The Securities and Exchange Commission (SEC) recently announced a six-month delay in compliance dates for the Investment Company Act's “Names Rule.” The extension aims to balance the investor benefit of the amended Names Rule framework with the additional time needed for funds for proper amendment. 

The delay gives private market firms, asset managers, and investors more time to align their fund strategies with their names. It’ll ease immediate compliance costs but prolong uncertainty and regulatory adjustments critical for addressing concerns like greenwashing. 

Let’s explore the compliance delay in the Names Rule in detail. 

About the Investment Company Act “Names Rule”

First adopted in 2001 under Section 35d-1 of the Investment Company Act of 1940, the Names Rule is a set of rules or a framework that addresses fund names that are likely to mislead investors about the fund’s investment objectives. Then, in September 2023, the SEC updated the rules of the framework with new requirements, requiring funds to invest at least 80% of their assets in line with the name’s implication. When the SEC updated the framework, it gave funds the deadline of December 11, 2025 (for funds with at least $1 billion net assets) and June 11, 2026 (for funds with less than $1 billion net assets). However, in a recent announcement, the SEC delayed compliance by six months. 

“The extension is designed to balance the investor benefit of the amended Names Rule framework with funds’ needs for additional time to implement the amendments properly, develop and finalize their compliance systems, and test their compliance plans,” said SEC. 

Key aspects of the Names Rule delay

• The new compliance dates for the Names Rule are:
   
  • June 11, 2026, for larger fund groups with net assets of $1 billion or more.
  • December 2026 for smaller fund groups with net assets of less than $1 billion. 

• The SEC matched the compliance dates for the Names Rule with the timing of specific annual disclosure and reporting requirements linked to the end of a fund's fiscal year to assist funds in avoiding extra expenses when implementing the Names Rule modifications.
• Acting Chair of the SEC March Uyeda mentioned at a recent conference that the Commission would consider extending compliance dates for other recently adopted rules as well. 

While you’re here…

Professionals in private markets and asset management firms use Auquan's AI agents to automate research and monitoring for deal sourcing, borrow screens and due diligence, risk monitoring, sustainability, and compliance workflows.

Using advanced AI techniques, Auquan generates material insights on any company or issuer worldwide — public or private — instantaneously, tailored for your workflow. 

Let's explore how Auquan can help you and your team eliminate tedious and time-consuming manual data work and focus more on what you do best.