General Electric Company and GE Capital International Holdings Limited; Notice of Application, 11079-11081 [2017-03184]

Download as PDF Federal Register / Vol. 82, No. 32 / Friday, February 17, 2017 / Notices Commission takes such action, the Commission shall institute proceedings under Section 19(b)(2)(B) 22 of the Act to determine whether the proposed rule change should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: mstockstill on DSK3G9T082PROD with NOTICES Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– NYSEARCA–2017–10 on the subject line. Paper Comments • Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–NYSEARCA–2017–10. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s Internet Web site (http://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission’s Public Reference Room, 100 F Street NE., Washington, DC 20549 on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR– 22 15 U.S.C. 78s(b)(2)(B). VerDate Sep<11>2014 17:38 Feb 16, 2017 NYSEARCA–2017–10 and should be submitted on or before March 10, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.23 Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017–03183 Filed 2–16–17; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Investment Company Act Release No. 32477; 812–14743] General Electric Company and GE Capital International Holdings Limited; Notice of Application February 13, 2017. Securities and Exchange Commission (‘‘Commission’’). ACTION: Notice of an application under section 6(c) of the Investment Company Act of 1940 (‘‘Act’’). AGENCY: General Electric Company (‘‘GE’’) and GE Capital International Holdings Limited (‘‘European Holdco’’) request an order under section 6(c) of the Act exempting European Holdco from all provisions of the Act during the period from the date of the requested order to the earlier of (a) three years from such date and (b) the completion of the sales process described in the application (‘‘Exemption Period’’). APPLICANTS: GE and European Holdco. FILING DATES: The application was filed on February 10, 2017. 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 applicant with a copy of the request, personally or by mail. Hearing requests should be received by the Commission by 5:30 p.m. on March 10, 2017, and should be accompanied by proof of service on applicant, 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; SUMMARY OF APPLICATION: 23 17 Jkt 241001 PO 00000 CFR 200.30–3(a)(12). Frm 00080 Fmt 4703 Sfmt 4703 11079 Applicants: 299 Park Avenue, New York, NY 10171. FOR FURTHER INFORMATION CONTACT: Steven I. Amchan, Senior Counsel, at (202) 551–6826, or Daniele Marchesani, Assistant Chief Counsel, at (202) 551– 6821 (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 the applicant using the Company name box, at http:// www.sec.gov/search/search.htm or by calling (202) 551–8090. Applicants’ Representations 1. GE, a New York corporation, is one of the largest and most diversified infrastructure and financial services corporations in the world. Its products and services range from aircraft engines, power generation, oil and gas production equipment and household appliances to medical imaging, business and consumer financing, and industrial products. Applicants state that GE is not an investment company as defined in section 3(a) of the Act. 2. European Holdco, a UK limited company and a wholly-owned subsidiary of GE, is the successor to the former General Electric Capital Corporation (‘‘Old GE Capital’’) with respect to various foreign businesses formerly held by Old GE Capital. European Holdco, directly or through its majority-owned subsidiaries, engages in financing activities primarily for midsized companies within the industries in which GE provides its services. 3. On April 10, 2015, GE announced a plan to reduce the size of its financial services businesses through the sale of most of the assets of Old GE Capital over the next 24 months and to focus on the continued investment and growth of GE’s industrial businesses. As part of this plan, Old GE Capital’s businesses were reorganized principally into European Holdco and a separate U.S. holding company (the ‘‘Reorganization’’), with the non-U.S. businesses being contributed to European Holdco.1 The non-U.S. businesses transferred from Old GE Capital to European Holdco include, among others, (i) banking, (ii) equipment financing, (iii) inventory financing, (iv) factoring, (v) automobile 1 As part of the plan to restructure and reduce the Old GE Capital business, Old GE Capital formed a finance subsidiary (‘‘FinCo’’), whose primary purpose is to finance the operations of GE’s foreign subsidiaries. E:\FR\FM\17FEN1.SGM 17FEN1 mstockstill on DSK3G9T082PROD with NOTICES 11080 Federal Register / Vol. 82, No. 32 / Friday, February 17, 2017 / Notices leasing, and (vi) aircraft and aircraft engine leasing. 4. Applicants assert that European Holdco is exempt from the Act pursuant to section 3(c)(6), the same exemption Old GE Capital was able to rely on prior to the Reorganization. Applicants state that in complying with section 3(c)(6), European Holdco relies not only on businesses described in sections 3(c)(3), (4), and (5), but also on businesses other than investing, reinvesting, owning, holding, or trading in securities. As such, to relying on section 3(c)(6), at least 25% of European Holdco’s gross income (i.e., revenue) generally must be derived from European Holdco’s 3(c)(3), (4), and (5) businesses. GE has calculated that, as of September 30, 2016, approximately 91% of European Holdco’s assets and 57% of its net income were derived from its section 3(c)(3), (4), and (5) businesses and its other businesses that are not investing, reinvesting, owning, holding, or trading in securities, and approximately 36% of its revenue was derived from its section 3(c)(3), (4), and (5) businesses. Applicants maintain that as such, European Holdco was in compliance with section 3(c)(6) as of that time. 5. Applicants state that GE intends over time to sell many of the foreign businesses contributed to European Holdco as