Investment Company Act Release No. IC-31235; 812-14242; Monroe Capital Corporation, et al., 52779-52780 [2014-21004]

Download as PDF Federal Register / Vol. 79, No. 171 / Thursday, September 4, 2014 / Notices SECURITIES AND EXCHANGE COMMISSION mstockstill on DSK4VPTVN1PROD with NOTICES Investment Company Act Release No. IC–31235; 812–14242; Monroe Capital Corporation, et al.; Notice of Application number, or for an applicant using the Company name box, at http:// www.sec.gov/search/search.htm or by calling (202) 551–8090. Applicants’ Representations 1. The Company, a Maryland corporation, is an externally managed, August 28, 2014. non-diversified, closed-end AGENCY: Securities and Exchange management investment company that Commission (‘‘Commission’’). has elected to be regulated as a business ACTION: Notice of an application for an development company (‘‘BDC’’) under order under section 6(c) of the the Act.1 The Company’s investment Investment Company Act of 1940 (the objective is to maximize the total return ‘‘Act’’) for an exemption from sections to its stockholders in the form of current 18(a) and 61(a) of the Act. income and capital appreciation through investments in senior, Applicants: Monroe Capital unitranche and junior secured debt and, Corporation (the ‘‘Company’’), Monroe to a lesser extent, unsecured Capital BDC Advisors, LLC (the subordinated debt and equity ‘‘Investment Adviser’’), MCC SBIC GP, investments. The Investment Adviser, a LLC (the ‘‘General Partner’’), and Delaware limited liability company, is Monroe Capital Corporation SBIC, LP the investment adviser to the Company. (‘‘Monroe SBIC’’). The Investment Adviser is registered Summary of the Application: The under the Investment Advisers Act of Company requests an order to permit it 1940. to adhere to a modified asset coverage 2. Monroe SBIC, a Delaware limited requirement. partnership, is a small business Filing Dates: The application was investment company (‘‘SBIC’’) licensed filed November 21, 2013, and amended by the Small Business Administration on May 23, 2014. Hearing or Notification of Hearing: An (‘‘SBA’’) to operate under the Small Business Investment Act of 1958 order granting the application will be (‘‘SBIA’’). Monroe SBIC is excluded issued unless the Commission orders a hearing. Interested persons may request from the definition of investment company by section 3(c)(7) of the Act. a hearing by writing to the The Company directly owns 99% of Commission’s Secretary and serving Monroe SBIC in the form of a limited applicants with a copy of the request, partnership interest in Monroe SBIC. personally or by mail. Hearing requests Since Monroe SBIC’s inception, the should be received by the Commission by 5:30 p.m. on September 22, 2014 and General Partner, a Delaware limited liability company, has been the general should be accompanied by proof of partner of Monroe SBIC and owns 1% service on the Applicants, in the form of Monroe SBIC in the form of a general of an affidavit or, for lawyers, a partnership interest. The Company certificate of service. Hearing requests owns 100% of the General Partner’s should state the nature of the writer’s equity interests. As a result, the interest, the reason for the request, and Company, directly or indirectly through the issues contested. Persons who wish the General Partner, wholly owns to be notified of a hearing may request Monroe SBIC. notification by writing to the Commission’s Secretary. Applicants’ Legal Analysis ADDRESSES: Secretary, U.S. Securities 1. The Company requests an and Exchange Commission, 100 F Street exemption pursuant to section 6(c) of NE., Washington, DC 20549–1090. the Act from the provisions of sections Applicants: Theodore L. Koenig, 18(a) and 61(a) of the Act to permit it Monroe Capital Corporation, 311 South to adhere to a modified asset coverage Wacker Drive, Suite 6400, Chicago, requirement with respect to any direct Illinois 60606. or indirect wholly owned subsidiary of FOR FURTHER INFORMATION CONTACT: the Company that is licensed by the Stephan N. Packs, Senior Counsel, at SBA to operate under the SBIA as a (202) 551–6853, or James M. Curtis, SBIC and relies on Section 3(c)(7) for an Branch Chief, at (202) 551–6825 exemption from the definition of (Division of Investment Management, Chief Counsel’s Office). 