Full Circle Capital Corporation et al.; Notice of Application, 53377-53381 [2015-21866]
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tkelley on DSK3SPTVN1PROD with NOTICES
Federal Register / Vol. 80, No. 171 / Thursday, September 3, 2015 / Notices
rule change is consistent with Section
15A(b)(2) of the Act,23 which requires,
among other things, that FINRA be so
organized and have the capacity to be
able to carry out the purposes of the Act,
to comply with the Act, and to enforce
compliance by FINRA members and
persons associated with members with
the Act, the rules and regulations
thereunder, and FINRA rules. The
Commission also finds the proposed
rule change consistent with Section
15A(b)(6) of the Act,24 which requires,
among other things, that FINRA rules
must be designed to prevent fraudulent
and manipulative acts and practices, to
promote just and equitable principles of
trade, and, in general, to protect
investors and the public interest.
The Commission believes that the
proposed rule change is reasonably
designed to clarify the manner in which
firms must comply with existing FINRA
Rule 6730(a)(4). The Commission
believes that it is consistent with the
Act for FINRA to explicitly prohibit the
delay of transaction reporting and to
require members to establish and
implement policies and procedures that
are reasonably designed to comply with
the TRACE reporting requirement as
amended. The Commission believes that
the proposed rule change will promote
timely trade reporting and thereby
enhance public price transparency,
consistent with the protection of
investors and public interest.
The Commission notes that FINRA
recognizes that members may manually
report transactions in TRACE-Eligible
Securities and, as a result, the trade
reporting process may not be completed
as quickly as where an automated trade
reporting system is used. The
Commission believes it is appropriate
that, in these cases, FINRA would take
into consideration the manual nature of
the member’s trade reporting process in
determining whether its policies and
procedures are reasonably designed to
report the trade ‘‘as soon as
practicable.’’
The Commission also notes that one
commenter suggested removing the ‘‘as
soon as practicable’’ requirement, while
another commenter, who supported the
requirement, suggested modifications to
the proposed rule text to account for
intrinsic factors that may delay
reporting. Further, both commenters
raised concerns about certain
circumstances that may affect the
timeliness of trade reporting, including
the variations in member reporting
mechanisms, routine business matters,
23 15
24 15
14:42 Sep 02, 2015
V. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,25 that the
proposed rule change (SR–FINRA–
2015–025), be, and hereby is,approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.26
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015–21868 Filed 9–2–15; 8:45 am]
BILLING CODE 8011–01–P
25 15
U.S.C. 78o–3(b)(2).
U.S.C. 78o–3(b)(6).
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or the complexity of the securities
traded.
The Commission believes FINRA’s
decision not to modify the rule text as
suggested by the commenters is
appropriate. The Commission notes that
FINRA acknowledges that reporting
processes differ by member firm and by
security and that its rule text already
accounted for this. As FINRA notes,
compliance with the rule would hinge
on whether the member firm’s policies
and procedures are reasonably designed
to report trades as soon as practicable by
having systems that commence
reporting at the time of execution
without delay. The Commission also
notes that FINRA acknowledges that the
facts and circumstances of a particular
transaction are among the factors that
may be considered in determining
whether a transaction was reported as
soon as practicable. Moreover, FINRA
states that routine and predictable
factors that affect the timing of reporting
should be accounted for when a member
designs policies, procedures, and
systems for trade reporting, in contrast
to unpredictable, extrinsic factors,
which are by their nature outside of a
member’s control.
While the proposed rule would
require firms to undertake an
assessment of existing policies and
procedures for compliance with the rule
and may entail some additional costs for
member firms that do not already have
policies and procedures in place to
report trades as soon as practicable, the
Commission believes the proposed rule
is be reasonably designed to achieve
compliance with FINRA rules and the
applicable federal securities law and
regulations.
Therefore, for the foregoing reasons,
the Commission finds that the proposed
rule change is consistent with the Act.
26 17
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U.S.C. 78s(b)(2).
CFR 200.30–3(a)(12).
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53377
SECURITIES AND EXCHANGE
COMMISSION
[Release No. IC–31799; File No. 812–14396]
Full Circle Capital Corporation et al.;
Notice of Application
August 28, 2015.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice of application for an
order pursuant to section 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 section 57(a)(4)
of the Act and rule 17d–1 under the Act.
AGENCY:
Applicants request an order to
permit a business development
company (‘‘BDC’’) and certain affiliated
investment funds to co-invest in
portfolio companies with each other and
with other affiliated investment funds.
APPLICANTS: Full Circle Capital
Corporation (the ‘‘Company’’), Full
Circle Private Investments LLC (‘‘FCPI
Fund’’), Full Circle Healthcare Capital,
LLC (the ‘‘Healthcare Fund,’’ and
together with FCPI Fund, the ‘‘Existing
Funds’’), Full Circle Advisors, LLC (the
‘‘Adviser’’), Full Circle West, Inc., FC
New Media, Inc., TransAmerican Asset
Servicing Group, Inc., FC New Specialty
Foods, Inc. and FC Takoda Holdings,
LLC, (collectively, the ‘‘Full Circle
Subsidiaries,’’ and together with the
Company, the Existing Funds and the
Adviser, the ‘‘Applicants’’).
DATES: Filing Dates: The application was
filed on December 4, 2014 and amended
on May 1, 2015.
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 September 22, 2015,
and should be accompanied by proof of
service on applicants, in the form of an
affidavit or, for lawyers, a certificate of
service. Pursuant to rule 0–5 under the
Act, hearing requests should state the
nature of the writer’s interest, any facts
bearing upon the desirability of a
hearing on the matter, 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.
SUMMARY:
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Applicants: 102 Greenwich Avenue,
2nd Floor, Greenwich, CT 06830.
FOR FURTHER INFORMATION CONTACT: Kyle
R. Ahlgren, Senior Counsel, at (202)
551–6857 or Holly Hunter-Ceci, Branch
Chief, at (202) 551–6825 (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.
