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.121 UIT offering costs
Publication date: 27 Jul 2018
us Investment companies ARM 9652.121
In a 1995 no-action letter, the SEC permitted sponsors of unit investment trusts (UITs) to recover organization and offering costs directly from the trust upon commencement of operations. In the context of a UIT, "offering" costs largely consist of federal and state registration fees.
UITs generally are of two types "non-expandable," where all units are sold in a single offering, and "expandable," where additional units may be sold after the date of initial offering. In some cases, even though the "expansion" period may extend over several years, registration costs for the maximum potential units issuable are required to be paid on the date of the initial offering.
AAG-INV 8.35 states that offering costs should be charged to paid-in capital on a pro rata basis as the units or shares are issued or sold by the trust. Offering costs that have not yet been charged to paid-in capital should be written off when it is no longer probable that the shares to which the offering costs relate will be issued. Offering costs that remain unamortized at the end of the year should be reviewed for impairment.
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