Owl Rock Capital Corporation II, et al., 51807-51809 [2020-18336]
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Federal Register / Vol. 85, No. 163 / Friday, August 21, 2020 / Notices
• Send an email to rule-comments@
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MEMX–2020–04 on the subject line.
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For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.54
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–18343 Filed 8–20–20; 8:45 am]
BILLING CODE 8011–01–P
54 17
CFR 200.30–3(a)(12).
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SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
33972; 812–15095]
Owl Rock Capital Corporation II, et al.
August 17, 2020.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice of an application under
Section 6(c) of the Investment Company
Act of 1940 (the ‘‘Act’’) for an
exemption from Sections 18(a)(2), 18(c),
18(i) and Section 61(a) of the Act.
AGENCY:
51807
application. The complete application
may be obtained via the Commission’s
website 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 Current Fund is a Maryland
corporation that is an externally
managed, closed-end management
investment company and that has
elected to be regulated as a BDC under
the Act.1 The Current Fund’s
investment objective is to generate
Summary of Application: Applicants
current income and, to a lesser extent,
request an order to permit certain
capital appreciation.
closed-end management investment
2. ORCIC is a newly-formed Maryland
companies that have elected to be
corporation that is expected to be an
regulated as business development
externally managed, closed-end
companies (‘‘BDCs’’) to issue multiple
management investment company and
classes of shares with varying sales
that intends to elect to be regulated as
loads and asset-based service and/or
a BDC under the Act. Prior to relying on
distribution fees.
the relief requested in its application,
Applicants: Owl Rock Capital
ORCIC will have filed an election to be
Corporation II (the ‘‘Current Fund’’),
regulated as a BDC under the Act. It is
Owl Rock Core Income Corp. (‘‘ORCIC’’) expected that ORCIC’s investment
and Owl Rock Capital Advisors LLC (the objective will be to generate current
‘‘Investment Adviser’’).
income and, to a lesser extent, capital
DATES: The application was filed on
appreciation by targeting investment
February 14, 2020 and amended on May opportunities with favorable risk29, 2020 and June 30, 2020.
adjusted returns.
Hearing or Notification of Hearing: An
3. The Investment Adviser is
order granting the requested relief will
registered as an investment adviser
be issued unless the Commission orders under the Investment Advisers Act of
a hearing. Interested persons may
1940 and serves as investment adviser
request a hearing by emailing the
to the Current Fund. The Investment
Commission’s Secretary at SecretarysAdviser is also expected to serve as the
Office@sec.gov and serving applicants
investment adviser to ORCIC.
with a copy of the request by email.
4. Applicants seek an order to permit
Hearing requests should be received by
the Funds (defined below) to offer
the Commission by 5:30 p.m. on
investors multiple classes of shares,
September 11, 2020 and should be
interests or units of beneficial interest,
accompanied by proof of service on the
as the case may be (‘‘Shares’’), with
applicants, in the form of an affidavit,
varying sales loads and asset-based
or, for lawyers, a certificate of service.
service and/or distribution fees.
Pursuant to Rule 0–5 under the Act,
5. Applicants request that the order
hearing requests should state the nature also apply to any continuously offered
of the writer’s interest, any facts bearing registered closed-end management
upon the desirability of a hearing on the investment company that elects to be
matter, the reason for the request, and
regulated as a BDC that has been
the issues contested. Persons who wish
previously organized or that may be
to be notified of a hearing may request
organized in the future for which the
notification by emailing to the
Investment Adviser or any entity
Commission’s Secretary at Secretaryscontrolling, controlled by, or under
Office@sec.gov.
common control with the Investment
ADDRESSES: The Commission:
Adviser, or any successor in interest to
Secretarys-Office@sec.gov. Applicants:
any such entity,2 acts as investment
alan@owlrock.com.
1 Section 2(a)(48) of the Act defines a BDC to be
FOR FURTHER INFORMATION CONTACT:
any closed-end investment company that operates
Marc Mehrespand, Senior Counsel, at
for the purpose of making investments in securities
(202) 551–8453 or Trace Rakestraw,
described in Sections 55(a)(1) through 55(a)(3) of
Branch Chief, at (202) 551–6825
the Act and makes available significant managerial
assistance with respect to the issuers of such
(Division of Investment Management,
securities.
Chief Counsel’s Office).