1 Section 2(a)(48) defines a BDC to be any closedend investment company that operates for the SUPPLEMENTARY INFORMATION: The purpose of making investments in securities following is a summary of the described in section 55(a)(1) through 55(a)(3) of the application. The complete application Act and makes available significant managerial may be obtained via the Commission’s assistance with respect to the issuers of such securities. Web site by searching for the file VerDate Mar<15>2010 18:14 Sep 03, 2014 Jkt 232001 PO 00000 Frm 00155 Fmt 4703 Sfmt 4703 52779 ‘‘investment company’’ under the 1940 Act (each, a ‘‘SBIC Subsidiary’’).2 Applicants state that companies operating under the SBIA, such as the SBIC Subsidiary, will be subject to the SBA’s substantial regulation of permissible leverage in their capital structure. 2. Section 18(a) of the Act prohibits a registered closed-end investment company from issuing any class of senior security or selling any such security of which it is the issuer unless the company complies with the asset coverage requirements set forth in that section. Section 61(a) of the Act makes section 18 applicable to a BDC, with certain modifications. Section 18(k) exempts an investment company operating as an SBIC from the asset coverage requirements for senior securities representing indebtedness that are contained in section 18(a)(1)(A) and (B). 3. Applicants state that the Company may be required to comply with the asset coverage requirements of section 18(a) (as modified by section 61(a)) on a consolidated basis because the Company may be deemed to be an indirect issuer of any class of senior security issued by Monroe SBIC or another SBIC Subsidiary. Applicants state that applying section 18(a) (as modified by section 61(a)) on a consolidated basis generally would require that the Company treat as its own all assets and any liabilities held directly either by itself, by Monroe SBIC, or by another SBIC Subsidiary. Accordingly, the Company requests an order under section 6(c) of the Act exempting the Company from the provisions of section 18(a) (as modified by section 61(a)), such that senior securities issued by each SBIC Subsidiary that would be excluded from the SBIC Subsidiary’s asset coverage ratio by section 18(k) if it were itself a BDC would also be excluded from the Company’s consolidated asset coverage ratio. 4. Section 6(c) of the Act authorizes the Commission to exempt any person, security, or transaction or any class or classes of persons, securities, or transactions from any provision or provisions of the Act or of any rule or regulation thereunder if, and to the extent that such exemption is necessary or appropriate, in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of 2 All existing entities that currently intend to rely on the order are named as applicants. Any newly formed SBIC Subsidiary that may rely on the order in the future will comply with the terms and condition of the order. E:\FR\FM\04SEN1.SGM 04SEN1 52780 Federal Register / Vol. 79, No. 171 / Thursday, September 4, 2014 / Notices the Act. Applicants state that the requested relief satisfies the section 6(c) standard. Applicants contend that, because the SBIC Subsidiary would be entitled to rely on section 18(k) if it were a BDC itself, there is no policy reason to deny the benefit of that exemption to the Company. Applicants’ Condition Applicants agree that any order granting the requested relief will be subject to the following condition: The Company shall not issue or sell any senior security, and the Company shall not cause or permit Monroe SBIC or any other SBIC Subsidiary to issue or sell any senior security of which the Company, Monroe SBIC or any other SBIC Subsidiary is the issuer except to the extent permitted by section 18 (as modified for BDCs by section 61) of the Act; provided that, immediately after the issuance or sale by any of the Company, Monroe SBIC or any other SBIC Subsidiary of any such senior security, the Company, individually and on a consolidated basis, shall have the asset coverage required by section 18(a) of the Act (as modified by section 61(a)). In determining whether the Company has the asset coverage on a consolidated basis required by section 18(a) of the Act (as modified by section 61(a)), any senior securities representing indebtedness of an SBIC Subsidiary if that SBIC Subsidiary has issued indebtedness that is held or guaranteed by the SBA shall not be considered senior securities and, for purposes of the definition of ‘‘asset coverage’’ in Section 18(h), shall be treated as indebtedness not represented by senior securities. For the Commission, by the Division of Investment Management, pursuant to delegated authority. Kevin M. O’Neill, Deputy Secretary. BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION mstockstill on DSK4VPTVN1PROD with NOTICES [Release No. 34–72946; File No. SR–BYX– 2014–019] Self-Regulatory Organizations; BATS Y-Exchange, Inc.; Notice of Filing of a Proposed Rule Change to Rules 11.9 of BATS Y-Exchange, Inc. