Monroe Capital Corporation, et al.; Notice of Application, 57596-57601 [2014-22792]
Download as PDF
<![CDATA[
mstockstill on DSK4VPTVN1PROD with NOTICES
57596
Federal Register / Vol. 79, No. 186 / Thursday, September 25, 2014 / Notices
review these projects and, if
appropriate, develop and implement a
risk mitigation plan. Examples of DURC
projects involving more than one
institution include cases where the
DURC is a collaboration between PIs at
different institutions or when the DURC
is undertaken by a single PI who
maintains laboratories at more than one
institution. Comments were requested
regarding whether each institution
participating in a multi-site DURC
project should have oversight of their
portion of the projects and, if DURC is
being conducted at their institution,
develop and implement their own risk
mitigation plans, or whether the
primary institution should have the
responsibility for meeting the
requirements for oversight of DURC.
Twelve comments were received
related to the oversight of DURC taking
place at multiple institutions. Seven of
the comments expressed the view that
each institution conducting DURC
should be responsible for the
assessment of its research for DURC
potential, and, in cases where DURC is
determined, develop and implement a
risk mitigation plan. Comments differed,
however, on how institutions should
work together to coordinate the
oversight responsibilities of the DURC.
Two comments suggested that in cases
of multiple PIs (and their institutions)
collaborating on a single DURC project,
the institutions of the collaborating
investigators should report any findings
of DURC to a single, primary institution.
Conversely, another comment stated
that DURC assessment should be a
responsibility of the primary or lead
institution in the DURC collaboration,
but that the individual collaborating
institutions should be responsible for
risk mitigation plan development and
implementation of their portion of the
project. Some (five) of the comments
were concerned with how differences in
institutional DURC assessments and
mitigation plans should be handled,
how these differences are arbitrated, and
how the risk mitigation plan(s) should
be implemented in cases of differing
institutional resources and capabilities.
The oversight of research that falls
within the scope and applicability of the
final Policy should be consistent,
regardless of whether the research is
undertaken by a single investigator at a
single institution, by a single
investigator holding multiple research
positions at different institutions, or by
multiple investigators collaborating
across institutions. When DURC
research is undertaken at multiple
institutions, these institutions should
work together to ensure that DURC
oversight, including the DURC reviews
VerDate Sep<11>2014
17:25 Sep 24, 2014
Jkt 232001
and any resulting risk mitigation plans,
is implemented consistently across the
collaborating entities. Consequently, in
the final Policy, the note at the
conclusion of Section 7.2 includes
revisions to clarify that in the case of
DURC collaborations involving multiple
institutions, the primary institution (i.e.,
the institution in receipt of the grant or
contract from the USG funding agency)
is responsible for notifying the funding
agency of research that falls within the
scope of the Policy and, if that research
is determined to be DURC, providing
copies of each collaborating institution’s
risk mitigation plan. Furthermore, the
primary institution should ensure that
DURC oversight is consistently applied
by all entities participating in the
collaboration.
The final Policy includes an
additional note in this section regarding
cases in which a Federal department or
agency simply passes through funding
from another Federal department or
agency to support life sciences research
at an institution that conducts or
sponsors research involving any of the
agents listed in Section 6.2.1. In such
cases, the agency originally providing
the funding shall be considered the USG
funding agency, and the ultimate
recipient of the funds shall be
considered the institution, and
respectively shall fulfill the
requirements expected of each under
this Policy.
Section 7.3. Responsibilities of USG
Funding Agencies
In order to facilitate timely
finalization of risk mitigation plans
drafted by the IRE (per Section 7.2.B.v)
and submitted by institutions (per
Section 7.2.B.vi), the final Policy for
Institutional DURC Oversight requires
the appropriate USG agencies to provide
an initial response to institutions within
30 calendar days and finalize the plan
within 60 calendar days of receipt of the
draft plan. This change is, in part, due
to two comments received that
suggested a specified time frame for
USG funding agencies to respond.
Section 8. Resources for Institutional
Oversight of DURC
The final Policy contains no revisions
to Section 8. However, as referenced in
Section III of this Notice, Section 8.A of
the Policy describes an implementation
guide (i.e., a ‘‘compendium of tools’’) for
use with both the Policy for Institutional
DURC Oversight and the March 2012
DURC Policy. Comments were requested
on the sufficiency of the tools and
guidance material, and approximately
one-third of the 26 comments received
indicated the list to be sufficient.
PO 00000
Frm 00094
Fmt 4703
Sfmt 4703
However, many more comments
included suggestions of additional tools
and how tools should be developed.
These suggestions include provision of
real or hypothetical case studies
illustrating the DURC assessment
process, provision of example or
template risk mitigation plans, and
additional guidance for interpreting the
seven experimental effects enumerated
in the Policy. Comments received in
response to the proposed Policy were
helpful in developing and revising the
guide’s components, including: A tool
to assist PIs and IREs in assessing the
applicability of the listed experimental
effects; points to consider in the
assessment of risks and benefits;
guidance on developing a risk
mitigation plan for IRE-identified
DURC; and guidance regarding the
responsible communication of DURC.
The compendium of implementation
tools is titled Tools for the
Identification, Assessment,
Management, and Responsible
Communication of Dual Use Research of
Concern: Companion Guide to the USG
Policies for Oversight of Life Sciences
Dual Use Research of Concern
(Companion Guide), and is posted on
the U.S. Department of Health and
Human Services Science Safety Security
(S3) Web site: https://www.phe.gov/s3/
dualuse. Use of the Companion Guide
by PIs, institutions, and Institutional
Review Entities (IREs) is, however, not
a requirement of the Policy for
Institutional DURC Oversight or the
March 2012 DURC Policy.
Cristin A. Dorgelo,
Chief of Staff, Office of Science and
Technology Policy.
[FR Doc. 2014–22770 Filed 9–24–14; 8:45 am]
BILLING CODE 3270–F4–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
31253; File No. 812–14028]
Monroe Capital Corporation, et al.;
Notice of Application
September 19, 2014.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice of application for an
order under sections 17(d), 57(a)(4), and
57(i) of the Investment Company Act of
1940 (the ‘‘Act’’) and rule 17d–1 under
the Act to permit certain joint
transactions otherwise prohibited by
sections 17(d), 57(a)(4), and 57(i) of the
Act and rule 17d–1 under the Act.
AGENCY:
E:\FR\FM\25SEN1.SGM
25SEN1
mstockstill on DSK4VPTVN1PROD with NOTICES
Federal Register / Vol. 79, No. 186 / Thursday, September 25, 2014 / Notices
Summary of Application: Applicants
request an order to permit certain
business development companies
(‘‘BDCs’’) and registered closed-end
management investment companies to
co-invest in portfolio companies with
each other and with affiliated
investment funds.
Applicants: Monroe Capital
Corporation (the ‘‘Company’’), MC
Funding Ltd. (‘‘MC Funding’’), MC
Funding, Ltd. 2013–1 (‘‘2013–1’’),
Monroe Capital Partners Fund, L.P.
(‘‘Monroe SBIC’’), Monroe Capital
Partners Fund II, L.P. (‘‘Monroe SBIC
II’’), Monroe Capital Corporation SBIC,
LP (‘‘MCC SBIC’’), Monroe Capital
Senior Secured Direct Loan Fund LP
(‘‘MCSSDL Fund’’), Monroe Capital
Senior Secured Direct Loan Fund
(Unleveraged) LP (‘‘MCSSDL–U Fund’’),
Monroe FCM Direct Loan Fund LP
(‘‘MFDL Fund’’ and collectively with
MC Funding, 2013–1, Monroe SBIC,
Monroe SBIC II, MCSSDL Fund and
MCSSDL–U Fund, the ‘‘Existing
Affiliated Private Funds’’), Monroe
Capital Management Advisors, LLC
(‘‘MCMA’’), Monroe Capital
Management LLC (‘‘Monroe Collateral
Manager’’), Monroe Capital Partners
Fund Advisors, Inc. (‘‘Monroe SBIC
Adviser’’), Monroe Capital Partners
Fund II Advisors, Inc. (‘‘Monroe SBIC II
Adviser’’ and, collectively with MCMA,
Monroe Collateral Manager, and Monroe
SBIC Adviser, the ‘‘Affiliated
Advisers’’), Monroe Capital Partners
Fund, LLC (‘‘Monroe SBIC General
Partner’’), Monroe Capital Partners Fund
II, LLC (‘‘Monroe SBIC II General
Partner’’), MCC SBIC GP, LLC (‘‘MCC
SBIC General Partner’’), Monroe Capital
Senior Secured Direct Loan Fund LLC
(‘‘MCSSDL Funds General Partner,’’),
and Monroe FCM Direct Loan Fund LLC
(‘‘MFDL Fund General Partner’’), and
Monroe Capital BDC Advisors, LLC
(‘‘BDC Adviser’’).1
DATES: Filing Dates: The application was
filed on April 18, 2012, and amended on
February 27, 2013, June 5, 2013,
November 27, 2013, July 16, 2014, and
September 5, 2014.