2 For purposes of the requested order, ‘‘successor’’
SUPPLEMENTARY INFORMATION: The
is limited to any entity that results from a
Continued
following is a summary of the
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51808
Federal Register / Vol. 85, No. 163 / Friday, August 21, 2020 / Notices
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adviser which periodically offers to
repurchase its Shares pursuant to Rule
13e–4 under the Securities Exchange
Act of 1934 (‘‘Exchange Act’’) and
Section 23(c)(2) of the Act (each, a
‘‘Future Fund’’ and together with the
Current Fund and ORCIC, the
‘‘Funds’’).3
6. As a BDC, the Current Fund is
organized as a closed-end investment
company, but offers its Shares
continuously, similar to an open-end
management investment company. The
Current Fund has only issued one class
of Shares, but anticipates that, if it
receives the relief requested in its
application, it will consider adding
additional classes of Shares to its public
offering. Shares of the Funds will not be
offered or traded in a secondary market
and will not be listed on any securities
exchange and do not trade on an overthe-counter system.4
7. ORCIC anticipates that, if it
receives the relief requested in its
application, it will offer multiple classes
of Shares upon the commencement of
its offering.
8. Each Fund is seeking the ability to
offer multiple classes of Shares that may
charge differing front-end sales loads,
contingent deferred sales charges
(‘‘CDSCs’’), an early withdrawal charge
(‘‘Repurchase Fee’’), and/or annual
asset-based service and/or distribution
fees. Each class of Shares will comply
with the provisions of Rule 2310 of the
Financial Industry Regulatory
Authority, Inc. (‘‘FINRA’’) Manual
(‘‘FINRA Rule 2310’’).5
9. Any Share of a Fund that is subject
to asset-based service or distribution
fees shall convert to a class with no
asset based service or distribution fees
upon such Share reaching the
applicable sales charge cap determined
in accordance with FINRA Rule 2310.
Further, if a class of Shares were to be
listed on an exchange in the future, all
other then-existing classes of Shares of
the listing Fund will be converted into
the listed class, without the imposition
of any sales load, fee or other charge.
10. In order to provide a limited
degree of liquidity to shareholders,
reorganization into another jurisdiction or a change
in the type of a business organization.
3 Any Fund relying on this relief in the future will
do so in compliance with the terms and conditions
of the application. Applicants represent that each
entity presently intending to rely on the requested
relief is listed as an applicant.
4 Applicants are not requesting relief with respect
to any Fund listed on a securities exchange. Any
Fund which relies on the relief requested herein
will cease relying on such relief upon the listing of
any class of its Shares on a securities exchange.
5 Any reference to FINRA Rule 2310 includes any
successor or replacement rule that may be adopted
by FINRA.
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Applicants state that each Fund may
from time to time offer to repurchase
Shares in accordance with Rule 13e–4
under the Exchange Act and Section
23(c)(2) of the Act. Applicants state
further that repurchases of each Fund’s
Shares will be made at such times, in
such amounts and on such terms as may
be determined by the applicable Fund’s
board of directors or trustees in its sole
discretion.
11. Each Fund will disclose in its
prospectus the fees, expenses and other
characteristics of each class of Shares
offered for sale by the prospectus, as is
required for open-end, multiple-class
funds under Form N–1A. As if it were
an open-end management investment
company, each Fund will disclose fund
expenses in shareholder reports,6 and
disclose in its prospectus any
arrangements that result in breakpoints
in, or elimination of, sales loads.7 Each
Fund will also comply with any
requirements the Commission or FINRA
may adopt regarding disclosure at the
point of sale and in transaction
confirmations about the costs and
conflicts of interest arising out of the
distribution of open-end management
investment company shares, and
regarding prospectus disclosure of sales
loads and revenue sharing arrangements
as if those requirements applied to the
Fund.8 Each Fund will contractually
require that any distributor of a Fund’s
Shares comply with such requirements
in connection with the distribution of
such Fund’s shares.
12. Distribution fees will be paid
pursuant to a plan of distribution
adopted by each Fund in compliance
with Rules 12b–1 and 17d–3 under the
Act, as if those rules applied to closedend funds electing to be regulated as
BDCs, with respect to a class (a
‘‘Distribution Plan’’).
13. Each Fund will allocate all
expenses incurred by it among the
various classes of Shares based on the
respective net assets of the Fund
attributable to each such class, except
that the net asset value and expenses of
each class will reflect the expenses
associated with the Distribution Plan of
that class (if any), shareholder servicing
6 See Shareholder Reports and Quarterly Portfolio
Disclosure of Registered Management Investment
Companies, Investment Co. Act Rel. No. 26372 (Feb.
27, 2004) (adopting release).