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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.1 The
Company’s Objectives and Strategies 2
are to generate both current income and
capital appreciation through debt and
equity investments, primarily in senior
secured loans and, to a lesser extent,
second lien loans and mezzanine loans
and equity securities issued by lower
middle-market companies that operate
in a diverse range of industries. The
Company has a six-member board of
directors (the ‘‘Board’’), of which four
members are not ‘‘interested persons’’ of
the Company within the meaning of
section 2(a)(19) of the Act (the
‘‘Independent Directors’’).
2. FCPI Fund is a Delaware limited
liability company managed by the
Adviser that has not yet held a closing
and currently has no investments. FCPI
Fund’s investment objective is to
generate both current income and
capital appreciation through debt and
equity investments. The Healthcare
Fund is a Delaware limited liability
company managed by the Adviser that
has not yet held a closing and currently
has no investments. The Healthcare
Fund’s investment objective is to
generate both current income and
capital appreciation through debt and
equity investments in the healthcare
industry. Each Existing Fund intends to
1 Section 2(a)(48) of the Act defines a BDC to be
any closed-end investment company that operates
for the purpose of making investments in securities
described in sections 55(a)(1) through 55(a)(3) of the
Act and makes available significant managerial
assistance with respect to the issuers of such
securities.
2 ‘‘Objectives and Strategies’’ means a fund’s
investment objectives and strategies, as described in
the fund’s registration statement on Form N–2,
other filings the fund has made with the
Commission under the Securities Act of 1933, or
under the Securities Exchange Act of 1934, and the
fund’s reports to shareholders.
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rely on the exclusion from the definition
of ‘‘investment company’’ provided by
section 3(c)(1) or 3(c)(7) of the Act.
3. Each Full Circle Subsidiary is a
Delaware entity and Wholly-Owned
Investment Sub 3 whose assets are
managed by the Adviser and whose sole
business purpose is to hold one or more
investments on behalf of the Company.
4. The Adviser is a privately-held
Delaware limited liability company
registered with the Commission as an
investment adviser under the
Investment Advisers Act of 1940. The
Adviser serves as investment adviser to
the Company and to each Existing Fund.
5. Applicants seek an order (‘‘Order’’)
under sections 57(a)(4) and 57(i) of the
Act and rule 17d–1 under the Act to
allow the Company, on one hand, and
one or more Funds,4 on the other hand,
to participate in the same investment
opportunities through a proposed coinvestment program (the ‘‘CoInvestment Program’’) where such
participation would otherwise be
prohibited under section 57(a)(4) and
rule 17d–1.
6. Applicants state that the Company
may, from time to time, form a WhollyOwned Investment Sub, each of which
would be prohibited from investing in a
Co-Investment Transaction 5 with any
Fund because it would be a company
3 The term ‘‘Wholly-Owned Investment Sub’’
means an entity (a) whose sole business purpose is
to hold one or more investments on behalf of the
Company (and, in the case of an SBIC Subsidiary
(as defined below), maintain a license under the
SBA Act (as defined below) and issue debentures
guaranteed by the SBA (as defined below)); (b) that
is wholly-owned by the Company (with the
Company at all times holding, beneficially and of
record, 100% of the voting and economic interests),
(c) with respect to which the Board has the sole
authority to make all determinations with respect
to the entity’s participation under the conditions to
the Application; and (d) that would be an
investment company but for section 3(c)(1) or
3(c)(7) of the Act. All subsidiaries of the Company
participating in co-investment transactions under
the terms of the Application will be Wholly-Owned
Investment Subs and will have Objectives and
Strategies that are either the same as, or a subset
of, the Company’s Objectives and Strategies. The
term ‘‘SBIC Subsidiary’’ means a Wholly-Owned
Investment Sub that is licensed by the Small
Business Administration (the ‘‘SBA’’) to operate
under the Small Business Investment Act of 1958,
as amended, (the ‘‘SBA Act’’) as a small business
investment company (an ‘‘SBIC’’).
4 ‘‘Fund’’ means: (i) The Existing Funds; and (ii)
any Future Fund. ‘‘Future Fund’’ means an entity:
(i) Whose investment adviser is the Adviser; and (ii)
that would be an investment company but for
section 3(c)(1) or 3(c)(7) of the Act. 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.
5 ‘‘Co-Investment Transaction’’ means any
transaction in which the Company (or a WhollyOwned Investment Sub) participated together with
one or more Funds in reliance on the requested
Order.
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controlled by the Company for purposes
of section 57(a)(4) and rule 17d–1.
Applicants request that each WhollyOwned Investment Sub be permitted to
participate in Co-Investment
Transactions in lieu of the Company
and that the Wholly-Owned Investment
Sub’s participation in any such
transaction be treated, for purposes of
the Order, as though the Company 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
Company’s investments and, therefore,
no conflicts of interest could arise
between the Company and the WhollyOwned Investment Sub. Applicants
further represent that the Board would
make all relevant determinations under
the conditions with regard to a WhollyOwned Investment Sub’s participation
in a Co-Investment Transaction, and the
Board would be informed of, and take
into consideration, any proposed use of
a Wholly-Owned Investment Sub in the
Company’s place. If the Company
proposes to participate in the same CoInvestment 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 Company and the
Wholly-Owned Investment Sub.
7. The Co-Investment Program
requires that the terms, conditions,
price, class of securities, settlement
date, and registration rights applicable
to any of the Funds’ purchases be the
same as those applicable to the
Company’s purchase. In selecting
investments for the Company, the
Adviser will consider only the
investment objective, investment
policies, investment position, capital
available for investment (‘‘Available
Capital’’),6 and other pertinent factors
applicable to the Company. Likewise,
when selecting investments for the
Funds, the Adviser will select
investments considering, in each case,
only the investment objective,
investment policies, investment
position, Available Capital, and other
pertinent factors applicable to that
6 The amount of the Company’s Available Capital
will be determined based on the amount of cash on
hand, existing commitments and reserves, if any,
the targeted leverage level, targeted asset mix and
other investment policies and restrictions set from
time to time by the Board or imposed by applicable
laws, rules, regulations or interpretations. Likewise,
a Fund’s Available Capital is determined based on
the amount of cash on hand, existing commitments
and reserves, if any, the targeted leverage level,
targeted asset mix and other investment policies
and restrictions set by the Fund’s directors, general
partners or adviser or imposed by applicable laws,
rules, regulations or interpretations.
