New Qualified Opportunity Fund (“QOF”) Regulations
On Tuesday, March 12, 2019, new QOF regulations were received by the Office of Information and Regulatory Affairs (“OIRA”) which is part of the Office of Management and Budget. Investors and fund managers are hopeful that these new regulations will relate to the operation of QOFs and answer many of the questions most professionals and industry participants have had recently. While the first tranche of regulations was released on October 22, 2018, many questions were left unanswered regarding the actual operation of QOFs as well as investor exits from QOFs down the road. The first set of proposed regulations focused mostly on the formation of QOFs. With the recent government shutdown and a delay in a public hearing on this topic, industry participants have delayed engaging in QOF transactions due to the uncertainty surrounding the law.
The OIRA is responsible for the review of draft proposed and final regulations under Executive Order 12866. Its role in the rulemaking process includes incorporating public comments, considering alternatives to rulemaking, and analyzing both costs and benefits. The timeline of the ultimate release of the new proposed regulations is uncertain but it can be expected to occur in the next few weeks.