DEFA14A: BlackRock Funds Face Legal Setback: Maryland Control Share Act Invalidation Impacts Shareholder Meetings

A U.S. District Court ruling against the application of the Maryland Control Share Acquisition Act to certain BlackRock-sponsored funds will affect the funds' 2024 and 2025 annual shareholder meetings.

Summary

• On December 5, 2023, a U.S. District Court ruled against certain BlackRock-sponsored funds regarding the application of the Maryland Control Share Acquisition Act.
• The court's decision rescinds resolutions by sixteen closed-end funds, including some BlackRock funds, that had opted into the Maryland Control Share Acquisition Act.
• The court declared that the funds' elections violate Section 18(i) of the 1940 Act.
• BlackRock has appealed the district court's decision to the U.S. Court of Appeals for the Second Circuit.
• As a result of the ruling, the Maryland Control Share Acquisition Act will not apply to each Fund's 2024 and 2025 annual shareholder meetings.
• The Funds' definitive proxy statement for the 2024 Annual Meeting of Shareholders has not yet been filed with the SEC.
• Shareholders are urged to read the notice of annual meeting, definitive proxy statement, and any other relevant documents when available.
• These documents will contain important information about the fund and the upcoming annual meeting of shareholders.
• Shareholders can obtain additional copies of these documents from the Funds' proxy solicitor or on the SEC's website.
• The Funds' Directors/Trustees, nominees for Director/Trustee, and executive officers are participants in connection with the 2024 Annual Meeting of Shareholders.

Sentiment

Score: 4

Explanation: The document describes a legal setback for BlackRock funds, which is a negative development. However, the impact on shareholders is mitigated by the availability of information and the ongoing appeal process.

Positives

• Shareholders will receive important information about the fund and the upcoming annual meeting of shareholders in the definitive proxy statement.
• Shareholders can obtain additional copies of these documents from the Funds' proxy solicitor or on the SEC's website.

Negatives

• A U.S. District Court ruled against certain BlackRock-sponsored funds regarding the application of the Maryland Control Share Acquisition Act.
• The court declared that the funds' elections violate Section 18(i) of the 1940 Act.

Risks

• The outcome of BlackRock's appeal to the U.S. Court of Appeals for the Second Circuit is uncertain.
• The legal challenge could potentially impact the governance structure of the affected funds.

Future Outlook

The application of the Maryland Control Share Acquisition Act to the funds will depend on the outcome of the appeal to the U.S. Court of Appeals for the Second Circuit.

Industry Context

This legal challenge highlights the complexities of fund governance and the potential impact of state laws on investment companies. Other fund managers with funds domiciled in Maryland may be affected by the outcome of this case.

Comparison to Industry Standards

• It is difficult to compare this situation directly to industry standards as it involves a specific legal challenge related to Maryland law.
• However, other fund managers with funds domiciled in Maryland may be affected by the outcome of this case.

Legal Proceedings

• The U.S. District Court for the Southern District of New York granted judgment in favor of a plaintiff's claim for rescission of resolutions by sixteen closed-end funds that opted in to elect to be subject to the Maryland Control Share Acquisition Act.
• The funds have appealed the district court's decision to the U.S. Court of Appeals for the Second Circuit.

Stakeholder Impact

• Shareholders are urged to read the notice of annual meeting, definitive proxy statement, and any other relevant documents when available.
• The Maryland Control Share Acquisition Act will not apply to each Fund's 2024 and 2025 annual shareholder meetings.

Next Steps

• BlackRock will continue with the appeal process to the U.S. Court of Appeals for the Second Circuit.
• The Funds will file the definitive proxy statement for the 2024 Annual Meeting of Shareholders with the SEC.

Key Dates

Keywords

BlackRock, Maryland Control Share Acquisition Act, Proxy Statement, Shareholder Meeting, Closed-End Funds, Litigation, SEC, Funds