part of the Reorganization, and would like to be able to manage this sales process so as to maximize shareholder value, rather than in a manner necessary to continuously comply with European Holdco’s exemption under the Act. GE has developed a plan for selling such businesses and expects that the sales process will be mostly complete within two years, with potentially some sales activity continuing into a third year. Applicants state that the sales process may extend into a third year given the tremendous complexity of GE’s structure and the Reorganization. At the conclusion of the sales process, GE expects that European Holdco will not be an investment company pursuant to rule 3a–1 under the Act (or otherwise), as its anticipated remaining businesses will involve significant amounts of assets that are not investment securities for purposes of the Act (such as aircraft and aircraft engines). Accordingly, applicants request an order of exemption for the duration of the Exemption Period to permit GE to sell various businesses without concern that it might cause European Holdco inadvertently and temporarily to become an investment company under the Act. VerDate Sep<11>2014 17:38 Feb 16, 2017 Jkt 241001 Applicants’ Legal Analysis 1. Under section 3(a)(1)(C) of the Act, an issuer is an investment company if it is engaged or proposes to engage in the business of investing, reinvesting, owning, holding, or trading in securities, and owns or proposes to acquire investment securities having a value exceeding 40 percent of the value of such issuer’s total assets (exclusive of government securities and cash items) on an unconsolidated basis. Section 3(a)(2) of the Act defines ‘‘investment securities’’ to include all securities except government securities, securities issued by employees’ securities companies, and securities issued by majority-owned subsidiaries of the owner that are not investment companies and are not relying on the exception from the definition of investment company in section 3(c)(1) or 3(c)(7) of the Act. 2. Rule 3a–1 under the Act provides an exemption from the definition of investment company if, on a consolidated basis with wholly-owned subsidiaries, no more than 45% of an issuer’s total assets (exclusive of government securities and cash items) consist of, and no more than 45% of its net income after taxes over the last four fiscal quarters combined is derived from, securities other than: Government securities, securities issued by employees’ securities companies, and securities of certain majority-owned subsidiaries and companies controlled primarily by the issuer. 3. Applicants assert that although European Holdco’s financing businesses involve significant holdings of investment securities (such as mortgages and equipment finance loans), European Holdco as currently structured is not an investment company under section 3(c)(6) of the Act, the same exemption Old GE Capital was able to rely on prior to the Reorganization. However, applicants state that there could be times during the process of selling European Holdco’s businesses, depending on the order in which the businesses are sold and the remaining mix of businesses, when European Holdco would technically not satisfy section 3(c)(6), rule 3a–1, or any other exception from the definition of ‘‘investment company,’’ and thus may fall within the definition of ‘‘investment company’’ in section 3(a)(1)(C). 4. Rule 3a–2 under the Act generally provides that, for purposes of sections 3(a)(1)(A) and 3(a)(1)(C), an issuer will not be deemed to be engaged in the business of investing, reinvesting, owning, holding or trading in securities for a period not to exceed one year if the PO 00000 Frm 00081 Fmt 4703 Sfmt 4703 issuer has a bona fide intent to be engaged in a non-investment company business. This enables the issuer to make an orderly transition to a noninvestment company business. Applicants state that the expected length of the sales process may preclude European Holdco from relying on rule 3a–2 because applicants cannot state that European Holdco has a bona fide intent to be engaged primarily in a business other than investing, reinvesting, owning, holding, or trading in securities within one year. 5. Section 6(c) of the Act permits the Commission to exempt any person from any provision of the Act, if and to the extent that the 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 the Act. 6. Applicants request an order under section 6(c) exempting European Holdco from all provisions of the Act for the duration of the Exemption Period. Applicants believe that the period of time requested will provide GE with enough time to execute the sales plan in a manner that maximizes economic value while ensuring that, at the end of the Exemption Period, European Holdco will not be an investment company. 7. Applicants assert that as a result of GE’s plan to reduce its financial services businesses through the sale of foreign businesses held by European Holdco, European Holdco may temporarily fall within the statutory definition of an investment company, even though that definition is not an accurate depiction of European Holdco’s business. Applicants assert that their officers will work diligently to bring European Holdco into compliance with rule 3a–1 (or another exemption) under the Act within three years. Applicants state that European Holdco’s transactions in securities will not be for speculative purposes, but rather in furtherance of its business as a holding company for certain international financial businesses of GE. Applicants contend that registration under the Act would involve unnecessary burden and expense for the applicants and GE’s shareholders, and would serve no regulatory purpose. For the reasons discussed above, applicants assert that the requested relief under section 6(c) of the Act is consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act. E:\FR\FM\17FEN1.SGM 17FEN1 Federal Register / Vol. 82, No. 32 / Friday, February 17, 2017 / Notices Applicants’ Conditions Applicants agree that the requested exemption will be subject to the following conditions: 1. European Holdco will not engage in the trading of securities for short-term speculative purposes; 2. European Holdco will not hold itself out as being engaged primarily in the business of investing, reinvesting, or trading in securities; and 3. European Holdco will have no securities outstanding while it is relying on the order other than (i) guarantees of FinCo debt that is also guaranteed by GE, (ii) debt securities (including commercial paper) guaranteed by GE and (iii) securities held by European Holdco’s affiliates. 