Hearing or Notification of Hearing: An
order granting the requested relief will
be issued unless the Commission orders
a hearing. Interested persons may
request a hearing by writing to the
Commission’s Secretary and serving
applicants with a copy of the request,
personally or by mail. Hearing requests
should be received by the Commission
1 All references to the term ‘‘BDC Adviser’’
include successors-in-interest to the BDC Adviser.
A successor-in-interest is limited to an entity that
results from a reorganization into another
jurisdiction or change in the type of business
organization.
VerDate Sep<11>2014
17:25 Sep 24, 2014
Jkt 232001
by 5:30 p.m. on October 14, 2014, and
should be accompanied by proof of
service on applicants, in the form of an
affidavit or, for lawyers, a certificate of
service. Hearing requests should state
the nature of the writer’s interest, the
reason for the request, and the issues
contested. Persons who wish to be
notified of a hearing may request
notification by writing to the
Commission’s Secretary.
ADDRESSES: Secretary, U.S. Securities
and Exchange Commission, 100 F St.
NE., Washington, DC 20549–1090.
Applicants: 311 South Wacker Drive,
Suite 6400, Chicago, IL 60606.
FOR FURTHER INFORMATION CONTACT:
Mark Zaruba, Senior Counsel, at (202)
551–6878 or Mary Kay Frech, Branch
Chief, at (202) 551–6821 (Chief
Counsel’s Office, Division of Investment
Management).
SUPPLEMENTARY INFORMATION: The
following is a summary of the
application. The complete application
may be obtained via the Commission’s
Web site by searching for the file
number, or for an applicant using the
Company name box, at https://
www.sec.gov/search/search.htm or by
calling (202) 551–8090.
Applicants’ Representations
1. The Company is a Maryland
corporation organized as a closed-end
management investment company that
has elected to be regulated as a BDC
under section 54(a) of the Act. The
Company’s Objectives and Strategies 2
are to maximize the total return to
stockholders in the form of current
income and capital appreciation
through investment in primarily senior,
unitranche and junior secured debt of
middle-market companies and, to a
lesser extent, unsecured subordinated
debt and equity investments. A majority
of the directors of the Company are
persons who are not ‘‘interested
persons’’ as defined in section 2(a)(19)
of the Act (‘‘Non-Interested Directors’’).
2. The BDC Adviser is a Delaware
corporation and is wholly owned and
controlled by Theodore L. Koenig. The
BDC Adviser is registered as an
investment adviser under the
Investment Advisers Act of 1940
(‘‘Advisers Act’’) and serves as
investment adviser to the Company. Mr.
Koenig also directly or indirectly owns
2 ‘‘Objectives and Strategies’’ means a Regulated
Fund’s (as defined below) investment objectives
and strategies, as described in the Regulated Fund’s
registration statement on Form N–2, other filings
the Regulated Fund has made with the Commission
under the Securities Act of 1933 (the ‘‘Securities
Act’’), or under the Securities Exchange Act of
1934, and the Regulated Fund’s reports to
shareholders.
PO 00000
Frm 00095
Fmt 4703
Sfmt 4703
57597
a controlling interest in, and serves as
the principal executive officer of, each
of the Affiliated Advisers.
3. MCC SBIC is a Delaware limited
partnership and is licensed to operate as
a small business investment company
(‘‘SBIC’’) by the United States Small
Business Administration (‘‘SBA’’). MCC
SBIC General Partner is a Delaware
limited liability company and serves as
general partner of MCC SBIC. The
Company owns 100 percent of the MCC
SBIC General Partner’s equity interests
and the MCC SBIC General Partner
owns 1 percent of MCC SBIC in the form
of a general partnership interest. The
Company directly owns 99 percent of
MCC SBIC in the form of limited
partnership interests. As a result, the
Company directly or indirectly wholly
owns MCC SBIC. MCC SBIC General
Partner has appointed the BDC Adviser
as the sole investment adviser for MCC
SBIC.
4. MC Funding and 2013–1 are
exempted companies incorporated
under the laws of the Cayman Islands
with limited liability. Monroe Collateral
Manager is a Delaware limited liability
company and is the investment adviser
for MC Funding and 2013–1. Monroe
SBIC and Monroe SBIC II Delaware
limited partnerships and are each
licensed as SBIC by the SBA. Monroe
SBIC General Partner and Monroe SBIC
II General Partner, each a Delaware
limited liability company, are the
general partners of Monroe SBIC and
Monroe SBIC II, respectively, and have
entered into agreements with Monroe
SBIC Adviser and Monroe SBIC II
Adviser, each a Delaware corporation, to
serve as investment adviser for Monroe
SBIC and Monroe SBIC II, respectively.
MCSSDL Fund, MCSSDL–U Fund, and
MFDL Fund are Delaware limited
partnerships. MCSSDL Funds General
Partner, a Delaware limited liability
company, is the general partner of
MCSSDL Fund and MCSSDL–U Fund
and MFDL Fund General Partner, a
Delaware limited liability company, is
the general partner of MFDL Fund.
MCMA, a Delaware limited liability
company, serves as investment adviser
for MCSSDL Fund, MCSSDL–U Fund,
and MFDL Fund under agreements with
MCSSDL Funds General Partner and
MFDL Fund General Partner,
respectively. Each of the Existing
Affiliated Private Funds is excluded
from the definition of investment
company by section 3(c)(1) of the Act.
Each of the Affiliated Advisers is
E:\FR\FM\25SEN1.SGM
25SEN1
57598
Federal Register / Vol. 79, No. 186 / Thursday, September 25, 2014 / Notices
mstockstill on DSK4VPTVN1PROD with NOTICES
registered as an investment adviser
under the Advisers Act.3
5. Applicants seek an order (‘‘Order’’)
to permit each Regulated Fund,4
together with one or more Regulated
Funds and/or Affiliated Private Funds 5
to participate in the same investment
opportunities through a co-investment
program where such participation
would otherwise be prohibited under
sections 17(d) or 57(a)(4) and rule 17d–
1 by (a) co-investing with each other in
securities issued by issuers in private
placement transactions in which an
Adviser negotiates terms in addition to
price; 6 and (b) making additional
investments in securities of such
issuers, including through the exercise
of warrants, conversion privileges, and
other rights to purchase securities of the
issuers (‘‘Follow-On Investments’’). ‘‘CoInvestment Transaction’’ means any
transaction in which a Regulated Fund
(or its Wholly-Owned Investment Sub,
as defined below) participated together
with one or more other Regulated Funds
and/or one or more Affiliated Private
Funds in reliance on the requested
Order. ‘‘Potential Co-Investment
Transaction’’ means any investment
opportunity in which a Regulated Fund
(or its Wholly-Owned Investment Sub)
could not participate together with one
or more Affiliated Private Funds and/or
one or more other Regulated Funds
without obtaining and relying on the
Order.7
6. Applicants state that a Regulated
Fund may, from time to time, form one
or more Wholly-Owned Investment
3 MCMA has filed a Form ADV with the
Commission. Monroe Collateral Manager, Monroe
SBIC Adviser and Monroe SBIC II Adviser are each
investment advisers registered under the Advisers
Act because they are relying advisers of MCMA.
4 ‘‘Regulated Funds’’ means the Company and the
Future Regulated Funds. ‘‘Future Regulated Fund’’
means a closed-end management investment
company (a) that is registered under the Act or has
elected to be regulated as a BDC, (b) whose
investment adviser is an Adviser, and (c) that
intends to participate in the Co-Investment Program
(as defined below). ‘‘Adviser’’ means (a) the BDC
Adviser, (b) an Affiliated Adviser, or (c) any
investment adviser that controls, is controlled by or
is under common control with the BDC Adviser and
is registered as an investment adviser under the
Advisers Act.
5 ‘‘Affiliated Private Fund’’ means any Existing
Affiliated Private Fund or any entity (a) whose
investment adviser is an Adviser, (b) that would be
an investment company but for section 3(c)(1) or
3(c)(7) of the Act, and (c) that intends to participate
in Co-Investment Program.
6 The term ‘‘private placement transactions’’
means transactions in which the offer and sale of
securities by the issuer are exempt from registration
under the Securities Act.
7 All existing entities that currently intend to rely
upon the requested Order have been named as
applicants. Any other existing or future entity that
subsequently relies on the Order will comply with
the terms and conditions of the application.
