How does an issuer demonstrate its bona fide intent?
The determination as to whether an issuer has the requisite non-investment intent to fit within the transient investment company exemption will be based on all the relevant facts and circumstances. Certainly an issuer should refrain from actively investing and reinvesting in securities and holding itself out as being in the business of investing, reinvesting and trading in securities for the period during which it is relying upon the transient investment company exemption. In addition, the issuer’s board of directors must pass a resolution (see the example set forth in Appendix A to this briefing) expressing such non-investment intent. This resolution should be contemporaneously recorded in the issuer’s minute books or comparable documents.