4. European Holdco will seek to decrease the percentage of its total assets comprised of investment securities so as not to be an investment company within the meaning of the Act and the rules and regulations thereunder as soon as reasonably possible and in any event within three years from the date of the requested order. For the Commission, by the Division of Investment Management, under delegated authority. Eduardo A. Aleman, Assistant Secretary. BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–80025; File No. SR– BatsEDGX–2017–04] Self-Regulatory Organizations; Bats EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Adopt Option Regulatory Fees as They Relate to the Equity Options Platform mstockstill on DSK3G9T082PROD with NOTICES February 13, 2017. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on January 30, 2017, Bats EDGX Exchange, Inc. (the ‘‘Exchange’’ or ‘‘EDGX’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. The Exchange has designated the proposed rule change as one establishing or changing a member due, fee, or other 2 17 U.S.C. 78s(b)(1). CFR 240.19b–4. VerDate Sep<11>2014 17:38 Feb 16, 2017 Jkt 241001 I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange filed a proposal to amend the fee schedule applicable to Members 5 and non-Members of the Exchange pursuant to Exchange Rules 15.1(a) and (c) to adopt an Options Regulatory Fee (‘‘ORF’’). The text of the proposed rule change is available at the Exchange’s Web site at 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. [FR Doc. 2017–03184 Filed 2–16–17; 8:45 am] 1 15 charge imposed by the Exchange under Section 19(b)(3)(A)(ii) of the Act 3 and Rule 19b–4(f)(2) thereunder,4 which renders the proposed rule change effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to modify its fee schedule applicable to its equity options platform (‘‘EDGX Options’’) to adopt an ORF in the amount of $0.0004 per contract side.6 The per-contract ORF 3 15 U.S.C. 78s(b)(3)(A)(ii). CFR 240.19b–4(f)(2). 5 The term ‘‘Member’’ is defined as ‘‘any registered broker or dealer that has been admitted to membership in the Exchange.’’ See Exchange Rule 1.5(n). 6 The Exchange notes that it previously proposed to adopt an ORF of $0.0002 per contract in August 2016 which would have been assessed to each Member and non-Member for all options transactions cleared by OCC in the ‘‘customer’’ range, regardless of the exchange on which the transaction occurred. See Securities Exchange Act Release No. 78452 (August 1, 2016), 81 FR 51951 (August 5, 2016) (SR–BatsEDGX–2016–33). The Exchange then filed to delay the implementation of SR–BatsEDGX–2016–33 until February 1, 2017. See 4 17 PO 00000 Frm 00082 Fmt 4703 Sfmt 4703 11081 will be assessed by the Exchange to each Member for all options transactions executed and cleared, or simply cleared, by the Member, that are cleared by OCC in the ‘‘customer’’ range, regardless of the exchange on which the transaction occurs.7 The ORF will be collected indirectly from Members through their clearing firms by OCC on behalf of the Exchange. The ORF also will be charged for transactions that are not executed by a Member but are ultimately cleared by a Member. In the case where a nonMember executes a transaction and a Member clears the transaction, the ORF will be assessed to the Member who clears the transaction. In the case where a Member executes a transaction and another Member clears the transaction, the ORF will be assessed to the Member who clears the transaction. Clearing members, however, are distinguished from executing participants because they remain identified to the Exchange regardless of the identity of the initiating executing participant, their location, and the market center on which they execute transactions. Therefore, the Exchange believes it is more efficient for the operation of the Exchange and for the marketplace as a whole to assess the ORF to clearing members. The Exchange believes it is appropriate to charge the ORF only to transactions that clear as customer at the OCC. The Exchange believes that its broad regulatory responsibilities with respect to a Member’s activities supports applying the ORF to transactions cleared but not executed by a Member. The Exchange’s regulatory responsibilities are the same regardless of whether a Member executes a transaction or clears a transaction executed on its behalf. The Exchange regularly reviews all such activities, including performing surveillance for position limit violations, manipulation, front-running, contrary exercise advice Securities Exchange Act Release No. 78745 (September 1, 2016), 81 FR 62185 (September 8, 2016) (SR–BatsEDGX–2016–48). The Commission later issued an order suspending and [sic] SR– BatsEDGX–2016–33 and instituted proceedings to determine whether to approve or disapprove the proposed rule change asking whether the [sic] ‘‘a sufficient regulatory nexus exists between the Exchange and a non-Member to justify imposition of the ORF on such non-Member.’’ See Securities Exchange Act Release No. 78850 (September 15, 2016), 81 FR 64963 (September 21, 2016). On January 10, 2017, the Exchange withdrew SR–Bats– EDGX–2016–33. The Exchange also proposes in this filing to remove text from its fee schedule adopted in SR–BatsEDGX–2016–48 which delayed the implementation of SR–Bats–EDGX–2016–33 until February 1, 2017. 7 The Exchange also proposes to insert a colon after the title ‘‘Options Regulatory Fee’’. E:\FR\FM\17FEN1.SGM 17FEN1