VerDate Sep<11>2014
17:25 Sep 24, 2014
Jkt 232001
Subs.8 Such a subsidiary would be
prohibited from investing in a CoInvestment Transaction with any other
Regulated Fund or Affiliated Private
Fund because it would be a company
controlled by a Regulated Fund for
purposes of sections 17(d) or 57(a)(4)
and rule 17d–1. Applicants request that
each Wholly-Owned Investment Sub be
permitted to participate in CoInvestment Transactions in lieu of the
Regulated Fund and that the WhollyOwned Investment Sub’s participation
in any such transaction be treated, for
purposes of the requested Order, as
though the Regulated Fund were
participating directly. Applicants
represent that this treatment is justified
because a Wholly-Owned Investment
Sub would have no purpose other than
serving as a holding vehicle for the
Regulated Fund’s investments and,
therefore, no conflicts of interest could
arise between the Regulated Fund and
the Wholly-Owned Investment Sub. The
Regulated Fund’s board of directors (for
any Regulated Fund, the ‘‘Board’’)
would make all relevant determinations
under the conditions with regard to a
Wholly-Owned Investment Sub’s
participation in a Co-Investment
Transaction, and the Regulated Fund’s
Board would be informed of, and take
into consideration, any proposed use of
a Wholly-Owned Investment Sub in the
Regulated Fund’s place. If the Regulated
Fund proposes to participate in the
same Co-Investment Transaction with
any of its Wholly-Owned Investment
Subs, the Board will also be informed
of, and take into consideration, the
relative participation of the Regulated
Fund and the Wholly-Owned
Investment Sub. MCC SBIC is a WhollyOwned Investment Sub and SBIC
Subsidiary of the Company.
7. When considering Potential CoInvestment Transactions for any
Regulated Fund, the BDC Adviser will
consider only the Objectives and
8 The term ‘‘Wholly-Owned Investment Sub’’
means an entity (i) that is wholly-owned by a
Regulated Fund (with the Regulated Fund at all
times holding, directly or indirectly, 100% of the
voting and economic interests); (ii) whose sole
business purpose is to hold one or more
investments on behalf of such Regulated Fund (and,
in the case of an SBIC Subsidiary, maintain a
license under the SBA Act and issue debentures
guaranteed by the SBA); (iii) with respect to which
the Regulated Fund’s board of directors (‘‘Board’’)
has the sole authority to make all determinations
with respect to the entity’s participation under the
conditions of the application; and (iv) that would
be an investment company but for section 3(c)(1) or
3(c)(7) of the Act. ‘‘SBIC Subsidiary’’ means an
entity that is licensed by the SBA to operate under
the Small Business Investment Act of 1958 (the
‘‘SBA Act’’) as a small business investment
company. An SBIC Subsidiary may be a WhollyOwned Investment Sub if it satisfies the conditions
in this definition.
PO 00000
Frm 00096
Fmt 4703
Sfmt 4703
Strategies, investment policies,
investment positions, capital available
for investment (‘‘Available Capital’’),9
and other pertinent factors applicable to
that Regulated Fund. The BDC Adviser
expects that any portfolio company that
is an appropriate investment for a
Regulated Fund should also be an
appropriate investment for one or more
other Regulated Funds and/or one or
more Affiliated Private Funds, with
certain exceptions based on Available
Capital or diversification.10
8. Other than pro rata dispositions
and Follow-On Investments as provided
in conditions 7 and 8, and after making
the determinations required in
conditions 1 and 2(a), the Adviser will
present each Potential Co-Investment
Transaction and the proposed allocation
to the directors of the Board eligible to
vote under section 57(o) of the Act
(‘‘Eligible Directors’’), and the ‘‘required
majority,’’ as defined in section 57(o) of
the Act (‘‘Required Majority’’) will
approve each Co-Investment
Transaction prior to any investment by
the participating Regulated Fund.11
9. With respect to the pro rata
dispositions and Follow-On Investments
provided in conditions 7 and 8, a
Regulated Fund may participate in a pro
rata disposition or Follow-On
Investment without obtaining prior
approval of the Required Majority if,
among other things: (i) The proposed
participation of each Regulated Fund
and Affiliated Private Fund in such
disposition is proportionate to its
outstanding investments in the issuer
immediately preceding the disposition
or Follow-On Investment, as the case
may be; and (ii) the Board of the
Regulated Fund has approved that
Regulated Fund’s participation in pro
rata dispositions and Follow-On
Investments as being in the best
interests of the Regulated Fund. If the
Board does not so approve, any such
disposition or Follow-On Investment
will be submitted to the Regulated
Fund’s Eligible Directors. The Board of
any Regulated Fund may at any time
rescind, suspend or qualify its approval
9 ‘‘Available Capital’’ consists solely of liquid
assets not held for permanent investment, including
cash, amounts that can currently be drawn down
from lines of credit, and marketable securities held
for short-term purposes. In addition, for the
Affiliated Private Funds, Available Capital would
include bona fide uncalled capital commitments
that can be called by the settlement date of the CoInvestment Transaction.
10 The Regulated Funds, however, will not be
obligated to invest, or co-invest, when investment
opportunities are referred to them.
11 In the case of a Regulated Fund that is a
registered closed-end fund, the Board members that
make up the Eligible Directors and the Required
Majority will be determined as if the Regulated
Fund were a BDC subject to section 57(o).
E:\FR\FM\25SEN1.SGM
25SEN1
Federal Register / Vol. 79, No. 186 / Thursday, September 25, 2014 / Notices
mstockstill on DSK4VPTVN1PROD with NOTICES
of pro rata dispositions and Follow-On
Investments with the result that all
dispositions and/or Follow-On
Investments must be submitted to the
Eligible Directors.
10. No Non-Interested Director of a
Regulated Fund will have a financial
interest in any Co-Investment
Transaction, other than indirectly
through share ownership in one of the
Regulated Funds.
Applicants’ Legal Analysis
1. Section 17(d) of the Act and rule
17d–1 under the Act generally prohibit
affiliated persons of a registered
investment company from participating
in joint transactions with the company
or a company controlled by such
registered investment company unless
the Commission has granted an order
permitting such transactions. Section
57(a)(4) of the Act prohibits certain
affiliated persons of a BDC from
participating in joint transactions with
the BDC (or a company controlled by
such BDC) in contravention of rules as
prescribed by the Commission. Section
57(i) of the Act provides that, until the
Commission prescribes rules under
section 57(a)(4), the Commission’s rules
under section 17(d) of the Act
applicable to registered closed-end
investment companies will be deemed
to apply to BDCs. Because the
Commission has not adopted any rules
under section 57(a)(4), rule 17d–1
applies to joint transactions involving a
BDC. In passing upon applications
under rule 17d–1, the Commission
considers whether the company’s
participation in the joint transaction is
consistent with the provisions, policies,
and purposes of the Act and the extent
to which such participation is on a basis
different from or less advantageous than
that of other participants.
2. The Regulated Funds and the
Affiliated Private Funds (a) may be
deemed to be under common control,
and thus affiliated persons of each other
under section 2(a)(3)(C) of the Act and
(b) will be persons related to a
Regulated Fund that is a BDC in a
manner described in section 57(b) of the
Act. As a result, these relationships will
cause each Regulated Fund (or its
Wholly-Owned Investment Sub) and
Affiliated Private Fund participating in
a Co-Investment Transaction with a
Regulated Fund (or its Wholly-Owned
Investment Sub) to be subject to section
17(d) or section 57(a)(4) and rule 17d–
1.
3. Applicants state that in the absence
of the requested relief, the Regulated
Funds would be, in some
circumstances, limited in their ability to
participate in attractive and appropriate
VerDate Sep<11>2014
17:25 Sep 24, 2014
Jkt 232001
investment opportunities. Applicants
state that the participation of the
Regulated Funds in Co-Investment
Transactions in accordance with the
conditions to the requested relief would
be consistent with the provisions,
policies and purposes of the Act and on
a basis that is not different from, or less
advantageous than, of other
participants.
Applicants’ Conditions
Applicants agree that the Order will
be subject to the following conditions:
1. Each time an Adviser considers a
Potential Co-Investment Transaction for
an Affiliated Private Fund or another
Regulated Fund that falls within a
Regulated Fund’s then-current
Objectives and Strategies, the Regulated
Fund’s Adviser will make an
independent determination of the
appropriateness of the investment for
such Regulated Fund in light of the
Regulated Fund’s then-current
circumstances.
2. (a) If the Adviser deems a Regulated
Fund’s participation in any Potential
Co-Investment Transaction to be
appropriate for the Regulated Fund, it
will then determine an appropriate level
of investment for the Regulated Fund.
(b) If the aggregate amount
recommended by the applicable Adviser
to be invested by the Regulated Fund in
the Potential Co-Investment
Transaction, together with the amount
proposed to be invested by the other
participating Regulated Funds and
Affiliated Private Funds, collectively, in
the same transaction, exceeds the
amount of the investment opportunity,
the investment opportunity will be
allocated among them pro rata based on
each participant’s Available Capital, up
to the amount proposed to be invested
by each. The applicable Adviser will
provide the Eligible Directors of each
participating Regulated Fund with
information concerning each
participating party’s Available Capital to
assist the Eligible Directors with their
review of the Regulated Fund’s
investments for compliance with these
allocation procedures.
(c) After making the determinations
required in conditions 1 and 2(a), the
applicable Adviser will distribute
written information concerning the
Potential Co-Investment Transaction
(including the amount proposed to be
invested by each participating Regulated
Fund and Affiliated Private Fund) to the
Eligible Directors of each participating
Regulated Fund for their consideration.