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tkelley on DSK3SPTVN1PROD with NOTICES
particular investing entity. Each of the
Funds has, or will have, investment
objectives and strategies that are similar
or identical to the Company’s Objectives
and Strategies.
8. Other than pro rata dispositions
and Follow-On Investments 7 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 CoInvestment Transaction 8 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’’) 9 will approve each CoInvestment Transaction prior to any
investment by the Company.
9. With respect to the pro rata
dispositions and Follow-On Investments
provided in conditions 7 and 8, the
Company 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 Fund and the Company in such
disposition or Follow-On Investment 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 has approved the Company’s
participation in pro rata dispositions
and Follow-On Investments as being in
the best interests of the Company. If the
Board does not so approve, any such
disposition or Follow-On Investment
will be submitted to the Eligible
Directors. The Board may at any time
rescind, suspend or qualify its approval
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 Independent Director will have
any direct or indirect financial interest
in any Co-Investment Transaction or
any interest in any portfolio company,
other than through an interest (if any) in
the securities of the Company.
11. Under condition 14, if the
Adviser, the principals of the Adviser
7 ‘‘Follow-On Investment’’ means any additional
investment in an existing portfolio company,
including the exercise of warrants, conversion
privileges or other similar rights to acquire
additional securities of the portfolio company.
8 ‘‘Potential Co-Investment Transaction’’ means
any investment opportunity in which the Company
(or a Wholly-Owned Investment Sub) could not
participate together with one or more Funds
without obtaining and relying on the Order.
9 In the case of a Regulated Fund that is a
registered closed-end fund, the Board members that
make up the Required Majority will be determined
as if the Regulated Fund were a BDC subject to
section 57(o).
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(‘‘Principals’’), any person controlling,
controlled by, or under common control
with the Adviser or the Principals, and
the Funds (collectively, the ‘‘Holders’’)
own in the aggregate more than 25% of
the outstanding voting securities of the
Company (‘‘Shares’’), then the Holders
will vote such Shares as directed by an
independent third party (such as the
trustee of a voting trust or a proxy
adviser) when voting on (1) the election
of directors; (2) the removal of one or
more directors; or (3) any matters
requiring approval by the vote of a
majority of the outstanding voting
securities, as defined in Section 2(a)(42)
of the Act.
Applicants’ Legal Analysis
1. Section 57(a)(4) of the Act makes it
unlawful for any person who is related
to a BDC in a manner described in
section 57(b), acting as principal,
knowingly to effect any transaction in
which the BDC is a joint or a joint and
several participant with that person in
contravention of rules and regulations
as the Commission may prescribe for the
purpose of limiting or preventing
participation by the BDC on a basis less
advantageous than that of the other
participant. Although the Commission
has not adopted any rules expressly
under section 57(a)(4), section 57(i)
provides that the rules under section
17(d) applicable to registered closed-end
investment companies (e.g., rule 17d–1)
are, in the interim, deemed to apply to
transactions subject to section 57(a).
Rule 17d–1, as made applicable to BDCs
by section 57(i), prohibits any person
who is related to a BDC in a manner
described in section 57(b), acting as
principal, from participating in, or
effecting any transaction in connection
with, any joint enterprise or other joint
arrangement or profit-sharing plan in
which the BDC is a participant, unless
an application regarding the joint
enterprise, arrangement, or profitsharing plan has been filed with the
Commission and has been granted by an
order entered prior to the submission of
the plan or any modification thereof, to
security holders for approval, or prior to
its adoption or modification if not so
submitted.
2. Section 57(b) specifies the persons
to whom the prohibitions of section
57(a)(4) apply. These persons include
the following: (1) Any director, officer,
employee, or member of an advisory
board of a BDC or any person (other
than the BDC itself) who is, within the
meaning of section 2(a)(3)(C), an
affiliated person of any such person; or
(2) any investment adviser or promoter
of, general partner in, principal
underwriter for, or person directly or
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53379
indirectly either controlling, controlled
by, or under common control with a
BDC (except the BDC itself and any
person who, if it were not directly or
indirectly controlled by the BDC, would
not be directly or indirectly under the
control of a person who controls the
BDC), or any person who is, within the
meaning of section 2(a)(3)(C) an
affiliated person of such person. Section
2(a)(9) defines ‘‘control’’ as the power to
exercise a controlling influence over the
management or policies of a company,
unless such power is solely the result of
an official position with such company.
The statute also sets forth the
interpretation that any person who
owns beneficially, either directly or
through one or more controlled
companies, more than 25 percent of the
voting securities of a company shall be
presumed to control such company; any
person who does not so own more than
25 percent of the voting securities of a
company shall be presumed not to
control such company; and a natural
person shall be presumed not to be a
controlled person.
3. Applicants state that in the absence
of the requested relief, transactions
effected as part of the Co-Investment
Program would be prohibited by section
57(a)(4) and rule 17d–1 to the extent
that the Funds fall within the category
of persons described by section 57(b)
`
vis-a-vis the Company. The Existing
Funds may be deemed to be affiliated
persons of the Company within the
meaning of section 2(a)(3)(C) by reason
of common control because the Adviser
manages and may be deemed to control
the Company and the Existing Funds.
Similarly, each Future Fund may be
deemed to be an affiliated person of the
Company within the meaning of section
2(a)(3)(C) by reason of common control
because the Adviser will manage and
may be deemed to control each Future
Fund. Thus, each of the Funds could be
deemed to be a person related to the
Company in a manner described by
section 57(b) and therefore prohibited
by section 57(a)(4) and rule 17d–1 from
participating in the Co-Investment
Program.
4. In passing upon applications under
rule 17d–1, the Commission will
consider whether the participation by
the BDC in such 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.
