SEC Reverts Governance Standards for Regulated Funds
Technical amendments remove disinterested director thresholds and chairman requirements following a court vacatur.
The Securities and Exchange Commission is updating the Code of Federal Regulations to align fund governance standards with a previous Federal court vacatur. The change applies to registered investment companies and business development companies, collectively known as regulated funds.
These technical amendments remove two specific requirements adopted in 2004: the mandate that a disinterested director serve as board chairman and the requirement that at least 75% of directors be disinterested.
Regulated funds must now return to the previous standard, which requires a simple majority of directors to be disinterested. This reversion affects funds that rely on various exemptive rules under the Investment Company Act.
Other provisions of rule 0-1(a)(7) remain unchanged. The SEC implemented these updates to reflect a court ruling that the 2004 amendments violated the Administrative Procedure Act.
The amendments took effect on August 6, 2026.