A Regulated Fund will co-invest with
one or more other Regulated Funds and/
or one or more Affiliated Private Funds
only if, prior to the Regulated Fund’s
PO 00000
Frm 00097
Fmt 4703
Sfmt 4703
57599
participation in the Potential CoInvestment Transaction, a Required
Majority concludes that:
(i) The terms of the Potential CoInvestment Transaction, including the
consideration to be paid, are reasonable
and fair to the Regulated Fund and its
shareholders and do not involve
overreaching in respect of the Regulated
Fund or its shareholders on the part of
any person concerned;
(ii) The Potential Co-Investment
Transaction is consistent with:
(A) the interests of the shareholders of
the Regulated Fund; and
(B) the Regulated Fund’s then-current
Objectives and Strategies;
(iii) The investment by any other
Regulated Funds or Affiliated Private
Funds would not disadvantage the
Regulated Fund, and participation by
the Regulated Fund would not be on a
basis different from or less advantageous
than that of other Regulated Funds or
Affiliated Private Funds; provided that,
if any other Regulated Fund or
Affiliated Private Fund, but not the
Regulated Fund itself, gains the right to
nominate a director for election to a
portfolio company’s board of directors
or the right to have a board observer or
any similar right to participate in the
governance or management of the
portfolio company, such event will not
be interpreted to prohibit the Required
Majority from reaching the conclusions
required by this condition (2)(c)(iii), if:
(A) The Eligible Directors will have
the right to ratify the selection of such
director or board observer, if any;
(B) the applicable Adviser agrees to,
and does, provide periodic reports to
the Regulated Fund’s Board with respect
to the actions of such director or the
information received by such board
observer or obtained through the
exercise of any similar right to
participate in the governance or
management of the portfolio company;
and
(C) any fees or other compensation
that an Affiliated Private Fund or a
Regulated Fund or any affiliated person
of any Affiliated Private Fund or any
Regulated Fund receives in connection
with the right of an Affiliated Private
Fund or a Regulated Fund to nominate
a director or appoint a board observer or
otherwise to participate in the
governance or management of the
portfolio company will be shared
proportionately among the participating
Affiliated Private Funds (who each may,
in turn, share its portion with its
affiliated persons) and the participating
Regulated Funds in accordance with the
amount of each party’s investment; and
(iv) the proposed investment by the
Regulated Fund will not benefit the
E:\FR\FM\25SEN1.SGM
25SEN1
mstockstill on DSK4VPTVN1PROD with NOTICES
57600
Federal Register / Vol. 79, No. 186 / Thursday, September 25, 2014 / Notices
Advisers, the Affiliated Private Funds or
the other Regulated Funds or any
affiliated person of any of them (other
than the parties to the Co-Investment
Transaction), except (A) to the extent
permitted by condition 13, (B) to the
extent permitted by section 17(e) or
57(k) of the Act, as applicable, (C)
indirectly, as a result of an interest in
the securities issued by one of the
parties to the Co-Investment
Transaction, or (D) in the case of fees or
other compensation described in
condition 2(c)(iii)(C).
3. Each Regulated Fund has the right
to decline to participate in any Potential
Co-Investment Transaction or to invest
less than the amount proposed.
4. The applicable Adviser will present
to the Board of each Regulated Fund, on
a quarterly basis, a record of all
investments in Potential Co-Investment
Transactions made by any of the other
Regulated Funds or Affiliated Private
Funds during the preceding quarter that
fell within the Regulated Fund’s thencurrent Objectives and Strategies that
were not offered to the Regulated Fund,
and an explanation of why the
investment opportunities were not
offered to the Regulated Fund. All
information presented to the Board
pursuant to this condition will be kept
for the life of the Regulated Fund and
at least two years thereafter, and will be
subject to examination by the
Commission and its staff.
5. Except for Follow-On Investments
made in accordance with condition 8,12
a Regulated Fund will not invest in
reliance on the Order in any issuer in
which another Regulated Fund,
Affiliated Private Fund, or any affiliated
person of another Regulated Fund or
Affiliated Private Fund is an existing
investor.
6. A Regulated Fund will not
participate in any Potential CoInvestment Transaction unless the
terms, conditions, price, class of
securities to be purchased, settlement
date, and registration rights will be the
same for each participating Regulated
Fund and Affiliated Private Fund. The
grant to an Affiliated Private Fund or
another Regulated Fund, but not the
Regulated Fund, of the right to nominate
a director for election to a portfolio
company’s board of directors, the right
to have an observer on the board of
directors or similar rights to participate
in the governance or management of the
portfolio company will not be
interpreted so as to violate this
12 This exception applies only to Follow-On
Investments by a Regulated Fund in issuers in
which that Regulated Fund already holds
investments.
VerDate Sep<11>2014
17:25 Sep 24, 2014
Jkt 232001
condition 6, if conditions 2(c)(iii)(A), (B)
and (C) are met.
7. (a) If any Affiliated Private Fund or
any Regulated Fund elects to sell,
exchange or otherwise dispose of an
interest in a security that was acquired
in a Co-Investment Transaction, the
applicable Advisers will:
(i) Notify each Regulated Fund that
participated in the Co-Investment
Transaction of the proposed disposition
at the earliest practical time; and
(ii) formulate a recommendation as to
participation by each Regulated Fund in
the disposition.
(b) Each Regulated Fund will have the
right to participate in such disposition
on a proportionate basis, at the same
price and on the same terms and
conditions as those applicable to the
participating Affiliated Private Funds
and Regulated Funds.
(c) A Regulated Fund may participate
in such disposition without obtaining
prior approval of the Required Majority
if: (i) The proposed participation of each
Regulated Fund and Affiliated Private
Fund in such disposition is
proportionate to its outstanding
investments in the issuer immediately
preceding the disposition; (ii) the Board
of the Regulated Fund has approved as
being in the best interests of the
Regulated Fund the ability to participate
in such dispositions on a pro rata basis
(as described in greater detail in the
application); and (iii) the Board of the
Regulated Fund is provided on a
quarterly basis with a list of all
dispositions made in accordance with
this condition. In all other cases, the
Adviser will provide its written
recommendation as to the Regulated
Fund’s participation to the Eligible
Directors, and the Regulated Fund will
participate in such disposition solely to
the extent that a Required Majority
determines that it is in the Regulated
Fund’s best interests.
(d) Each Affiliated Private Fund and
each Regulated Fund will bear its own
expenses in connection with any such
disposition.
8. (a) If any Affiliated Private Fund or
any Regulated Fund desires to make a
Follow-On Investment in a portfolio
company whose securities were
acquired in a Co-Investment
Transaction, the applicable Advisers
will:
(i) Notify each Regulated Fund that
participated in the Co-Investment
Transaction of the proposed transaction
at the earliest practical time; and
(ii) formulate a recommendation as to
the proposed participation, including
the amount of the proposed Follow-On
Investment, by each Regulated Fund.
PO 00000
Frm 00098
Fmt 4703
Sfmt 4703
(b) A Regulated Fund may participate
in such Follow-On Investment without
obtaining prior approval of the Required
Majority if: (i) The proposed
participation of each Regulated Fund
and each Affiliated Private Fund in such
investment is proportionate to its
outstanding investments in the issuer
immediately preceding the Follow-On
Investment; and (ii) the Board of the
Regulated Fund has approved as being
in the best interests of the Regulated
Fund the ability to participate in
Follow-On Investments on a pro rata
basis (as described in greater detail in
the application). In all other cases, the
Adviser will provide its written
recommendation as to the Regulated
Fund’s participation to the Eligible
Directors, and the Regulated Fund will
participate in such Follow-On
Investment solely to the extent that a
Required Majority determines that it is
in the Regulated Fund’s best interests.
(c) If, with respect to any Follow-On
Investment:
(i) The amount of the opportunity is
not based on the Regulated Funds’ and
the Affiliated Private Funds’
outstanding investments immediately
preceding the Follow-On Investment;
and
(ii) the aggregate amount
recommended by the Adviser to be
invested by each Regulated Fund in the
Follow-On Investment, together with
the amount proposed to be invested by
the participating Affiliated Private
Funds in the same transaction, exceeds
the amount of the opportunity; then the
amount invested by each such party will
be allocated among them pro rata based
on each participant’s Available Capital,
up to the amount proposed to be
invested by each.
(d) The acquisition of Follow-On
Investments as permitted by this
condition will be considered a CoInvestment Transaction for all purposes
and subject to the other conditions set
forth in the application.
9. The Non-Interested Directors of
each Regulated Fund will be provided
quarterly for review all information
concerning Potential Co-Investment
Transactions and Co-Investment
Transactions, including investments
made by other Regulated Funds or
Affiliated Private Funds that the
Regulated Fund considered but declined
to participate in, so that the NonInterested Directors may determine
whether all investments made during
the preceding quarter, including those
investments that the Regulated Fund
considered but declined to participate
in, comply with the conditions of the
Order. In addition, the Non-Interested
Directors will consider at least annually
E:\FR\FM\25SEN1.SGM
25SEN1
mstockstill on DSK4VPTVN1PROD with NOTICES
Federal Register / Vol. 79, No. 186 / Thursday, September 25, 2014 / Notices
the continued appropriateness for the
Regulated Fund of participating in new
and existing Co-Investment
Transactions.