5. Applicants submit that the fact that
the Required Majority will approve each
Co-Investment Transaction before
investment, and other protective
conditions set forth in the Application,
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will ensure that the Company will be
treated fairly. The conditions to which
the requested relief will be subject are
designed to ensure that neither the
Adviser nor Principal would be able to
favor the Funds over the Company
through the allocation of investment
opportunities among them. Because
almost every attractive investment
opportunity for the Company will also
be an attractive investment opportunity
for the Funds, Applicants submit that
the Co-Investment Program presents an
attractive alternative to the institution of
some form of equitable allocation
protocol for the allocation of 100% of
individual investment opportunities to
either the Company or the Funds as
opportunities arise. Applicants submit
that the Company’s participation in the
Co-Investment Transactions will be
consistent with the provisions, policies,
and purposes of the Act and on a basis
that is not different from or less
advantageous than that of other
participants.
Applicants’ Conditions
Applicants agree that the Order will
be subject to the following conditions:
1. Each time the Adviser considers a
Potential Co-Investment Transaction for
a Fund that falls within the Company’s
then-current Objectives and Strategies,
the Adviser will make an independent
determination of the appropriateness of
the investment for the Company in light
of the Company’s then-current
circumstances.
2. (a) If the Adviser deems the
Company’s participation in any
Potential Co-Investment Transaction to
be appropriate for the Company, it will
then determine an appropriate level of
investment for the Company.
(b) If the aggregate amount
recommended by the Adviser to be
invested in the Potential Co-Investment
Transaction by the Company, together
with the amount proposed to be
invested by the Funds, collectively, in
the same transaction, exceeds the
amount of the investment opportunity,
the amount proposed to be invested by
each party will be allocated among them
pro rata based on each party’s Available
Capital in the asset class being
allocated, up to the amount proposed to
be invested by each. The Adviser will
provide the Eligible Directors with
information concerning each
participating party’s Available Capital to
assist the Eligible Directors with their
review of the Company’s investments
for compliance with these allocation
procedures.
(c) After making the determinations
required in conditions 1 and 2(a), the
Adviser will distribute written
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information concerning the Potential
Co-Investment Transaction (including
the amount proposed to be invested by
each Fund) to the Eligible Directors for
their consideration. The Company will
co-invest with one or more Funds only
if, prior to participating in the Potential
Co- Investment Transaction, a Required
Majority concludes that:
(i) The terms of the transaction,
including the consideration to be paid,
are reasonable and fair to the Company
and its shareholders and do not involve
overreaching in respect of the Company
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 Company; and
(B) the Company’s then-current
Objectives and Strategies;
(iii) the investment by the Funds
would not disadvantage the Company,
and participation by the Company
would not be on a basis different from
or less advantageous than that of the
Funds; provided that, if any Fund, but
not the Company 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 Adviser agrees to, and does,
provide, periodic reports to the Board
with respect to the actions of the
director or the information received by
the 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 any Fund or any affiliated person
of any Fund receives in connection with
the right of the 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
Funds (who may, in turn, share their
portion with their affiliated persons)
and the Company in accordance with
the amount of each party’s investment;
and
(iv) the proposed investment by the
Company will not benefit the Adviser or
the Funds or any affiliated person of any
of them (other than the parties to the CoInvestment Transaction), except (A) to
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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. The Company has the right to
decline to participate in any Potential
Co-Investment Transaction or to invest
less than the amount proposed.
4. The Adviser will present to the
Board, on a quarterly basis, a record of
all investments in Potential CoInvestment Transactions made by the
Funds during the preceding quarter that
fell within the Company’s then-current
Objectives and Strategies that were not
made available to the Company, and an
explanation of why the investment
opportunities were not offered to the
Company. All information presented to
the Board pursuant to this condition
will be kept for the life of the Company
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,
the Company will not invest in reliance
on the Order in any issuer in which any
Fund or any affiliated person of the
Funds is an existing investor.
6. The Company 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
the Company as for the each
participating Fund. The grant to a Fund,
but not the Company, 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 Fund elects to sell,
exchange or otherwise dispose of an
interest in a security that was acquired
in a Co-Investment Transaction, the
Adviser will:
(i) Notify the Company of the
proposed disposition at the earliest
practical time; and
(ii) formulate a recommendation as to
participation by the Company in the
disposition.
(b) The Company will have the right
to participate in such disposition on a
proportionate basis, at the same price
and on the same terms and conditions
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Federal Register / Vol. 80, No. 171 / Thursday, September 3, 2015 / Notices
as those applicable to the participating
Funds.
(c) The Company may participate in
such disposition without obtaining prior
approval of the Required Majority if: (i)
The proposed participation of the
Company and each Fund in such
disposition is proportionate to its
outstanding investment in the issuer
immediately preceding the disposition;
(ii) the Board has approved as being in
the best interests of the Company the
ability to participate in such
dispositions on a pro rata basis (as
described in greater detail in the
Application); and (iii) the Board 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 Company’s
participation to the Eligible Directors,
and the Company will participate in
such disposition solely to the extent that
a Required Majority determines that it is
in the Company’s best interests.
(d) The Company and each
participating Fund will bear its own
expenses in connection with any such
disposition.
8. (a) If any Fund desires to make a
Follow-On Investment in a portfolio
company whose securities were
acquired in a Co-Investment
Transaction, the Adviser will:
(i) Notify the Company 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 the Company.
(b) The Company may participate in
such Follow-On Investment without
obtaining prior approval of the Required
Majority if: (i) The proposed
participation of the Company and each
Fund in such investment is
proportionate to its outstanding
investments in the issuer immediately
preceding the Follow-On Investment;
and (ii) the Board has approved as being
in the best interests of the Company 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 Company’s
participation to the Eligible Directors,
and the Company will participate in
such Follow-On Investment solely to the
extent that a Required Majority
determines that it is in the Company’s
best interests.
