ARCC: Shareholder Suit Challenges Adviser Fees

August 24, 2026

On August 21, 2026, Ares Capital Corporation filed with the Securities and Exchange Commission a shareholder derivative complaint challenging fees paid to its external adviser, Ares Capital Management LLC.

The complaint was filed August 14 in the U.S. District Court for the District of Maryland. Ares Capital is named as a nominal defendant, while the adviser is the defendant. The plaintiff alleges that the advisory arrangement violates the adviser’s fiduciary duty under Section 36(b) of the Investment Company Act.

The complaint says ARCC paid the adviser ﹩773 million in 2025, consisting of a ﹩425 million base management fee and a ﹩348 million income-based fee. It alleges that the fee structure rewards leverage and accrued payment-in-kind income without requiring repayment of fees if that income later proves uncollectible. It also alleges conflicts tied to the adviser’s role in valuing illiquid investments.

Why it matters

These are allegations, not judicial findings. The complaint does not establish liability or a payable award. It seeks damages on ARCC’s behalf, including repayment of allegedly excessive fees received from one year before the lawsuit through trial, plus possible rescission or rescissory damages and prospective injunctive relief.

The immediate shareholder issue is added legal cost and scrutiny of ARCC’s fee agreement, valuation governance and treatment of non-cash income. Any recovery in a derivative action would generally belong to ARCC rather than be paid directly to the plaintiff as an individual shareholder.

Investors should watch for the adviser’s response, any motion to dismiss, and later court rulings. The SEC filing contains the complaint but no response from ARCC or the adviser.

Sources

Disclosure: This article is general information, not personalized investment advice. Fly High Investing may hold securities discussed in this article.