10. Each Regulated Fund will
maintain the records required by section
57(f)(3) of the Act as if each of the
Regulated Funds were a BDC and each
of the investments permitted under
these conditions were approved by the
Required Majority under section 57(f) of
the Act.
11. No Non-Interested Director of a
Regulated Fund will also be a director,
general partner, managing member or
principal, or otherwise an ‘‘affiliated
person’’ (as defined in the Act) of a
Affiliated Private Fund.
12. The expenses, if any, associated
with acquiring, holding or disposing of
any securities acquired in a CoInvestment Transaction (including,
without limitation, the expenses of the
distribution of any such securities
registered for sale under the Securities
Act) will, to the extent not payable by
the Advisers under their respective
investment advisory agreements with
the Affiliated Private Funds and the
Regulated Funds, be shared by the
Regulated Funds and Affiliated Private
Funds in proportion to the relative
amounts of the securities held or to be
acquired or disposed of, as the case may
be.
13. Any transaction fee (including
break-up or commitment fees but
excluding broker’s fees contemplated by
section 17(e) or 57(k) of the Act, as
applicable) received in connection with
a Co-Investment Transaction will be
distributed to the participating
Regulated Funds and Affiliated Private
Funds on a pro rata basis based on the
amounts they invested or committed, as
the case may be, in such Co-Investment
Transaction. If any transaction fee is to
be held by an Adviser pending
consummation of the transaction, the
fee will be deposited into an account
maintained by such Adviser at a bank or
banks having the qualifications
prescribed in section 26(a)(1) of the Act,
and the account will earn a competitive
rate of interest that will also be divided
pro rata among the participating
Regulated Funds and Affiliated Private
Funds based on the amounts they invest
in such Co-Investment Transaction.
None of the Affiliated Private Funds, the
Advisers, the other Regulated Funds or
any affiliated person of the Regulated
Funds or Affiliated Private Funds will
receive additional compensation or
remuneration of any kind as a result of
or in connection with a Co-Investment
Transaction (other than (a) in the case
of the Regulated Funds and the
Affiliated Private Funds, the pro rata
VerDate Sep<11>2014
17:25 Sep 24, 2014
Jkt 232001
transaction fees described above and
fees or other compensation described in
condition 2(c)(iii)(C); and (b) in the case
of an Adviser, investment advisory fees
paid in accordance with the agreement
between the Adviser and the Regulated
Fund or Affiliated Private Fund).
For the Commission, by the Division of
Investment Management, under delegated
authority.
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–22792 Filed 9–24–14; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–73151; File No. SR–
NYSEARCA–2014–106]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Amending NYSE Arca
Equities Rule 2.100(a) To Correct
Potential Ambiguities Introduced in
Prior Rule Change Filings Submitted in
2013 and 2014
September 19, 2014.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on
September 15, 2014, NYSE Arca, Inc.
(the ‘‘Exchange’’ or ‘‘NYSE Arca’’) filed
with the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been prepared by the self-regulatory
organization. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend
NYSE Arca Equities Rule 2.100(a) to
correct potential ambiguities introduced
in prior rule change filings submitted in
2013 and 2014. The text of the proposed
rule change is available on the
Exchange’s Web site at www.nyse.com,
at the principal office of the Exchange,
and at the Commission’s Public
Reference Room.
1 15
U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
2 15
PO 00000
Frm 00099
Fmt 4703
Sfmt 4703
57601
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend
NYSE Arca Equities Rule 2.100(a) to
correct potential ambiguities introduced
in prior rule change filings submitted in
2013 and 2014. More specifically, as a
result of overlapping amendments in
2013 and 2014, potential ambiguity as to
the approved text of Rule 2.100(a) of the
rule was introduced, as discussed in
greater detail below. In order to
establish the approved text definitively,
the Exchange accordingly proposes to
amend existing Rule 2.100(a)(2)(A).
On June 14, 2013, the Exchange filed
a proposed rule change relating to the
acquisition by IntercontinentalExchange
Group, Inc. (now known as
Intercontinental Exchange, Inc. or
‘‘ICE’’) of the Exchange’s indirect parent
company, NYSE Euronext (the ‘‘June
2013 Rule Change’’).4 The June 2013
Rule Change included non-substantive
amendments to Rule 2.100(a)(3)(ii) to
replace two references to NYSE
Euronext with references to
IntercontinentalExchange Group, Inc.,
which would be the new public holding
company above NYSE Euronext. No
other amendments to Rule 2.100(a) were
proposed. The Commission approved
the June 2013 Rule Change on August
15, 2013.5 However, the June 2013 Rule
Change by its terms did not become
operative until the closing of ICE’s
acquisition of NYSE Euronext, which
occurred on November 13, 2013.
On July 22, 2013, after publication of
notice of the June 2013 Rule Change but
prior to issuance of the approval order,
the Exchange filed an additional
4 See Securities Exchange Act Release No. 69850
(June 25, 2013), 78 FR 39352 (July 1, 2013) (SR–
NYSEArca–2013–62) (notice).
5 See Securities Exchange Act Release No. 70210
(Aug. 15, 2013), 78 FR 51758 (Aug. 21, 2013) (SR–
NYSEArca–2013–62) (approval order).
E:\FR\FM\25SEN1.SGM
25SEN1
]]>Agencies
[Federal Register Volume 79, Number 186 (Thursday, September 25, 2014)]
[Notices]
[Pages 57596-57601]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-22792]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 31253; File No. 812-14028]
Monroe Capital Corporation, et al.; Notice of Application
September 19, 2014.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice of application for an order under sections 17(d),
57(a)(4), and 57(i) of the Investment Company Act of 1940 (the ``Act'')
and rule 17d-1 under the Act to permit certain joint transactions
otherwise prohibited by sections 17(d), 57(a)(4), and 57(i) of the Act
and rule 17d-1 under the Act.
-----------------------------------------------------------------------
[[Page 57597]]
Summary of Application: Applicants request an order to permit
certain business development companies (``BDCs'') and registered
closed-end management investment companies to co-invest in portfolio
companies with each other and with affiliated investment funds.
Applicants: Monroe Capital Corporation (the ``Company''), MC
Funding Ltd. (``MC Funding''), MC Funding, Ltd. 2013-1 (``2013-1''),
Monroe Capital Partners Fund, L.P. (``Monroe SBIC''), Monroe Capital
Partners Fund II, L.P. (``Monroe SBIC II''), Monroe Capital Corporation
SBIC, LP (``MCC SBIC''), Monroe Capital Senior Secured Direct Loan Fund
LP (``MCSSDL Fund''), Monroe Capital Senior Secured Direct Loan Fund
(Unleveraged) LP (``MCSSDL-U Fund''), Monroe FCM Direct Loan Fund LP
(``MFDL Fund'' and collectively with MC Funding, 2013-1, Monroe SBIC,
Monroe SBIC II, MCSSDL Fund and MCSSDL-U Fund, the ``Existing
Affiliated Private Funds''), Monroe Capital Management Advisors, LLC
(``MCMA''), Monroe Capital Management LLC (``Monroe Collateral
Manager''), Monroe Capital Partners Fund Advisors, Inc. (``Monroe SBIC
Adviser''), Monroe Capital Partners Fund II Advisors, Inc. (``Monroe
SBIC II Adviser'' and, collectively with MCMA, Monroe Collateral
Manager, and Monroe SBIC Adviser, the ``Affiliated Advisers''), Monroe
Capital Partners Fund, LLC (``Monroe SBIC General Partner''), Monroe
Capital Partners Fund II, LLC (``Monroe SBIC II General Partner''), MCC
SBIC GP, LLC (``MCC SBIC General Partner''), Monroe Capital Senior
Secured Direct Loan Fund LLC (``MCSSDL Funds General Partner,''), and
Monroe FCM Direct Loan Fund LLC (``MFDL Fund General Partner''), and
Monroe Capital BDC Advisors, LLC (``BDC Adviser'').\1\
---------------------------------------------------------------------------
\1\ All references to the term ``BDC Adviser'' include
successors-in-interest to the BDC Adviser. A successor-in-interest
is limited to an entity that results from a reorganization into
another jurisdiction or change in the type of business organization.
DATES: Filing Dates: The application was filed on April 18, 2012, and
amended on February 27, 2013, June 5, 2013, November 27, 2013, July 16,
2014, and September 5, 2014.
Hearing or Notification of Hearing: An order granting the requested
relief will be issued unless the Commission orders a hearing.