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’),1 and Rule 19b–4 thereunder,2 1 15 2 17 U.S.C. 78s(b)(1). CFR 240.19b–4. VerDate Mar<15>2010 18:14 Sep 03, 2014 Jkt 232001 I. Self-Regulatory Organization’s Statement of the Terms of the Substance of the Proposed Rule Change The Exchange filed a proposal to amend Rule 11.9 to add certain optional price sliding functionality. The text of the proposed rule change is available at the Exchange’s Web site at http://www.batstrading.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. 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 Exchange 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 these 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 Statutory Basis for, the Proposed Rule Change 1. Purpose [FR Doc. 2014–21004 Filed 9–3–14; 8:45 am] August 28, 2014. notice is hereby given that on August 26, 2014, BATS Y-Exchange, Inc. (the ‘‘Exchange’’ or ‘‘BYX’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I, II and III below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. The Exchange currently offers various forms of sliding which, in all cases, result in the re-pricing of an order to, or ranking and/or display of an order at, a price other than an order’s limit price in order to comply with applicable securities laws and/or Exchange rules. Specifically, the Exchange currently offers price sliding to ensure compliance with Regulation NMS and Regulation SHO. Price sliding currently offered by the Exchange re-prices and displays an order upon entry and in certain cases again re-prices and redisplays an order at a more aggressive price one time if and when permissible (‘‘single display-price sliding’’), and optionally continually re-prices an order (‘‘multiple display-price sliding’’) based on changes in the national best bid (‘‘NBB’’) or national best offer (‘‘NBO’’, PO 00000 Frm 00156 Fmt 4703 Sfmt 4703 and together with the NBB, the ‘‘NBBO’’). The Exchange proposes to add another optional process, the Price Adjust process, as described below. Price Adjust in all contexts for which it is being proposed will have to be elected by a User 3 in order to be applied by the Exchange. In contrast to display-price sliding, which is based solely on Protected Quotations 4 at equities markets other than the Exchange, Price Adjust would be based on Protected Quotations at external markets and at the Exchange. If the Exchange has a Protected Quotation that an incoming order to the Exchange locks or crosses then such order executes against the resting order, or, if the incoming order is a BATS Post Only Order or Partial Post Only at Limit Order, such order would be executed in accordance with Rules 11.9(c)(6) and (c)(7), respectively, or adjusted pursuant to the Price Adjust process, as described in further detail below. Because the Exchange will route orders to external markets with locking or crossing quotations, the Exchange notes that the Price Adjust process would only be applicable to non-routable orders, including BATS Only Orders, BATS Post Only Orders and Partial Post Only at Limit Orders. In turn, because BATS Only Orders will execute against locking or crossing interest on the Exchange (including both Protected Quotations as well as any non-displayed interest), the fact that Price Adjust would be based on Protected Quotations at the Exchange is only relevant for BATS Post Only Orders and Partial Post Only at Limit Orders. With respect to price sliding offered to ensure compliance with Regulation NMS (‘‘display-price sliding’’), under the Exchange’s current rules, if, at the time of entry, a non-routable order would cross a Protected Quotation displayed by another trading center the Exchange re-prices and ranks such order at the locking price, and displays such order at one minimum price variation below the NBO for bids and above the NBB for offers. Similarly, in the event a non-routable order that, at the time of entry, would lock a Protected Quotation displayed by another trading center, the 3 As defined in BYX Rule 1.5(cc), a User is ‘‘any Member or Sponsored Participant who is authorized to obtain access to the System pursuant to Rule 11.3.’’ 4 As defined in BYX Rule 1.5(t), a ‘‘Protected Quotation’’ is ‘‘a quotation that is a Protected Bid or Protected Offer.’’ In turn, the term ‘‘Protected Bid’’ or ‘‘Protected Offer’’ means ‘‘a bid or offer in a stock that is (i) displayed by an automated trading center; (ii) disseminated pursuant to an effective national market system plan; and (iii) an automated quotation that is the best bid or best offer of a national securities exchange or association.’’ E:\FR\FM\04SEN1.SGM 04SEN1