Agencies

[Federal Register Volume 82, Number 32 (Friday, February 17, 2017)]
[Notices]
[Pages 11079-11081]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-03184]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 32477; 812-14743]


General Electric Company and GE Capital International Holdings 
Limited; Notice of Application

February 13, 2017.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application under section 6(c) of the Investment 
Company Act of 1940 (``Act'').

-----------------------------------------------------------------------

Summary of Application:  General Electric Company (``GE'') and GE 
Capital International Holdings Limited (``European Holdco'') request an 
order under section 6(c) of the Act exempting European Holdco from all 
provisions of the Act during the period from the date of the requested 
order to the earlier of (a) three years from such date and (b) the 
completion of the sales process described in the application 
(``Exemption Period'').

Applicants: GE and European Holdco.

Filing Dates: The application was filed on February 10, 2017.

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 applicant with a copy of the request, personally or by 
mail. Hearing requests should be received by the Commission by 5:30 
p.m. on March 10, 2017, and should be accompanied by proof of service 
on applicant, 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: 299 Park Avenue, New 
York, NY 10171.

FOR FURTHER INFORMATION CONTACT: Steven I. Amchan, Senior Counsel, at 
(202) 551-6826, or Daniele Marchesani, Assistant Chief Counsel, at 
(202) 551-6821 (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 the 
applicant using the Company name box, at http://www.sec.gov/search/search.htm or by calling (202) 551-8090.