Interested persons may request a hearing by writing to the Commission's
Secretary and serving applicants with a copy of the request, personally
or by mail. Hearing requests should be received by the Commission by
5:30 p.m. on October 14, 2014, and should be accompanied by proof of
service on applicants, in the form of an affidavit or, for lawyers, a
certificate of service. Hearing requests should state the nature of the
writer's interest, the reason for the request, and the issues
contested. Persons who wish to be notified of a hearing may request
notification by writing to the Commission's Secretary.
ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F
St. NE., Washington, DC 20549-1090. Applicants: 311 South Wacker Drive,
Suite 6400, Chicago, IL 60606.
FOR FURTHER INFORMATION CONTACT: Mark Zaruba, Senior Counsel, at (202)
551-6878 or Mary Kay Frech, Branch Chief, at (202) 551-6821 (Chief
Counsel's Office, Division of Investment Management).
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained via the
Commission's Web site by searching for the file number, or for an
applicant using the Company name box, at https://www.sec.gov/search/search.htm or by calling (202) 551-8090.
Applicants' Representations
1. The Company is a Maryland corporation organized as a closed-end
management investment company that has elected to be regulated as a BDC
under section 54(a) of the Act. The Company's Objectives and Strategies
\2\ are to maximize the total return to stockholders in the form of
current income and capital appreciation through investment in primarily
senior, unitranche and junior secured debt of middle-market companies
and, to a lesser extent, unsecured subordinated debt and equity
investments. A majority of the directors of the Company are persons who
are not ``interested persons'' as defined in section 2(a)(19) of the
Act (``Non-Interested Directors'').
---------------------------------------------------------------------------
\2\ ``Objectives and Strategies'' means a Regulated Fund's (as
defined below) investment objectives and strategies, as described in
the Regulated Fund's registration statement on Form N-2, other
filings the Regulated Fund has made with the Commission under the
Securities Act of 1933 (the ``Securities Act''), or under the
Securities Exchange Act of 1934, and the Regulated Fund's reports to
shareholders.
---------------------------------------------------------------------------
2. The BDC Adviser is a Delaware corporation and is wholly owned
and controlled by Theodore L. Koenig. The BDC Adviser is registered as
an investment adviser under the Investment Advisers Act of 1940
(``Advisers Act'') and serves as investment adviser to the Company. Mr.
Koenig also directly or indirectly owns a controlling interest in, and
serves as the principal executive officer of, each of the Affiliated
Advisers.
3. MCC SBIC is a Delaware limited partnership and is licensed to
operate as a small business investment company (``SBIC'') by the United
States Small Business Administration (``SBA''). MCC SBIC General
Partner is a Delaware limited liability company and serves as general
partner of MCC SBIC. The Company owns 100 percent of the MCC SBIC
General Partner's equity interests and the MCC SBIC General Partner
owns 1 percent of MCC SBIC in the form of a general partnership
interest. The Company directly owns 99 percent of MCC SBIC in the form
of limited partnership interests. As a result, the Company directly or
indirectly wholly owns MCC SBIC. MCC SBIC General Partner has appointed
the BDC Adviser as the sole investment adviser for MCC SBIC.
4. MC Funding and 2013-1 are exempted companies incorporated under
the laws of the Cayman Islands with limited liability. Monroe
Collateral Manager is a Delaware limited liability company and is the
investment adviser for MC Funding and 2013-1. Monroe SBIC and Monroe
SBIC II Delaware limited partnerships and are each licensed as SBIC by
the SBA. Monroe SBIC General Partner and Monroe SBIC II General
Partner, each a Delaware limited liability company, are the general
partners of Monroe SBIC and Monroe SBIC II, respectively, and have
entered into agreements with Monroe SBIC Adviser and Monroe SBIC II
Adviser, each a Delaware corporation, to serve as investment adviser
for Monroe SBIC and Monroe SBIC II, respectively. MCSSDL Fund, MCSSDL-U
Fund, and MFDL Fund are Delaware limited partnerships. MCSSDL Funds
General Partner, a Delaware limited liability company, is the general
partner of MCSSDL Fund and MCSSDL-U Fund and MFDL Fund General Partner,
a Delaware limited liability company, is the general partner of MFDL
Fund. MCMA, a Delaware limited liability company, serves as investment
adviser for MCSSDL Fund, MCSSDL-U Fund, and MFDL Fund under agreements
with MCSSDL Funds General Partner and MFDL Fund General Partner,
respectively. Each of the Existing Affiliated Private Funds is excluded
from the definition of investment company by section 3(c)(1) of the
Act. Each of the Affiliated Advisers is
[[Page 57598]]
registered as an investment adviser under the Advisers Act.\3\
---------------------------------------------------------------------------
\3\ MCMA has filed a Form ADV with the Commission. Monroe
Collateral Manager, Monroe SBIC Adviser and Monroe SBIC II Adviser
are each investment advisers registered under the Advisers Act
because they are relying advisers of MCMA.
---------------------------------------------------------------------------
5. Applicants seek an order (``Order'') to permit each Regulated
Fund,\4\ together with one or more Regulated Funds and/or Affiliated
Private Funds \5\ to participate in the same investment opportunities
through a co-investment program where such participation would
otherwise be prohibited under sections 17(d) or 57(a)(4) and rule 17d-1
by (a) co-investing with each other in securities issued by issuers in
private placement transactions in which an Adviser negotiates terms in
addition to price; \6\ and (b) making additional investments in
securities of such issuers, including through the exercise of warrants,
conversion privileges, and other rights to purchase securities of the
issuers (``Follow-On Investments''). ``Co-Investment Transaction''
means any transaction in which a Regulated Fund (or its Wholly-Owned
Investment Sub, as defined below) participated together with one or
more other Regulated Funds and/or one or more Affiliated Private Funds
in reliance on the requested Order. ``Potential Co-Investment
Transaction'' means any investment opportunity in which a Regulated
Fund (or its Wholly-Owned Investment Sub) could not participate
together with one or more Affiliated Private Funds and/or one or more
other Regulated Funds without obtaining and relying on the Order.\7\
---------------------------------------------------------------------------
\4\ ``Regulated Funds'' means the Company and the Future
Regulated Funds. ``Future Regulated Fund'' means a closed-end
management investment company (a) that is registered under the Act
or has elected to be regulated as a BDC, (b) whose investment
adviser is an Adviser, and (c) that intends to participate in the
Co-Investment Program (as defined below). ``Adviser'' means (a) the
BDC Adviser, (b) an Affiliated Adviser, or (c) any investment
adviser that controls, is controlled by or is under common control
with the BDC Adviser and is registered as an investment adviser
under the Advisers Act.
\5\ ``Affiliated Private Fund'' means any Existing Affiliated
Private Fund or any entity (a) whose investment adviser is an
Adviser, (b) that would be an investment company but for section
3(c)(1) or 3(c)(7) of the Act, and (c) that intends to participate
in Co-Investment Program.
\6\ The term ``private placement transactions'' means
transactions in which the offer and sale of securities by the issuer
are exempt from registration under the Securities Act.
\7\ All existing entities that currently intend to rely upon the
requested Order have been named as applicants. Any other existing or
future entity that subsequently relies on the Order will comply with
the terms and conditions of the application.
---------------------------------------------------------------------------
6. Applicants state that a Regulated Fund may, from time to time,
form one or more Wholly-Owned Investment Subs.\8\ Such a subsidiary
would be prohibited from investing in a Co-Investment Transaction with
any other Regulated Fund or Affiliated Private Fund because it would be
a company controlled by a Regulated Fund for purposes of sections 17(d)
or 57(a)(4) and rule 17d-1. Applicants request that each Wholly-Owned
Investment Sub be permitted to participate in Co-Investment
Transactions in lieu of the Regulated Fund and that the Wholly-Owned
Investment Sub's participation in any such transaction be treated, for
purposes of the requested Order, as though the Regulated Fund were
participating directly. Applicants represent that this treatment is
justified because a Wholly-Owned Investment Sub would have no purpose
other than serving as a holding vehicle for the Regulated Fund's
investments and, therefore, no conflicts of interest could arise
between the Regulated Fund and the Wholly-Owned Investment Sub. The
Regulated Fund's board of directors (for any Regulated Fund, the
``Board'') would make all relevant determinations under the conditions
with regard to a Wholly-Owned Investment Sub's participation in a Co-
Investment Transaction, and the Regulated Fund's Board would be
informed of, and take into consideration, any proposed use of a Wholly-
Owned Investment Sub in the Regulated Fund's place. If the Regulated
Fund proposes to participate in the same Co-Investment Transaction with
any of its Wholly-Owned Investment Subs, the Board will also be
informed of, and take into consideration, the relative participation of
the Regulated Fund and the Wholly-Owned Investment Sub. MCC SBIC is a
Wholly-Owned Investment Sub and SBIC Subsidiary of the Company.