Agencies

[Federal Register Volume 79, Number 171 (Thursday, September 4, 2014)]
[Notices]
[Pages 52779-52780]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-21004]



[[Page 52779]]

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SECURITIES AND EXCHANGE COMMISSION


Investment Company Act Release No. IC-31235; 812-14242; Monroe 
Capital Corporation, et al.; Notice of Application

August 28, 2014.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application for an order under section 6(c) of the 
Investment Company Act of 1940 (the ``Act'') for an exemption from 
sections 18(a) and 61(a) of the Act.

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    Applicants: Monroe Capital Corporation (the ``Company''), Monroe 
Capital BDC Advisors, LLC (the ``Investment Adviser''), MCC SBIC GP, 
LLC (the ``General Partner''), and Monroe Capital Corporation SBIC, LP 
(``Monroe SBIC'').
    Summary of the Application: The Company requests an order to permit 
it to adhere to a modified asset coverage requirement.
    Filing Dates: The application was filed November 21, 2013, and 
amended on May 23, 2014.
    Hearing or Notification of Hearing: An order granting the 
application 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, 2014 and should be accompanied by proof of 
service on the 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 
Street NE., Washington, DC 20549-1090. Applicants: Theodore L. Koenig, 
Monroe Capital Corporation, 311 South Wacker Drive, Suite 6400, 
Chicago, Illinois 60606.

FOR FURTHER INFORMATION CONTACT: Stephan N. Packs, Senior Counsel, at 
(202) 551-6853, or James M. Curtis, Branch Chief, at (202) 551-6825 
(Division of Investment Management, Chief Counsel's Office).

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 http://www.sec.gov/search/search.htm or by calling (202) 551-8090.

Applicants' Representations

    1. The Company, a Maryland corporation, is an externally managed, 
non-diversified, closed-end management investment company that has 
elected to be regulated as a business development company (``BDC'') 
under the Act.\1\ The Company's investment objective is to maximize the 
total return to its stockholders in the form of current income and 
capital appreciation through investments in senior, unitranche and 
junior secured debt and, to a lesser extent, unsecured subordinated 
debt and equity investments. The Investment Adviser, a Delaware limited 
liability company, is the investment adviser to the Company. The 
Investment Adviser is registered under the Investment Advisers Act of 
1940.
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    \1\ Section 2(a)(48) defines a BDC to be any closed-end 
investment company that operates for the purpose of making 
investments in securities described in section 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. Monroe SBIC, a Delaware limited partnership, is a small business 
investment company (``SBIC'') licensed by the Small Business 
Administration (``SBA'') to operate under the Small Business Investment 
Act of 1958 (``SBIA''). Monroe SBIC is excluded from the definition of 
investment company by section 3(c)(7) of the Act. The Company directly 
owns 99% of Monroe SBIC in the form of a limited partnership interest 
in Monroe SBIC. Since Monroe SBIC's inception, the General Partner, a 
Delaware limited liability company, has been the general partner of 
Monroe SBIC and owns 1% of Monroe SBIC in the form of a general 
partnership interest. The Company owns 100% of the General Partner's 
equity interests. As a result, the Company, directly or indirectly 
through the General Partner, wholly owns Monroe SBIC.

