No-Action Relief Excludes Tax Blocker Entity from Definition of Investment Company

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On August 30, 2012, the SEC’s Division of Investment Management said that it would not recommend enforcement action if an oil and natural gas company implementing an alternative capital structure did not register as an investment company.

LINN Energy, LLC (“LINN”) created a structure to enable tax-exempt and foreign entities to invest indirectly in LINN through a wholly-owned subsidiary, LinnCo, LLC (“LinnCo”), thus providing more favorable tax treatment than with a direct investment. LinnCo, however, may be an investment company as defined in sections 3(a)(1)(A) and 3(a)(1)(C) of the 1940 Act, because its sole assets will consist of investment securities, that is, interests in LINN, and cash.

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