---------------------------------------------------------------------------
\8\ The term ``Wholly-Owned Investment Sub'' means an entity (i)
that is wholly-owned by a Regulated Fund (with the Regulated Fund at
all times holding, directly or indirectly, 100% of the voting and
economic interests); (ii) whose sole business purpose is to hold one
or more investments on behalf of such Regulated Fund (and, in the
case of an SBIC Subsidiary, maintain a license under the SBA Act and
issue debentures guaranteed by the SBA); (iii) with respect to which
the Regulated Fund's board of directors (``Board'') has the sole
authority to make all determinations with respect to the entity's
participation under the conditions of the application; and (iv) that
would be an investment company but for section 3(c)(1) or 3(c)(7) of
the Act. ``SBIC Subsidiary'' means an entity that is licensed by the
SBA to operate under the Small Business Investment Act of 1958 (the
``SBA Act'') as a small business investment company. An SBIC
Subsidiary may be a Wholly-Owned Investment Sub if it satisfies the
conditions in this definition.
---------------------------------------------------------------------------
7. When considering Potential Co-Investment Transactions for any
Regulated Fund, the BDC Adviser will consider only the Objectives and
Strategies, investment policies, investment positions, capital
available for investment (``Available Capital''),\9\ and other
pertinent factors applicable to that Regulated Fund. The BDC Adviser
expects that any portfolio company that is an appropriate investment
for a Regulated Fund should also be an appropriate investment for one
or more other Regulated Funds and/or one or more Affiliated Private
Funds, with certain exceptions based on Available Capital or
diversification.\10\
---------------------------------------------------------------------------
\9\ ``Available Capital'' consists solely of liquid assets not
held for permanent investment, including cash, amounts that can
currently be drawn down from lines of credit, and marketable
securities held for short-term purposes. In addition, for the
Affiliated Private Funds, Available Capital would include bona fide
uncalled capital commitments that can be called by the settlement
date of the Co-Investment Transaction.
\10\ The Regulated Funds, however, will not be obligated to
invest, or co-invest, when investment opportunities are referred to
them.
---------------------------------------------------------------------------
8. Other than pro rata dispositions and Follow-On Investments as
provided in conditions 7 and 8, and after making the determinations
required in conditions 1 and 2(a), the Adviser will present each
Potential Co-Investment Transaction and the proposed allocation to the
directors of the Board eligible to vote under section 57(o) of the Act
(``Eligible Directors''), and the ``required majority,'' as defined in
section 57(o) of the Act (``Required Majority'') will approve each Co-
Investment Transaction prior to any investment by the participating
Regulated Fund.\11\
---------------------------------------------------------------------------
\11\ In the case of a Regulated Fund that is a registered
closed-end fund, the Board members that make up the Eligible
Directors and the Required Majority will be determined as if the
Regulated Fund were a BDC subject to section 57(o).
---------------------------------------------------------------------------
9. With respect to the pro rata dispositions and Follow-On
Investments provided in conditions 7 and 8, a Regulated Fund may
participate in a pro rata disposition or Follow-On Investment without
obtaining prior approval of the Required Majority if, among other
things: (i) The proposed participation of each Regulated Fund and
Affiliated Private Fund in such disposition is proportionate to its
outstanding investments in the issuer immediately preceding the
disposition or Follow-On Investment, as the case may be; and (ii) the
Board of the Regulated Fund has approved that Regulated Fund's
participation in pro rata dispositions and Follow-On Investments as
being in the best interests of the Regulated Fund. If the Board does
not so approve, any such disposition or Follow-On Investment will be
submitted to the Regulated Fund's Eligible Directors. The Board of any
Regulated Fund may at any time rescind, suspend or qualify its approval
[[Page 57599]]
of pro rata dispositions and Follow-On Investments with the result that
all dispositions and/or Follow-On Investments must be submitted to the
Eligible Directors.
10. No Non-Interested Director of a Regulated Fund will have a
financial interest in any Co-Investment Transaction, other than
indirectly through share ownership in one of the Regulated Funds.
Applicants' Legal Analysis
1. Section 17(d) of the Act and rule 17d-1 under the Act generally
prohibit affiliated persons of a registered investment company from
participating in joint transactions with the company or a company
controlled by such registered investment company unless the Commission
has granted an order permitting such transactions. Section 57(a)(4) of
the Act prohibits certain affiliated persons of a BDC from
participating in joint transactions with the BDC (or a company
controlled by such BDC) in contravention of rules as prescribed by the
Commission. Section 57(i) of the Act provides that, until the
Commission prescribes rules under section 57(a)(4), the Commission's
rules under section 17(d) of the Act applicable to registered closed-
end investment companies will be deemed to apply to BDCs. Because the
Commission has not adopted any rules under section 57(a)(4), rule 17d-1
applies to joint transactions involving a BDC. In passing upon
applications under rule 17d-1, the Commission considers whether the
company's participation in the joint transaction is consistent with the
provisions, policies, and purposes of the Act and the extent to which
such participation is on a basis different from or less advantageous
than that of other participants.
2. The Regulated Funds and the Affiliated Private Funds (a) may be
deemed to be under common control, and thus affiliated persons of each
other under section 2(a)(3)(C) of the Act and (b) will be persons
related to a Regulated Fund that is a BDC in a manner described in
section 57(b) of the Act. As a result, these relationships will cause
each Regulated Fund (or its Wholly-Owned Investment Sub) and Affiliated
Private Fund participating in a Co-Investment Transaction with a
Regulated Fund (or its Wholly-Owned Investment Sub) to be subject to
section 17(d) or section 57(a)(4) and rule 17d-1.
3. Applicants state that in the absence of the requested relief,
the Regulated Funds would be, in some circumstances, limited in their
ability to participate in attractive and appropriate investment
opportunities. Applicants state that the participation of the Regulated
Funds in Co-Investment Transactions in accordance with the conditions
to the requested relief would be consistent with the provisions,
policies and purposes of the Act and on a basis that is not different
from, or less advantageous than, of other participants.
Applicants' Conditions
Applicants agree that the Order will be subject to the following
conditions:
1. Each time an Adviser considers a Potential Co-Investment
Transaction for an Affiliated Private Fund or another Regulated Fund
that falls within a Regulated Fund's then-current Objectives and
Strategies, the Regulated Fund's Adviser will make an independent
determination of the appropriateness of the investment for such
Regulated Fund in light of the Regulated Fund's then-current
circumstances.
2. (a) If the Adviser deems a Regulated Fund's participation in any
Potential Co-Investment Transaction to be appropriate for the Regulated
Fund, it will then determine an appropriate level of investment for the
Regulated Fund.
(b) If the aggregate amount recommended by the applicable Adviser
to be invested by the Regulated Fund in the Potential Co-Investment
Transaction, together with the amount proposed to be invested by the
other participating Regulated Funds and Affiliated Private Funds,
collectively, in the same transaction, exceeds the amount of the
investment opportunity, the investment opportunity will be allocated
among them pro rata based on each participant's Available Capital, up
to the amount proposed to be invested by each. The applicable Adviser
will provide the Eligible Directors of each participating Regulated
Fund with information concerning each participating party's Available
Capital to assist the Eligible Directors with their review of the
Regulated Fund's investments for compliance with these allocation
procedures.
(c) After making the determinations required in conditions 1 and
2(a), the applicable Adviser will distribute written information
concerning the Potential Co-Investment Transaction (including the
amount proposed to be invested by each participating Regulated Fund and
Affiliated Private Fund) to the Eligible Directors of each
participating Regulated Fund for their consideration. A Regulated Fund
will co-invest with one or more other Regulated Funds and/or one or
more Affiliated Private Funds only if, prior to the Regulated Fund's
participation in the Potential Co-Investment Transaction, a Required
Majority concludes that:
(i) The terms of the Potential Co-Investment Transaction, including
the consideration to be paid, are reasonable and fair to the Regulated
Fund and its shareholders and do not involve overreaching in respect of
the Regulated Fund or its shareholders on the part of any person
concerned;
(ii) The Potential Co-Investment Transaction is consistent with:
(A) the interests of the shareholders of the Regulated Fund; and
(B) the Regulated Fund's then-current Objectives and Strategies;
(iii) The investment by any other Regulated Funds or Affiliated
Private Funds would not disadvantage the Regulated Fund, and
participation by the Regulated Fund would not be on a basis different
from or less advantageous than that of other Regulated Funds or
Affiliated Private Funds; provided that, if any other Regulated Fund or
Affiliated Private Fund, but not the Regulated Fund itself, gains the
right to nominate a director for election to a portfolio company's
board of directors or the right to have a board observer or any similar
right to participate in the governance or management of the portfolio
company, such event will not be interpreted to prohibit the Required
Majority from reaching the conclusions required by this condition
(2)(c)(iii), if:
(A) The Eligible Directors will have the right to ratify the
selection of such director or board observer, if any;
(B) the applicable Adviser agrees to, and does, provide periodic
reports to the Regulated Fund's Board with respect to the actions of
such director or the information received by such board observer or
obtained through the exercise of any similar right to participate in
the governance or management of the portfolio company; and
(C) any fees or other compensation that an Affiliated Private Fund
or a Regulated Fund or any affiliated person of any Affiliated Private
Fund or any Regulated Fund receives in connection with the right of an
Affiliated Private Fund or a Regulated Fund to nominate a director or
appoint a board observer or otherwise to participate in the governance
or management of the portfolio company will be shared proportionately
among the participating Affiliated Private Funds (who each may, in
turn, share its portion with its affiliated persons) and the
participating Regulated Funds in accordance with the amount of each
party's investment; and
(iv) the proposed investment by the Regulated Fund will not benefit
the
[[Page 57600]]
Advisers, the Affiliated Private Funds or the other Regulated Funds or
any affiliated person of any of them (other than the parties to the Co-
Investment Transaction), except (A) to the extent permitted by
condition 13, (B) to the extent permitted by section 17(e) or 57(k) of
the Act, as applicable, (C) indirectly, as a result of an interest in
the securities issued by one of the parties to the Co-Investment
Transaction, or (D) in the case of fees or other compensation described
in condition 2(c)(iii)(C).