Applicants' Legal Analysis

    1. The Company requests an exemption pursuant to section 6(c) of 
the Act from the provisions of sections 18(a) and 61(a) of the Act to 
permit it to adhere to a modified asset coverage requirement with 
respect to any direct or indirect wholly owned subsidiary of the 
Company that is licensed by the SBA to operate under the SBIA as a SBIC 
and relies on Section 3(c)(7) for an exemption from the definition of 
``investment company'' under the 1940 Act (each, a ``SBIC 
Subsidiary'').\2\ Applicants state that companies operating under the 
SBIA, such as the SBIC Subsidiary, will be subject to the SBA's 
substantial regulation of permissible leverage in their capital 
structure.
---------------------------------------------------------------------------

    \2\ All existing entities that currently intend to rely on the 
order are named as applicants. Any newly formed SBIC Subsidiary that 
may rely on the order in the future will comply with the terms and 
condition of the order.
---------------------------------------------------------------------------

    2. Section 18(a) of the Act prohibits a registered closed-end 
investment company from issuing any class of senior security or selling 
any such security of which it is the issuer unless the company complies 
with the asset coverage requirements set forth in that section. Section 
61(a) of the Act makes section 18 applicable to a BDC, with certain 
modifications. Section 18(k) exempts an investment company operating as 
an SBIC from the asset coverage requirements for senior securities 
representing indebtedness that are contained in section 18(a)(1)(A) and 
(B).
    3. Applicants state that the Company may be required to comply with 
the asset coverage requirements of section 18(a) (as modified by 
section 61(a)) on a consolidated basis because the Company may be 
deemed to be an indirect issuer of any class of senior security issued 
by Monroe SBIC or another SBIC Subsidiary. Applicants state that 
applying section 18(a) (as modified by section 61(a)) on a consolidated 
basis generally would require that the Company treat as its own all 
assets and any liabilities held directly either by itself, by Monroe 
SBIC, or by another SBIC Subsidiary. Accordingly, the Company requests 
an order under section 6(c) of the Act exempting the Company from the 
provisions of section 18(a) (as modified by section 61(a)), such that 
senior securities issued by each SBIC Subsidiary that would be excluded 
from the SBIC Subsidiary's asset coverage ratio by section 18(k) if it 
were itself a BDC would also be excluded from the Company's 
consolidated asset coverage ratio.
    4. Section 6(c) of the Act authorizes the Commission to exempt any 
person, security, or transaction or any class or classes of persons, 
securities, or transactions from any provision or provisions of the Act 
or of any rule or regulation thereunder if, and to the extent that such 
exemption is necessary or appropriate, in the public interest and 
consistent with the protection of investors and the purposes fairly 
intended by the policy and provisions of

[[Page 52780]]

the Act. Applicants state that the requested relief satisfies the 
section 6(c) standard. Applicants contend that, because the SBIC 
Subsidiary would be entitled to rely on section 18(k) if it were a BDC 
itself, there is no policy reason to deny the benefit of that exemption 
to the Company.

Applicants' Condition

    Applicants agree that any order granting the requested relief will 
be subject to the following condition:
    The Company shall not issue or sell any senior security, and the 
Company shall not cause or permit Monroe SBIC or any other SBIC 
Subsidiary to issue or sell any senior security of which the Company, 
Monroe SBIC or any other SBIC Subsidiary is the issuer except to the 
extent permitted by section 18 (as modified for BDCs by section 61) of 
the Act; provided that, immediately after the issuance or sale by any 
of the Company, Monroe SBIC or any other SBIC Subsidiary of any such 
senior security, the Company, individually and on a consolidated basis, 
shall have the asset coverage required by section 18(a) of the Act (as 
modified by section 61(a)). In determining whether the Company has the 
asset coverage on a consolidated basis required by section 18(a) of the 
Act (as modified by section 61(a)), any senior securities representing 
indebtedness of an SBIC Subsidiary if that SBIC Subsidiary has issued 
indebtedness that is held or guaranteed by the SBA shall not be 
considered senior securities and, for purposes of the definition of 
``asset coverage'' in Section 18(h), shall be treated as indebtedness 
not represented by senior securities.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Kevin M. O'Neill,
 Deputy Secretary.
[FR Doc. 2014-21004 Filed 9-3-14; 8:45 am]
BILLING CODE 8011-01-P