SEC Proposal for Interval Funds and Other Closed-End Funds: Key Changes for Fund Managers

Background

An interval fund is a registered closed-end fund that makes periodic repurchase offers to shareholders at net asset value (NAV) under Rule 23c-3. The interval at which those offers occur is established pursuant to the fund’s fundamental policy. This proposal primarily affects interval funds, but it also reaches other registered closed-end funds and business development companies (BDCs) seeking to offer multiple share classes,, and the advisers to these funds.

On September 30, 2026, the Securities and Exchange Commission (SEC) proposed amendments to the rules governing interval funds and other regulated closed-end funds. If adopted, these proposed amendments could bring meaningful change to interval funds, enhancing their usefulness and making them more attractive vehicles for investors.

Key Takeaways

• The SEC proposed amendments to Rule 23c-3 on September 30, 2026, to modernize how interval funds operate.
• The proposal would add a monthly repurchase interval, so interval funds would no longer need exemptive relief to make monthly repurchase offers. An interval fund could also defer its first repurchase offer for up to two years after its registration statement becomes effective.
• A principles-based liquidity requirement would replace the rule that interval funds hold liquid assets equal to at least 100% of each repurchase offer amount.
• Interval funds could make discretionary repurchase offers every year instead of every two years, and the proposal clarifies that the five percent to 25% range would apply only to repurchases under the fund’s fundamental policy.
• The SEC proposal lets unlisted regulated closed-end funds and BDCs offer multiple share classes without receiving individual exemptive orders.
• Deferred sales loads could be deducted from repurchase proceeds, and the repurchase pricing date and treatment of oversubscribed offers would be simplified.
• New disclosure requirements would apply to all regulated closed-end funds, not just interval funds.

What Changes Does the SEC Interval Fund Proposal Include?

The following are the more notable proposed amendments.

Monthly Repurchase Offers Without Exemptive Relief

Rule 23c-3 currently allows interval funds to make repurchase offers every three, six, or 12 months. The proposal would add a monthly option. Today, interval funds need to apply for exemptive relief to make monthly repurchase offers. This change could provide additional liquidity to investors concerned about the limited liquidity of interval funds. However, the SEC would need to also reduce the 5% minimum repurchase offer amount for a monthly repurchase offer to be practical.

A Longer Wait for the First Repurchase Offer

According to Rule 23c-3(a)(7), interval funds are required to make their initial repurchase offer after two intervals from the effective date of its registration statement. For example, an interval fund that selected three-month repurchase intervals would need to have its first repurchase offering six months after the effective date. Under the proposal, an interval fund may elect to defer the initial repurchase offer up to two years from the effective date of the registration statement or the shareholder vote adopting the fundamental policy. This potential change could prove beneficial to interval funds investing in private equity, venture capital, or other investments that require a longer timeframe to monetize.

A Principle-Based Liquidity Requirement

Rule 23c-3(b)(10) requires interval funds to hold between the repurchase notification and the repurchase pricing date, at least 100% of the repurchase offer amount in assets that can be sold or disposed of in the ordinary course of business at approximately the price at which the interval fund has valued the investment, within a period equal to the period between a repurchase request deadline and the repurchase payment deadline or of assets that mature by the next repurchase payment deadline. The SEC proposes to replace this requirement with a more principles-based approach that would instead require interval funds to manage the portfolio’s liquidity to satisfy repurchase requests without requiring a sale or disposition of investments at a price that deviates significantly from the value of those investments. This should allow the interval funds more flexibility in managing their portfolios during the offering periods.

Annual Discretionary Repurchase Offers

For discretionary repurchase offers of interval fund shares, the current rule, Rule 23c-3(a)(3), requires the repurchase amount to be between five and 25%. The proposal clarifies that this requirement would only apply to repurchases made pursuant to fundamental policy. For discretionary repurchases, the repurchase amount can be any amount of the interval fund’s shares. Additionally, the proposed amendment would expand the interval fund’s ability to make discretionary repurchases every year, rather than every two years under the current rule. This proposed amendment provides the boards of interval funds with greater flexibility in providing additional liquidity to shareholders. Non-interval funds would also be subject to the proposed amendments if they elect to offer a discretionary repurchase.

Deferred Sales Loads and Simplified Repurchase Mechanics

The proposal would permit funds to deduct deferred sales loads from repurchase proceeds. It would also simplify the repurchase pricing date and the treatment of oversubscribed repurchase offers, thereby reducing operational complexity for fund managers and their service providers.

Multiple Share Classes Without Exemptive Orders

The proposed changes to Rule 18f-3 would allow interval funds, other regulated non-listed closed-end funds, and BDCs to have multiple share class structures. These fund structures are currently permitted to have only a single class of shares. This amendment would allow interval funds and other unlisted regulated closed-end funds to offer shares through multiple classes with different fees and/or distribution structures. The SEC has issued numerous exemptive orders to various unlisted regulated closed-end funds, allowing them to establish multiple share classes over the years. This amendment would codify these multiple-share-class exemptive orders.

What Happens to Existing Exemptive Orders?

If adopted, nearly all existing multiple-share-class and monthly-repurchase exemptive orders would be rescinded. Funds currently relying on those orders would need to transition to the new rules, so the proposal affects structures already operating in the marketplace, not just future launches.

Disclosure Changes Across All Regulated Closed-End Funds

The proposed disclosure changes would apply to all regulated closed-end funds, not merely interval funds. They include:

• New fee and expense disclosures in shareholder reports
• A new prospectus legend
• An increased amount used in the prospectus expense example
• Updates to Forms N-2 and N-CEN

What Should Fund Managers Consider?

These proposed amendments would modernize the interval fund framework by providing greater flexibility while maintaining investor protection. Since the proposal would also codify the multiple-share-class exemptive orders previously issued to interval funds and other regulated closed-end funds, they would no longer need to incur the costs and time delays of obtaining an exemptive order to use a multiple-share-class structure. BDC’s and other closed-end fund sponsors should evaluate the share-class and disclosure provisions.

What Happens Next?

The SEC is currently accepting comments on the proposed amendments. Comments are due December 4, 2026. After the comment period closes, the SEC can revise the proposal before adopting the final rule. The proposal details compliance timing. It proposes a one-year compliance period following the effective date of a final rule, along with a one-year wind-down period before existing exemptive orders are rescinded. Fund managers should build these timelines into their planning now, particularly if they rely on exemptive orders today.

Interval fund managers and advisers should begin preparing now. That work may include:

• Revisiting Rule 38a-1 compliance policies and procedures
• Updating Forms N-2 and N-CEN disclosures
• Evaluating share-class structures
• Assessing the effect of changes to repurchase and liquidity practices
• Considering whether to submit a comment letter

EisnerAmper’s Asset Management team can help you assess those effects and prepare for the changes. Contact our team to discuss your fund’s next steps.

This article was prepared with AI assistance and edited and enhanced by EisnerAmper professionals for accuracy and completeness. All technical content, analysis, and recommendations reflect the knowledge of our team.