 2025; SEC Guidance Available
By Marc Leong, Mayer Brown LLP
On March 6, 2025, the Securities and Exchange Commission (“SEC”) issued a press release relating to the enhanced Electronic Data Gathering, Analysis, and Retrieval (“EDGAR”) system (“EDGAR Next”), including useful links to various guidance and resource materials to assist filers and their advisers with the transition. The new EDGAR Filer Management dashboard went live on the SEC’s website on March 24, 2025. Filers can now enroll in EDGAR Next by submitting an amended Form ID, which is the application that individuals or companies complete to obtain EDGAR access credentials.
As discussed in a December 2024 Legal Update, the SEC’s changes to the EDGAR system were issued on September 27, 2024. Enrollment in EDGAR Next will remain open until December 19, 2025. The SEC stated that filers should enroll no later than September 12, 2025, to avoid interruption in the ability to file. To avoid getting locked out from the EDGAR system close to a filing deadline, filers should provide sufficient time to transition to EDGAR Next. More information is available on the EDGAR Next webpage. The SEC also provided links to EDGAR Next resources, including:
- the “How Do I” Guide for EDGAR Next enrollment;
- Frequently Asked Questions about EDGAR Next; and
- EDGAR Next instruction videos on the SEC’s YouTube channel.
PCAOB Publishes Resource for Auditors to Comply with Form AP Requirements Following Deficiencies
By Noah B. Levin, Associate, WilmerHale
In response to what the Public Company Accounting Oversight Board (“PCAOB”) characterized as “a large number” of deficient Form AP filings, the PCAOB published a high-level overview of the form’s requirements. The PCAOB’s emphasis on recurring deficiencies in Form AP filings highlights the nuances involved in hours calculations and hours attribution.
Among the common deficiencies cited by the PCAOB are
- inaccurately reporting whether another accounting firm contributed at least 5 percent of total audit hours; and
- inaccurately reporting the number of accounting firms contributing under 5 percent of total audit hours.
Another accounting firm is considered to have participated in the audit if it (or any of its professionals) is subject to supervision under AS 1201. Both nonaffiliated firms and firms affiliated with the lead firm through a global network can be classified as “other accounting firms.”
The PCAOB emphasized hours calculations and reporting in its publication, reiterating that Form AP requires
- disclosing the names of other audit firms contributing at least 5 percent of the total audit hours along with the percentage of hours these firms contributed to the audit; and
- disclosing the number of firms contributing to the audit not meeting the 5 percent threshold, along with the aggregate percentage of the hours these firms contributed to the audit.
As the PCAOB resource reminds, hours should include time spent on the financial statement audit, interim financial reviews subject to AS 4105, and internal controls audits subject to AS 2201. However, hours spent by the engagement quality reviewer, external specialists, internal auditors, and third parties under the issuer’s control, and time spent auditing entities that the issuer has an equity method investment in, are not calculated as part of the total audit hours.
PCAOB Hosts Open Meeting Discussing QC 1000 Implementation Efforts
By Noah B. Levin, Associate, WilmerHale
The Public Company Accounting Oversight Board (“PCAOB”) hosted an Open Meeting to inform the public about its QC 1000 implementation efforts ahead of QC 1000’s effective date on December 15, 2025.
By the effective date, all registered firms will be required to design their quality control regimes within the framework of QC 1000, regardless of whether these firms audit public companies or not. Audit firms that audit public companies or broker-dealers will be required to design, implement, and operate their quality control regimes within the requirements of QC 1000. They will also need to annually evaluate their quality control systems and report the results on the new Form QC no later than November 30 of each year.
The PCAOB notes that it has engaged with firms to gather feedback on implementation efforts and noted that many are building on the International Standard on Quality Management 1 requirements to develop QC 1000–compliant systems.
To further assist firms, the PCAOB announced several upcoming initiatives:
- Attending small business forums to answer questions, including on April 3 in Chicago and on May 1 in Jersey City.
- Hosting QC 1000 workshops to assist firms with implementation efforts, including one in Washington, DC, on May 13 and another in Dallas at some point in the summer.
- Future publication of guidance materials on the requirements for the monitoring and remediation process that is additive to recently released staff presentations on
- monitoring and remediation requirements;
- engagement deficiencies (including AS 2901), QC observation, and QC deficiencies; and
- performing root cause analysis and designing, implementing, and testing remedial actions.
The PCAOB believes that its outreach, workshops, and guidance materials will ensure audit firms are prepared to comply with QC 1000’s requirements by the December 15 effective date.