(c) If, with respect to any Follow-On
Investment:
(i) The amount of the opportunity is
not based on the Company’s and the
VerDate Sep<11>2014
14:42 Sep 02, 2015
Jkt 235001
Funds’ outstanding investments
immediately preceding the Follow-On
Investment; and
(ii) the aggregate amount
recommended by the Adviser to be
invested by the Company in the FollowOn Investment, together with the
amount proposed to be invested by the
participating 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 party’s Available
Capital in the asset class being
allocated, 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 Independent Directors will be
provided quarterly for review all
information concerning Potential CoInvestment Transactions and CoInvestment Transactions, including
investments made by the Funds that the
Company considered but declined to
participate in, so that the Independent
Directors may determine whether all
investments made during the preceding
quarter, including those investments
that the Company considered but
declined to participate in, comply with
the conditions of the order. In addition,
the Independent Directors will consider
at least annually the continued
appropriateness for the Company of
participating in new and existing CoInvestment Transactions.
10. The Company will maintain the
records required by section 57(f)(3) as if
each of the investments permitted under
these conditions were approved by the
Required Majority under section 57(f).
11. No Independent Director will also
be a director, general partner, managing
member or principal, or otherwise an
‘‘affiliated person’’ (as defined in the
Act), of any of the Funds.
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 1933 Act)
will, to the extent not payable by the
Adviser under its respective investment
advisory agreements with the Company
and the Funds, be shared by the
Company and the Funds in proportion
to the relative amounts of the securities
held or being acquired or disposed of,
as the case may be.
PO 00000
Frm 00105
Fmt 4703
Sfmt 9990
53381
13. Any transaction fee 10 (including
break-up or commitment fees but
excluding broker’s fees contemplated by
section 17(e) or 57(k), as applicable)
received in connection with a CoInvestment Transaction will be
distributed to the Company and the
participating 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 the
Adviser pending consummation of the
transaction, the fee will be deposited
into an account maintained by the
Adviser at a bank or banks having the
qualifications prescribed in section
26(a)(1), and the account will earn a
competitive rate of interest that will also
be divided pro rata among the Company
and the participating Funds based on
the amounts they invest in such CoInvestment Transaction. None of the
Adviser, the Funds, nor any affiliated
person of the Company 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 Company and the participating
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 the
Adviser, investment advisory fees paid
in accordance with the respective
agreements between the Adviser and the
Company or the Funds).
14. If the Holders own in the aggregate
more than 25% of the outstanding
Shares of a Regulated Fund, then the
Holders will vote such Shares as
directed by an independent third party
(such as the trustee of a voting trust or
a proxy adviser) when voting on (1) the
election of directors; (2) the removal of
one or more directors; or (3) any matters
requiring approval by the vote of a
majority of the outstanding voting
securities, as defined in section 2(a)(42)
of the Act.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015–21866 Filed 9–2–15; 8:45 am]
BILLING CODE 8011–01–P
10 Applicants are not requesting and the staff is
not providing any relief for transaction fees
received in connection with any Co-Investment
Transaction.
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]]>Agencies
[Federal Register Volume 80, Number 171 (Thursday, September 3, 2015)]
[Notices]
[Pages 53377-53381]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-21866]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. IC-31799; File No. 812-14396]
Full Circle Capital Corporation et al.; Notice of Application
August 28, 2015.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice of application for an order pursuant to section 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
section 57(a)(4) of the Act and rule 17d-1 under the Act.
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SUMMARY: Applicants request an order to permit a business development
company (``BDC'') and certain affiliated investment funds to co-invest
in portfolio companies with each other and with other affiliated
investment funds.
APPLICANTS: Full Circle Capital Corporation (the ``Company''), Full
Circle Private Investments LLC (``FCPI Fund''), Full Circle Healthcare
Capital, LLC (the ``Healthcare Fund,'' and together with FCPI Fund, the
``Existing Funds''), Full Circle Advisors, LLC (the ``Adviser''), Full
Circle West, Inc., FC New Media, Inc., TransAmerican Asset Servicing
Group, Inc., FC New Specialty Foods, Inc. and FC Takoda Holdings, LLC,
(collectively, the ``Full Circle Subsidiaries,'' and together with the
Company, the Existing Funds and the Adviser, the ``Applicants'').
DATES: Filing Dates: The application was filed on December 4, 2014 and
amended on May 1, 2015.
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 September 22, 2015, and should be accompanied by proof of
service on applicants, in the form of an affidavit or, for lawyers, a
certificate of service. Pursuant to rule 0-5 under the Act, hearing
requests should state the nature of the writer's interest, any facts
bearing upon the desirability of a hearing on the matter, 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.
[[Page 53378]]
Applicants: 102 Greenwich Avenue, 2nd Floor, Greenwich, CT 06830.
FOR FURTHER INFORMATION CONTACT: Kyle R. Ahlgren, Senior Counsel, at
(202) 551-6857 or Holly Hunter-Ceci, Branch Chief, at (202) 551-6825
(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.\1\ The Company's Objectives and
Strategies \2\ are to generate both current income and capital
appreciation through debt and equity investments, primarily in senior
secured loans and, to a lesser extent, second lien loans and mezzanine
loans and equity securities issued by lower middle-market companies
that operate in a diverse range of industries. The Company has a six-
member board of directors (the ``Board''), of which four members are
not ``interested persons'' of the Company within the meaning of section
2(a)(19) of the Act (the ``Independent Directors'').
---------------------------------------------------------------------------
\1\ Section 2(a)(48) of the Act defines a BDC to be any closed-
end investment company that operates for the purpose of making
investments in securities described in sections 55(a)(1) through
55(a)(3) of the Act and makes available significant managerial
assistance with respect to the issuers of such securities.
\2\ ``Objectives and Strategies'' means a fund's investment
objectives and strategies, as described in the fund's registration
statement on Form N-2, other filings the fund has made with the
Commission under the Securities Act of 1933, or under the Securities
Exchange Act of 1934, and the fund's reports to shareholders.
---------------------------------------------------------------------------
2. FCPI Fund is a Delaware limited liability company managed by the
Adviser that has not yet held a closing and currently has no
investments. FCPI Fund's investment objective is to generate both
current income and capital appreciation through debt and equity
investments. The Healthcare Fund is a Delaware limited liability
company managed by the Adviser that has not yet held a closing and
currently has no investments. The Healthcare Fund's investment
objective is to generate both current income and capital appreciation
through debt and equity investments in the healthcare industry. Each
Existing Fund intends to rely on the exclusion from the definition of
``investment company'' provided by section 3(c)(1) or 3(c)(7) of the
Act.