3. Each Regulated Fund has the right to decline to participate in
any Potential Co-Investment Transaction or to invest less than the
amount proposed.
4. The applicable Adviser will present to the Board of each
Regulated Fund, on a quarterly basis, a record of all investments in
Potential Co-Investment Transactions made by any of the other Regulated
Funds or Affiliated Private Funds during the preceding quarter that
fell within the Regulated Fund's then-current Objectives and Strategies
that were not offered to the Regulated Fund, and an explanation of why
the investment opportunities were not offered to the Regulated Fund.
All information presented to the Board pursuant to this condition will
be kept for the life of the Regulated Fund and at least two years
thereafter, and will be subject to examination by the Commission and
its staff.
5. Except for Follow-On Investments made in accordance with
condition 8,\12\ a Regulated Fund will not invest in reliance on the
Order in any issuer in which another Regulated Fund, Affiliated Private
Fund, or any affiliated person of another Regulated Fund or Affiliated
Private Fund is an existing investor.
---------------------------------------------------------------------------
\12\ This exception applies only to Follow-On Investments by a
Regulated Fund in issuers in which that Regulated Fund already holds
investments.
---------------------------------------------------------------------------
6. A Regulated Fund will not participate in any Potential Co-
Investment Transaction unless the terms, conditions, price, class of
securities to be purchased, settlement date, and registration rights
will be the same for each participating Regulated Fund and Affiliated
Private Fund. The grant to an Affiliated Private Fund or another
Regulated Fund, but not the Regulated Fund, of the right to nominate a
director for election to a portfolio company's board of directors, the
right to have an observer on the board of directors or similar rights
to participate in the governance or management of the portfolio company
will not be interpreted so as to violate this condition 6, if
conditions 2(c)(iii)(A), (B) and (C) are met.
7. (a) If any Affiliated Private Fund or any Regulated Fund elects
to sell, exchange or otherwise dispose of an interest in a security
that was acquired in a Co-Investment Transaction, the applicable
Advisers will:
(i) Notify each Regulated Fund that participated in the Co-
Investment Transaction of the proposed disposition at the earliest
practical time; and
(ii) formulate a recommendation as to participation by each
Regulated Fund in the disposition.
(b) Each Regulated Fund will have the right to participate in such
disposition on a proportionate basis, at the same price and on the same
terms and conditions as those applicable to the participating
Affiliated Private Funds and Regulated Funds.
(c) A Regulated Fund may participate in such disposition without
obtaining prior approval of the Required Majority if: (i) The proposed
participation of each Regulated Fund and Affiliated Private Fund in
such disposition is proportionate to its outstanding investments in the
issuer immediately preceding the disposition; (ii) the Board of the
Regulated Fund has approved as being in the best interests of the
Regulated Fund the ability to participate in such dispositions on a pro
rata basis (as described in greater detail in the application); and
(iii) the Board of the Regulated Fund is provided on a quarterly basis
with a list of all dispositions made in accordance with this condition.
In all other cases, the Adviser will provide its written recommendation
as to the Regulated Fund's participation to the Eligible Directors, and
the Regulated Fund will participate in such disposition solely to the
extent that a Required Majority determines that it is in the Regulated
Fund's best interests.
(d) Each Affiliated Private Fund and each Regulated Fund will bear
its own expenses in connection with any such disposition.
8. (a) If any Affiliated Private Fund or any Regulated Fund desires
to make a Follow-On Investment in a portfolio company whose securities
were acquired in a Co-Investment Transaction, the applicable Advisers
will:
(i) Notify each Regulated Fund that participated in the Co-
Investment Transaction of the proposed transaction at the earliest
practical time; and
(ii) formulate a recommendation as to the proposed participation,
including the amount of the proposed Follow-On Investment, by each
Regulated Fund.
(b) A Regulated Fund may participate in such Follow-On Investment
without obtaining prior approval of the Required Majority if: (i) The
proposed participation of each Regulated Fund and each Affiliated
Private Fund in such investment is proportionate to its outstanding
investments in the issuer immediately preceding the Follow-On
Investment; and (ii) the Board of the Regulated Fund has approved as
being in the best interests of the Regulated Fund the ability to
participate in Follow-On Investments on a pro rata basis (as described
in greater detail in the application). In all other cases, the Adviser
will provide its written recommendation as to the Regulated Fund's
participation to the Eligible Directors, and the Regulated Fund will
participate in such Follow-On Investment solely to the extent that a
Required Majority determines that it is in the Regulated Fund's best
interests.
(c) If, with respect to any Follow-On Investment:
(i) The amount of the opportunity is not based on the Regulated
Funds' and the Affiliated Private Funds' outstanding investments
immediately preceding the Follow-On Investment; and
(ii) the aggregate amount recommended by the Adviser to be invested
by each Regulated Fund in the Follow-On Investment, together with the
amount proposed to be invested by the participating Affiliated Private
Funds in the same transaction, exceeds the amount of the opportunity;
then the amount invested by each such party will be allocated among
them pro rata based on each participant's Available Capital, up to the
amount proposed to be invested by each.
(d) The acquisition of Follow-On Investments as permitted by this
condition will be considered a Co-Investment Transaction for all
purposes and subject to the other conditions set forth in the
application.
9. The Non-Interested Directors of each Regulated Fund will be
provided quarterly for review all information concerning Potential Co-
Investment Transactions and Co-Investment Transactions, including
investments made by other Regulated Funds or Affiliated Private Funds
that the Regulated Fund considered but declined to participate in, so
that the Non-Interested Directors may determine whether all investments
made during the preceding quarter, including those investments that the
Regulated Fund considered but declined to participate in, comply with
the conditions of the Order. In addition, the Non-Interested Directors
will consider at least annually
[[Page 57601]]
the continued appropriateness for the Regulated Fund of participating
in new and existing Co-Investment Transactions.
10. Each Regulated Fund will maintain the records required by
section 57(f)(3) of the Act as if each of the Regulated Funds were a
BDC and each of the investments permitted under these conditions were
approved by the Required Majority under section 57(f) of the Act.
11. No Non-Interested Director of a Regulated Fund will also be a
director, general partner, managing member or principal, or otherwise
an ``affiliated person'' (as defined in the Act) of a Affiliated
Private Fund.
12. The expenses, if any, associated with acquiring, holding or
disposing of any securities acquired in a Co-Investment Transaction
(including, without limitation, the expenses of the distribution of any
such securities registered for sale under the Securities Act) will, to
the extent not payable by the Advisers under their respective
investment advisory agreements with the Affiliated Private Funds and
the Regulated Funds, be shared by the Regulated Funds and Affiliated
Private Funds in proportion to the relative amounts of the securities
held or to be acquired or disposed of, as the case may be.
13. Any transaction fee (including break-up or commitment fees but
excluding broker's fees contemplated by section 17(e) or 57(k) of the
Act, as applicable) received in connection with a Co-Investment
Transaction will be distributed to the participating Regulated Funds
and Affiliated Private Funds on a pro rata basis based on the amounts
they invested or committed, as the case may be, in such Co-Investment
Transaction. If any transaction fee is to be held by an Adviser pending
consummation of the transaction, the fee will be deposited into an
account maintained by such Adviser at a bank or banks having the
qualifications prescribed in section 26(a)(1) of the Act, and the
account will earn a competitive rate of interest that will also be
divided pro rata among the participating Regulated Funds and Affiliated
Private Funds based on the amounts they invest in such Co-Investment
Transaction. None of the Affiliated Private Funds, the Advisers, the
other Regulated Funds or any affiliated person of the Regulated Funds
or Affiliated Private Funds will receive additional compensation or
remuneration of any kind as a result of or in connection with a Co-
Investment Transaction (other than (a) in the case of the Regulated
Funds and the Affiliated Private Funds, the pro rata transaction fees
described above and fees or other compensation described in condition
2(c)(iii)(C); and (b) in the case of an Adviser, investment advisory
fees paid in accordance with the agreement between the Adviser and the
Regulated Fund or Affiliated Private Fund).
For the Commission, by the Division of Investment Management,
under delegated authority.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-22792 Filed 9-24-14; 8:45 am]
BILLING CODE 8011-01-P