Applicants' Representations

    1. GE, a New York corporation, is one of the largest and most 
diversified infrastructure and financial services corporations in the 
world. Its products and services range from aircraft engines, power 
generation, oil and gas production equipment and household appliances 
to medical imaging, business and consumer financing, and industrial 
products. Applicants state that GE is not an investment company as 
defined in section 3(a) of the Act.
    2. European Holdco, a UK limited company and a wholly-owned 
subsidiary of GE, is the successor to the former General Electric 
Capital Corporation (``Old GE Capital'') with respect to various 
foreign businesses formerly held by Old GE Capital. European Holdco, 
directly or through its majority-owned subsidiaries, engages in 
financing activities primarily for mid-sized companies within the 
industries in which GE provides its services.
    3. On April 10, 2015, GE announced a plan to reduce the size of its 
financial services businesses through the sale of most of the assets of 
Old GE Capital over the next 24 months and to focus on the continued 
investment and growth of GE's industrial businesses. As part of this 
plan, Old GE Capital's businesses were reorganized principally into 
European Holdco and a separate U.S. holding company (the 
``Reorganization''), with the non-U.S. businesses being contributed to 
European Holdco.\1\ The non-U.S. businesses transferred from Old GE 
Capital to European Holdco include, among others, (i) banking, (ii) 
equipment financing, (iii) inventory financing, (iv) factoring, (v) 
automobile

[[Page 11080]]

leasing, and (vi) aircraft and aircraft engine leasing.
---------------------------------------------------------------------------

    \1\ As part of the plan to restructure and reduce the Old GE 
Capital business, Old GE Capital formed a finance subsidiary 
(``FinCo''), whose primary purpose is to finance the operations of 
GE's foreign subsidiaries.
---------------------------------------------------------------------------

    4. Applicants assert that European Holdco is exempt from the Act 
pursuant to section 3(c)(6), the same exemption Old GE Capital was able 
to rely on prior to the Reorganization. Applicants state that in 
complying with section 3(c)(6), European Holdco relies not only on 
businesses described in sections 3(c)(3), (4), and (5), but also on 
businesses other than investing, reinvesting, owning, holding, or 
trading in securities. As such, to relying on section 3(c)(6), at least 
25% of European Holdco's gross income (i.e., revenue) generally must be 
derived from European Holdco's 3(c)(3), (4), and (5) businesses. GE has 
calculated that, as of September 30, 2016, approximately 91% of 
European Holdco's assets and 57% of its net income were derived from 
its section 3(c)(3), (4), and (5) businesses and its other businesses 
that are not investing, reinvesting, owning, holding, or trading in 
securities, and approximately 36% of its revenue was derived from its 
section 3(c)(3), (4), and (5) businesses. Applicants maintain that as 
such, European Holdco was in compliance with section 3(c)(6) as of that 
time.
    5. Applicants state that GE intends over time to sell many of the 
foreign businesses contributed to European Holdco as part of the 
Reorganization, and would like to be able to manage this sales process 
so as to maximize shareholder value, rather than in a manner necessary 
to continuously comply with European Holdco's exemption under the Act. 
GE has developed a plan for selling such businesses and expects that 
the sales process will be mostly complete within two years, with 
potentially some sales activity continuing into a third year. 
Applicants state that the sales process may extend into a third year 
given the tremendous complexity of GE's structure and the 
Reorganization. At the conclusion of the sales process, GE expects that 
European Holdco will not be an investment company pursuant to rule 3a-1 
under the Act (or otherwise), as its anticipated remaining businesses 
will involve significant amounts of assets that are not investment 
securities for purposes of the Act (such as aircraft and aircraft 
engines). Accordingly, applicants request an order of exemption for the 
duration of the Exemption Period to permit GE to sell various 
businesses without concern that it might cause European Holdco 
inadvertently and temporarily to become an investment company under the 
Act.

