ICANN Approves Historic Plan for New Top Level Domains

By David M. Silverman and Catherine E. Maxson

At its meeting in Singapore this week, the Internet Corporation for Assigned Names and Numbers (ICANN) approved a historic plan to allow unlimited numbers of generic top-level domains (gTLDs) to join the ranks of .com, .org, .net, and .biz. Currently, there are only 22 such gTLDs plus the country code TLDs (ccTLDs) such as .us and .ca (Canada).

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SEC Open Meeting Today To Approve VC Fund Exemption To Adviser Act Registration

The SEC is having a meeting today at which it will approve rules defining which types of venture capital funds will be exempt from having to register as investment advisers under the Investment Advisers Act.

From the proposed rules:

As described in more detail below, we propose to define a venture capital fund as a private fund that: (i) invests in equity securities of private companies in order to provide operating and business expansion capital (i.e., “qualifying portfolio companies,” which are discussed below) and at least 80 percent of each company’s securities owned by the fund were acquired directly from the qualifying portfolio company; (ii) directly, or through its investment advisers, offers or provides significant managerial assistance to, or controls, the qualifying portfolio company; (iii) does not borrow or otherwise incur leverage (other than limited short term borrowing); (iv) does not offer its investors redemption or other similar liquidity rights except in extraordinary circumstances; (v) represents itself as a venture capital fund to investors; and (vi) is not registered under the Investment Company Act and has not elected to be treated as a BDC.

See also this WSJ article.

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Spotlight: Broadband Networks + Health Care

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The Latest on the Taxation of Carried Interests

By Joe Wallin and Michael Gentile

A proposal to change the tax treatment of carried interests was included in the Obama Administration’s 2012 Revenue Proposals. Unlike proposals introduced by the Treasury in the past, which would have been applicable to all partnerships, this iteration is limited to carried interests in an “investment partnership.” The proposal defines an “investment partnership” as a partnership in which a majority of its assets are investment-type assets (i.e., certain securities, real estate, interests in partnerships, commodities, cash or cash equivalents, or derivative contracts with respect to those assets) and over half of the contributed capital is from partners in whose hands the partnership interests constitute property held for the production of income. The operative rules of the Treasury’s proposal are similar to those of the carried interest legislation introduced by Max Baucus on September 16, 2010 (which was not enacted), and would significantly change the way in which carried interests are taxed.

The proposal introduced by the Treasury.

The Treasury’s explanation of this proposal.

The Administration has been proposing to raise the tax on carried interest over the past several years. Given that history, it seems unlikely that this latest proposal will become law. However, perhaps passage now is more likely than in the past because of the narrower scope of the proposal and the ongoing debt limit negotiations.

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NY Court of Appeals Adopts Broad View of Section 230 Immunity

Court dismisses defamation claim based on user’s post and host’s added content.

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