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An update on the rule that helped streamline shareholder communications.
Digital transformation continues to reshape our world and fund communications are no exception. The Securities and Exchange Commission (SEC) supports modernized and enhanced investor disclosures and so adopted SEC Rule 30e-3, which, as of January 1, 2021, allows fund companies to mail a short notice of internet availability of shareholder reports instead of full shareholder reports.
In this update, we will provide an overview of SEC Rule 30e-3, how it has benefited fund firms and investors, and how your firm can maximize the benefits of the rule.
Industry adoption of Rule 30e-3
At this writing:
Below are some key aspects of SEC Rule 30e-3, best practices for funds and frequently asked questions to help your firm maximize the benefits of this new and transformative digital-first rule.
Key aspects of Rule 30e-3
|If only one fund is on the notice, include a URL that takes the shareholder directly to the documents.|
|For notices with multiple funds, leverage a landing page to direct shareholders to reports and portfolio holdings with one click. The landing page should host the annual and semi-annual report and fund holdings for the 1st and 3rd quarters.|
|Ensure each URL is short and intuitive, keep the character count low and try to avoid the use of special characters and capitalization.|
|List fund names specific to the investor’s holdings so that they match the naming convention on the website; do not use generic names.|
|Include a QR code; this helps avoid typos and makes it fast and easy for shareholders to access websites and/or documents.|
The New York Stock Exchange fee schedule was updated to include Notice and Access fees for 30e-3. Notice and Access fees have pricing tiers and cannot be charged on any accounts for which a fund pays a preference management fee.
Broadridge offers a comprehensive solution that enables the capture of investor distribution preferences through a centralized website and, working with banks, brokers and mutual funds, it also allows for easy enrollment in e-delivery. Use of QR codes simplifies the election process for shareholders by routing them directly to the website.
For additional information on best practices, the ruling and how it may impact your business, please contact us below.