Applicants' Legal Analysis

    1. Under section 3(a)(1)(C) of the Act, an issuer is an investment 
company if it is engaged or proposes to engage in the business of 
investing, reinvesting, owning, holding, or trading in securities, and 
owns or proposes to acquire investment securities having a value 
exceeding 40 percent of the value of such issuer's total assets 
(exclusive of government securities and cash items) on an 
unconsolidated basis. Section 3(a)(2) of the Act defines ``investment 
securities'' to include all securities except government securities, 
securities issued by employees' securities companies, and securities 
issued by majority-owned subsidiaries of the owner that are not 
investment companies and are not relying on the exception from the 
definition of investment company in section 3(c)(1) or 3(c)(7) of the 
Act.
    2. Rule 3a-1 under the Act provides an exemption from the 
definition of investment company if, on a consolidated basis with 
wholly-owned subsidiaries, no more than 45% of an issuer's total assets 
(exclusive of government securities and cash items) consist of, and no 
more than 45% of its net income after taxes over the last four fiscal 
quarters combined is derived from, securities other than: Government 
securities, securities issued by employees' securities companies, and 
securities of certain majority-owned subsidiaries and companies 
controlled primarily by the issuer.
    3. Applicants assert that although European Holdco's financing 
businesses involve significant holdings of investment securities (such 
as mortgages and equipment finance loans), European Holdco as currently 
structured is not an investment company under section 3(c)(6) of the 
Act, the same exemption Old GE Capital was able to rely on prior to the 
Reorganization. However, applicants state that there could be times 
during the process of selling European Holdco's businesses, depending 
on the order in which the businesses are sold and the remaining mix of 
businesses, when European Holdco would technically not satisfy section 
3(c)(6), rule 3a-1, or any other exception from the definition of 
``investment company,'' and thus may fall within the definition of 
``investment company'' in section 3(a)(1)(C).
    4. Rule 3a-2 under the Act generally provides that, for purposes of 
sections 3(a)(1)(A) and 3(a)(1)(C), an issuer will not be deemed to be 
engaged in the business of investing, reinvesting, owning, holding or 
trading in securities for a period not to exceed one year if the issuer 
has a bona fide intent to be engaged in a non-investment company 
business. This enables the issuer to make an orderly transition to a 
non-investment company business. Applicants state that the expected 
length of the sales process may preclude European Holdco from relying 
on rule 3a-2 because applicants cannot state that European Holdco has a 
bona fide intent to be engaged primarily in a business other than 
investing, reinvesting, owning, holding, or trading in securities 
within one year.
    5. Section 6(c) of the Act permits the Commission to exempt any 
person from any provision of the Act, if and to the extent that the 
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 the Act.
    6. Applicants request an order under section 6(c) exempting 
European Holdco from all provisions of the Act for the duration of the 
Exemption Period. Applicants believe that the period of time requested 
will provide GE with enough time to execute the sales plan in a manner 
that maximizes economic value while ensuring that, at the end of the 
Exemption Period, European Holdco will not be an investment company.
    7. Applicants assert that as a result of GE's plan to reduce its 
financial services businesses through the sale of foreign businesses 
held by European Holdco, European Holdco may temporarily fall within 
the statutory definition of an investment company, even though that 
definition is not an accurate depiction of European Holdco's business. 
Applicants assert that their officers will work diligently to bring 
European Holdco into compliance with rule 3a-1 (or another exemption) 
under the Act within three years. Applicants state that European 
Holdco's transactions in securities will not be for speculative 
purposes, but rather in furtherance of its business as a holding 
company for certain international financial businesses of GE. 
Applicants contend that registration under the Act would involve 
unnecessary burden and expense for the applicants and GE's 
shareholders, and would serve no regulatory purpose. For the reasons 
discussed above, applicants assert that the requested relief under 
section 6(c) of the Act is consistent with the protection of investors 
and the purposes fairly intended by the policy and provisions of the 
Act.

[[Page 11081]]

Applicants' Conditions

    Applicants agree that the requested exemption will be subject to 
the following conditions:
    1. European Holdco will not engage in the trading of securities for 
short-term speculative purposes;
    2. European Holdco will not hold itself out as being engaged 
primarily in the business of investing, reinvesting, or trading in 
securities; and
    3. European Holdco will have no securities outstanding while it is 
relying on the order other than (i) guarantees of FinCo debt that is 
also guaranteed by GE, (ii) debt securities (including commercial 
paper) guaranteed by GE and (iii) securities held by European Holdco's 
affiliates.
    4. European Holdco will seek to decrease the percentage of its 
total assets comprised of investment securities so as not to be an 
investment company within the meaning of the Act and the rules and 
regulations thereunder as soon as reasonably possible and in any event 
within three years from the date of the requested order.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-03184 Filed 2-16-17; 8:45 am]
 BILLING CODE 8011-01-P