Recent Court Rulings Shape Strategies for Closed-End Funds in Shareholder Activism Context

Recent decisions from the U.S. Court of Appeals for the Second Circuit and the U.S. District Court for the Southern District of New York have brought attention to anti-takeover strategies employed by registered closed-end investment companies amidst shareholder activism campaigns. The cases emphasize that any attempt to alter the foundational principle of “one share, one vote” under Section 18(i) of the Investment Company Act of 1940 is impermissible, and consequently, investment companies are urged to explore alternative defensive measures in response to potential hostile shareholder actions.