3. Each Full Circle Subsidiary is a Delaware entity and Wholly-
Owned Investment Sub \3\ whose assets are managed by the Adviser and
whose sole business purpose is to hold one or more investments on
behalf of the Company.
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\3\ The term ``Wholly-Owned Investment Sub'' means an entity (a)
whose sole business purpose is to hold one or more investments on
behalf of the Company (and, in the case of an SBIC Subsidiary (as
defined below), maintain a license under the SBA Act (as defined
below) and issue debentures guaranteed by the SBA (as defined
below)); (b) that is wholly-owned by the Company (with the Company
at all times holding, beneficially and of record, 100% of the voting
and economic interests), (c) with respect to which the Board has the
sole authority to make all determinations with respect to the
entity's participation under the conditions to the Application; and
(d) that would be an investment company but for section 3(c)(1) or
3(c)(7) of the Act. All subsidiaries of the Company participating in
co-investment transactions under the terms of the Application will
be Wholly-Owned Investment Subs and will have Objectives and
Strategies that are either the same as, or a subset of, the
Company's Objectives and Strategies. The term ``SBIC Subsidiary''
means a Wholly-Owned Investment Sub that is licensed by the Small
Business Administration (the ``SBA'') to operate under the Small
Business Investment Act of 1958, as amended, (the ``SBA Act'') as a
small business investment company (an ``SBIC'').
---------------------------------------------------------------------------
4. The Adviser is a privately-held Delaware limited liability
company registered with the Commission as an investment adviser under
the Investment Advisers Act of 1940. The Adviser serves as investment
adviser to the Company and to each Existing Fund.
5. Applicants seek an order (``Order'') under sections 57(a)(4) and
57(i) of the Act and rule 17d-1 under the Act to allow the Company, on
one hand, and one or more Funds,\4\ on the other hand, to participate
in the same investment opportunities through a proposed co-investment
program (the ``Co-Investment Program'') where such participation would
otherwise be prohibited under section 57(a)(4) and rule 17d-1.
---------------------------------------------------------------------------
\4\ ``Fund'' means: (i) The Existing Funds; and (ii) any Future
Fund. ``Future Fund'' means an entity: (i) Whose investment adviser
is the Adviser; and (ii) that would be an investment company but for
section 3(c)(1) or 3(c)(7) of the Act. 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.
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6. Applicants state that the Company may, from time to time, form a
Wholly-Owned Investment Sub, each of which would be prohibited from
investing in a Co-Investment Transaction \5\ with any Fund because it
would be a company controlled by the Company for purposes of section
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 Company and that the Wholly-Owned
Investment Sub's participation in any such transaction be treated, for
purposes of the Order, as though the Company 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 Company's investments and, therefore, no
conflicts of interest could arise between the Company and the Wholly-
Owned Investment Sub. Applicants further represent that 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 Board would be informed of, and take into
consideration, any proposed use of a Wholly-Owned Investment Sub in the
Company's place. If the Company 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 Company and the Wholly-Owned Investment
Sub.
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\5\ ``Co-Investment Transaction'' means any transaction in which
the Company (or a Wholly-Owned Investment Sub) participated together
with one or more Funds in reliance on the requested Order.
---------------------------------------------------------------------------
7. The Co-Investment Program requires that the terms, conditions,
price, class of securities, settlement date, and registration rights
applicable to any of the Funds' purchases be the same as those
applicable to the Company's purchase. In selecting investments for the
Company, the Adviser will consider only the investment objective,
investment policies, investment position, capital available for
investment (``Available Capital''),\6\ and other pertinent factors
applicable to the Company. Likewise, when selecting investments for the
Funds, the Adviser will select investments considering, in each case,
only the investment objective, investment policies, investment
position, Available Capital, and other pertinent factors applicable to
that
[[Page 53379]]
particular investing entity. Each of the Funds has, or will have,
investment objectives and strategies that are similar or identical to
the Company's Objectives and Strategies.
---------------------------------------------------------------------------
\6\ The amount of the Company's Available Capital will be
determined based on the amount of cash on hand, existing commitments
and reserves, if any, the targeted leverage level, targeted asset
mix and other investment policies and restrictions set from time to
time by the Board or imposed by applicable laws, rules, regulations
or interpretations. Likewise, a Fund's Available Capital is
determined based on the amount of cash on hand, existing commitments
and reserves, if any, the targeted leverage level, targeted asset
mix and other investment policies and restrictions set by the Fund's
directors, general partners or adviser or imposed by applicable
laws, rules, regulations or interpretations.
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8. Other than pro rata dispositions and Follow-On Investments \7\
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 \8\ 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'') \9\ will approve
each Co-Investment Transaction prior to any investment by the Company.
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\7\ ``Follow-On Investment'' means any additional investment in
an existing portfolio company, including the exercise of warrants,
conversion privileges or other similar rights to acquire additional
securities of the portfolio company.
\8\ ``Potential Co-Investment Transaction'' means any investment
opportunity in which the Company (or a Wholly-Owned Investment Sub)
could not participate together with one or more Funds without
obtaining and relying on the Order.
\9\ In the case of a Regulated Fund that is a registered closed-
end fund, the Board members that make up the Required Majority will
be determined as if the Regulated Fund were a BDC subject to section
57(o).
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9. With respect to the pro rata dispositions and Follow-On
Investments provided in conditions 7 and 8, the Company 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 Fund and the Company in such
disposition or Follow-On Investment 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 has
approved the Company's participation in pro rata dispositions and
Follow-On Investments as being in the best interests of the Company. If
the Board does not so approve, any such disposition or Follow-On
Investment will be submitted to the Eligible Directors. The Board may
at any time rescind, suspend or qualify its approval 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 Independent Director will have any direct or indirect
financial interest in any Co-Investment Transaction or any interest in
any portfolio company, other than through an interest (if any) in the
securities of the Company.
