Zscaler, Inc., a leading cloud security company, has filed an application with the U.S. Securities and Exchange Commission (SEC) seeking an order under Section 3(b)(2) of the Investment Company Act of 1940. The order would confirm Zscaler's status as a company primarily engaged in non-investment business activities, specifically providing cloud security solutions. The application, filed on September 13, 2024, comes as Zscaler's R&D expenses have decreased relative to its sales and marketing costs, potentially affecting its ability to meet the requirements of Rule 3a-8, which exempts companies from being considered investment companies if R&D expenses are a 'substantial' part of operating expenses. Zscaler's application outlines its business operations, historical reliance on Rule 3a-8, and the need for liquid...Show More

Zscaler, Inc., a leading cloud security company, has filed an application with the U.S. Securities and Exchange Commission (SEC) seeking an order under Section 3(b)(2) of the Investment Company Act of 1940. The order would confirm Zscaler's status as a company primarily engaged in non-investment business activities, specifically providing cloud security solutions. The application, filed on September 13, 2024, comes as Zscaler's R&D expenses have decreased relative to its sales and marketing costs, potentially affecting its ability to meet the requirements of Rule 3a-8, which exempts companies from being considered investment companies if R&D expenses are a 'substantial' part of operating expenses. Zscaler's application outlines its business operations, historical reliance on Rule 3a-8, and the need for liquid capital to finance operations and R&D in the competitive cloud computing industry. The company asserts that its investment securities, which are primarily Capital Preservation Instruments, are necessary for managing cash reserves and are not held for speculative purposes. Zscaler's application includes a detailed discussion of its business model, financials, and the reasons why it should not be considered an investment company under the 1940 Act.