Capital markets lawyers and bankers have been trained to
require issuers offering securities in the US to represent that
they are not investment companies under the US Investment
Company Act of 1940. So how have non-US investment companies
recently tapped the US market?
First a bit of background. In a nutshell, the Act applies to
any entity that either holds itself out as engaging primarily
in investing, reinvesting or trading in securities (the
subjective test) or that fails certain numeric tests relating
to the nature of its assets and income (the objective
If a company is deemed an investment company under either
test, absent an exemption, it is required to register under the
Act and face: restrictions on transactions with affiliates,
time-consuming recordkeeping requirements, restrictions on the
classes of securities which...