11. Under condition 14, if the Adviser, the principals of the
Adviser (``Principals''), any person controlling, controlled by, or
under common control with the Adviser or the Principals, and the Funds
(collectively, the ``Holders'') own in the aggregate more than 25% of
the outstanding voting securities of the Company (``Shares''), then the
Holders will vote such Shares as directed by an independent third party
(such as the trustee of a voting trust or a proxy adviser) when voting
on (1) the election of directors; (2) the removal of one or more
directors; or (3) any matters requiring approval by the vote of a
majority of the outstanding voting securities, as defined in Section
2(a)(42) of the Act.
Applicants' Legal Analysis
1. Section 57(a)(4) of the Act makes it unlawful for any person who
is related to a BDC in a manner described in section 57(b), acting as
principal, knowingly to effect any transaction in which the BDC is a
joint or a joint and several participant with that person in
contravention of rules and regulations as the Commission may prescribe
for the purpose of limiting or preventing participation by the BDC on a
basis less advantageous than that of the other participant. Although
the Commission has not adopted any rules expressly under section
57(a)(4), section 57(i) provides that the rules under section 17(d)
applicable to registered closed-end investment companies (e.g., rule
17d-1) are, in the interim, deemed to apply to transactions subject to
section 57(a). Rule 17d-1, as made applicable to BDCs by section 57(i),
prohibits any person who is related to a BDC in a manner described in
section 57(b), acting as principal, from participating in, or effecting
any transaction in connection with, any joint enterprise or other joint
arrangement or profit-sharing plan in which the BDC is a participant,
unless an application regarding the joint enterprise, arrangement, or
profit-sharing plan has been filed with the Commission and has been
granted by an order entered prior to the submission of the plan or any
modification thereof, to security holders for approval, or prior to its
adoption or modification if not so submitted.
2. Section 57(b) specifies the persons to whom the prohibitions of
section 57(a)(4) apply. These persons include the following: (1) Any
director, officer, employee, or member of an advisory board of a BDC or
any person (other than the BDC itself) who is, within the meaning of
section 2(a)(3)(C), an affiliated person of any such person; or (2) any
investment adviser or promoter of, general partner in, principal
underwriter for, or person directly or indirectly either controlling,
controlled by, or under common control with a BDC (except the BDC
itself and any person who, if it were not directly or indirectly
controlled by the BDC, would not be directly or indirectly under the
control of a person who controls the BDC), or any person who is, within
the meaning of section 2(a)(3)(C) an affiliated person of such person.
Section 2(a)(9) defines ``control'' as the power to exercise a
controlling influence over the management or policies of a company,
unless such power is solely the result of an official position with
such company. The statute also sets forth the interpretation that any
person who owns beneficially, either directly or through one or more
controlled companies, more than 25 percent of the voting securities of
a company shall be presumed to control such company; any person who
does not so own more than 25 percent of the voting securities of a
company shall be presumed not to control such company; and a natural
person shall be presumed not to be a controlled person.
3. Applicants state that in the absence of the requested relief,
transactions effected as part of the Co-Investment Program would be
prohibited by section 57(a)(4) and rule 17d-1 to the extent that the
Funds fall within the category of persons described by section 57(b)
vis-[agrave]-vis the Company. The Existing Funds may be deemed to be
affiliated persons of the Company within the meaning of section
2(a)(3)(C) by reason of common control because the Adviser manages and
may be deemed to control the Company and the Existing Funds. Similarly,
each Future Fund may be deemed to be an affiliated person of the
Company within the meaning of section 2(a)(3)(C) by reason of common
control because the Adviser will manage and may be deemed to control
each Future Fund. Thus, each of the Funds could be deemed to be a
person related to the Company in a manner described by section 57(b)
and therefore prohibited by section 57(a)(4) and rule 17d-1 from
participating in the Co-Investment Program.
4. In passing upon applications under rule 17d-1, the Commission
will consider whether the participation by the BDC in such 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.
5. Applicants submit that the fact that the Required Majority will
approve each Co-Investment Transaction before investment, and other
protective conditions set forth in the Application,
[[Page 53380]]
will ensure that the Company will be treated fairly. The conditions to
which the requested relief will be subject are designed to ensure that
neither the Adviser nor Principal would be able to favor the Funds over
the Company through the allocation of investment opportunities among
them. Because almost every attractive investment opportunity for the
Company will also be an attractive investment opportunity for the
Funds, Applicants submit that the Co-Investment Program presents an
attractive alternative to the institution of some form of equitable
allocation protocol for the allocation of 100% of individual investment
opportunities to either the Company or the Funds as opportunities
arise. Applicants submit that the Company's participation in the Co-
Investment Transactions will be consistent with the provisions,
policies, and purposes of the Act and on a basis that is not different
from or less advantageous than that of other participants.
Applicants' Conditions
Applicants agree that the Order will be subject to the following
conditions:
1. Each time the Adviser considers a Potential Co-Investment
Transaction for a Fund that falls within the Company's then-current
Objectives and Strategies, the Adviser will make an independent
determination of the appropriateness of the investment for the Company
in light of the Company's then-current circumstances.
2. (a) If the Adviser deems the Company's participation in any
Potential Co-Investment Transaction to be appropriate for the Company,
it will then determine an appropriate level of investment for the
Company.
(b) If the aggregate amount recommended by the Adviser to be
invested in the Potential Co-Investment Transaction by the Company,
together with the amount proposed to be invested by the Funds,
collectively, in the same transaction, exceeds the amount of the
investment opportunity, the amount proposed to be invested by each
party will be allocated among them pro rata based on each party's
Available Capital in the asset class being allocated, up to the amount
proposed to be invested by each. The Adviser will provide the Eligible
Directors with information concerning each participating party's
Available Capital to assist the Eligible Directors with their review of
the Company's investments for compliance with these allocation
procedures.
(c) After making the determinations required in conditions 1 and
2(a), the Adviser will distribute written information concerning the
Potential Co-Investment Transaction (including the amount proposed to
be invested by each Fund) to the Eligible Directors for their
consideration. The Company will co-invest with one or more Funds only
if, prior to participating in the Potential Co- Investment Transaction,
a Required Majority concludes that:
(i) The terms of the transaction, including the consideration to be
paid, are reasonable and fair to the Company and its shareholders and
do not involve overreaching in respect of the Company 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 Company; and
(B) the Company's then-current Objectives and Strategies;
(iii) the investment by the Funds would not disadvantage the
Company, and participation by the Company would not be on a basis
different from or less advantageous than that of the Funds; provided
that, if any Fund, but not the Company 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 Adviser agrees to, and does, provide, periodic reports to
the Board with respect to the actions of the director or the
information received by the 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 any Fund or any affiliated
person of any Fund receives in connection with the right of the 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 Funds (who may,
in turn, share their portion with their affiliated persons) and the
Company in accordance with the amount of each party's investment; and
(iv) the proposed investment by the Company will not benefit the
Adviser or the 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. The Company has the right to decline to participate in any
Potential Co-Investment Transaction or to invest less than the amount
proposed.
4. The Adviser will present to the Board, on a quarterly basis, a
record of all investments in Potential Co-Investment Transactions made
by the Funds during the preceding quarter that fell within the
Company's then-current Objectives and Strategies that were not made
available to the Company, and an explanation of why the investment
opportunities were not offered to the Company. All information
presented to the Board pursuant to this condition will be kept for the
life of the Company 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, the Company will not invest in reliance on the Order in
any issuer in which any Fund or any affiliated person of the Funds is
an existing investor.
6. The Company 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 the Company as for the each participating Fund. The grant to a
Fund, but not the Company, 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 Fund elects to sell, exchange or otherwise dispose of
an interest in a security that was acquired in a Co-Investment
Transaction, the Adviser will:
(i) Notify the Company of the proposed disposition at the earliest
practical time; and
(ii) formulate a recommendation as to participation by the Company
in the disposition.
(b) The Company will have the right to participate in such
disposition on a proportionate basis, at the same price and on the same
terms and conditions
[[Page 53381]]
as those applicable to the participating Funds.
(c) The Company may participate in such disposition without
obtaining prior approval of the Required Majority if: (i) The proposed
participation of the Company and each Fund in such disposition is
proportionate to its outstanding investment in the issuer immediately
preceding the disposition; (ii) the Board has approved as being in the
best interests of the Company the ability to participate in such
dispositions on a pro rata basis (as described in greater detail in the
Application); and (iii) the Board 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 Company's participation to the Eligible Directors, and the
Company will participate in such disposition solely to the extent that
a Required Majority determines that it is in the Company's best
interests.
(d) The Company and each participating Fund will bear its own
expenses in connection with any such disposition.
8. (a) If any Fund desires to make a Follow-On Investment in a
portfolio company whose securities were acquired in a Co-Investment
Transaction, the Adviser will:
(i) Notify the Company 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 the
Company.
(b) The Company may participate in such Follow-On Investment
without obtaining prior approval of the Required Majority if: (i) The
proposed participation of the Company and each Fund in such investment
is proportionate to its outstanding investments in the issuer
immediately preceding the Follow-On Investment; and (ii) the Board has
approved as being in the best interests of the Company 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 Company's
participation to the Eligible Directors, and the Company will
participate in such Follow-On Investment solely to the extent that a
Required Majority determines that it is in the Company's best
interests.
(c) If, with respect to any Follow-On Investment:
(i) The amount of the opportunity is not based on the Company's and
the Funds' outstanding investments immediately preceding the Follow-On
Investment; and
(ii) the aggregate amount recommended by the Adviser to be invested
by the Company in the Follow-On Investment, together with the amount
proposed to be invested by the participating 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 party's Available Capital in the asset
class being allocated, 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 Independent Directors will be provided quarterly for review
all information concerning Potential Co-Investment Transactions and Co-
Investment Transactions, including investments made by the Funds that
the Company considered but declined to participate in, so that the
Independent Directors may determine whether all investments made during
the preceding quarter, including those investments that the Company
considered but declined to participate in, comply with the conditions
of the order. In addition, the Independent Directors will consider at
least annually the continued appropriateness for the Company of
participating in new and existing Co-Investment Transactions.
10. The Company will maintain the records required by section
57(f)(3) as if each of the investments permitted under these conditions
were approved by the Required Majority under section 57(f).
11. No Independent Director will also be a director, general
partner, managing member or principal, or otherwise an ``affiliated
person'' (as defined in the Act), of any of the Funds.
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 1933 Act) will, to the
extent not payable by the Adviser under its respective investment
advisory agreements with the Company and the Funds, be shared by the
Company and the Funds in proportion to the relative amounts of the
securities held or being acquired or disposed of, as the case may be.
13. Any transaction fee \10\ (including break-up or commitment fees
but excluding broker's fees contemplated by section 17(e) or 57(k), as
applicable) received in connection with a Co-Investment Transaction
will be distributed to the Company and the participating 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 the Adviser pending consummation of the transaction, the fee
will be deposited into an account maintained by the Adviser at a bank
or banks having the qualifications prescribed in section 26(a)(1), and
the account will earn a competitive rate of interest that will also be
divided pro rata among the Company and the participating Funds based on
the amounts they invest in such Co-Investment Transaction. None of the
Adviser, the Funds, nor any affiliated person of the Company 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 Company and the participating 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 the Adviser,
investment advisory fees paid in accordance with the respective
agreements between the Adviser and the Company or the Funds).
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\10\ Applicants are not requesting and the staff is not
providing any relief for transaction fees received in connection
with any Co-Investment Transaction.
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14. If the Holders own in the aggregate more than 25% of the
outstanding Shares of a Regulated Fund, then the Holders will vote such
Shares as directed by an independent third party (such as the trustee
of a voting trust or a proxy adviser) when voting on (1) the election
of directors; (2) the removal of one or more directors; or (3) any
matters requiring approval by the vote of a majority of the outstanding
voting securities, as defined in section 2(a)(42) of the Act.
For the Commission, by the Division of Investment Management,
under delegated authority.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-21866 Filed 9-2-15; 8:45 am]
BILLING CODE 8011-01-P