7 See Disclosure of Breakpoint Discounts by
Mutual Funds, Investment Co. Act Rel. No. 26464
(June 7, 2004) (adopting release).
8 See Confirmation Requirements and Point of
Sale Disclosure Requirements for Transactions in
Certain Mutual Funds and Other Securities, and
Other Confirmation Requirement Amendments, and
Amendments to the Registration Form for Mutual
Funds, Investment Co. Act Rel. No. 26341 (Jan. 29,
2004) (proposing release).
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fees attributable to a particular class
(including transfer agency fees, if any)
and any other incremental expenses of
that class. Expenses of the Fund
allocated to a particular class of the
Fund’s Shares will be borne on a pro
rata basis by each outstanding Share of
that class. Applicants state that each
Fund will comply with the provisions of
Rule 18f–3 under the Act as if it were
an open-end management investment
company.
14. Any Fund that imposes a CDSC
will comply with the provisions of Rule
6c–10 (except to the extent a Fund will
comply with FINRA Rule 2310 rather
than FINRA Rule 2341, as such rule may
be amended (‘‘FINRA Rule 2341’’)), as if
that rule applied to BDCs. With respect
to any waiver of, scheduled variation in,
or elimination of the CDSC, a Fund will
comply with the requirements of Rule
22d–1 under the Act as if the Fund were
an open-end management investment
company. Each Fund also will disclose
CDSCs in accordance with the
requirements of Form N–1A concerning
CDSCs as if the Fund were an open-end
management investment company.
15. Funds may impose a Repurchase
Fee at a rate no greater than 2% of the
shareholder’s repurchase proceeds if the
interval between the date of purchase of
the Shares and the valuation date with
respect to the repurchase of such Shares
is less than a specified period. Any
Repurchase Fee will apply equally to all
shareholders of the applicable Fund,
regardless of class, consistent with
Section 18 of the Act and Rule 18f–3
under the Act. To the extent a Fund
determines to waive, impose scheduled
variations of, or eliminate any
Repurchase Fees, it will do so
consistently with the requirements of
Rule 22d–1 under the Act as if the
Repurchase Fee were a CDSC and as if
the Fund were an open-end investment
company and the Fund’s waiver of,
scheduled variation in, or elimination
of, the Repurchase Fee will apply
uniformly to all shareholders of the
Fund.
Applicants’ Legal Analysis
Multiple Classes of Shares
1. Section 18(a)(2) of the Act provides
that a closed-end investment company
may not issue or sell a senior security
that is a stock unless certain
requirements are met. Applicants state
that the creation of multiple classes of
shares of the Funds may violate Section
18(a)(2), which is made applicable to
BDCs through Section 61(a) of the Act,
because the Funds may not meet such
requirements with respect to a class of
shares that may be a senior security.
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Federal Register / Vol. 85, No. 163 / Friday, August 21, 2020 / Notices
2. Section 18(c) of the Act provides,
in relevant part, that a closed-end
investment company may not issue or
sell any senior security if, immediately
thereafter, the company has outstanding
more than one class of senior security.
Applicants state that the creation of
multiple classes of Shares of the Funds
may be prohibited by Section 18(c),
which is made applicable to BDCs
through Section 61(a) of the Act, as a
class may have priority over another
class as to payment of dividends
because shareholders of different classes
would pay different fees and expenses.
3. Section 18(i) of the Act provides
that each share of stock issued by a
registered management investment
company will be a voting stock and
have equal voting rights with every
other outstanding voting stock.
Applicants state that multiple classes of
shares of the Funds may violate Section
18(i) of the Act, which is made
applicable to BDCs through Section
61(a) of the Act, because each class
would be entitled to exclusive voting
rights with respect to matters solely
related to that class.
4. Section 6(c) of the Act provides that
the Commission may exempt any
person, security or transaction or any
class or classes of persons, securities or
transactions from any provision of the
Act, or from any rule or regulation
under the Act, if and to the extent 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 the Act. Applicants
request an exemption under Section 6(c)
from Sections 18(a)(2), 18(c) and 18(i)
(which are made applicable to BDCs by
Section 61(a) of the Act) to permit the
Funds to issue multiple classes of
Shares.
5. Applicants submit that the
proposed allocation of expenses relating
to distribution and voting rights among
multiple classes is equitable and will
not discriminate against any group or
class of shareholders. Applicants submit
that the proposed arrangements would
permit a Fund to facilitate the
distribution of its Shares and provide
investors with a broader choice of fee
options. Applicants assert that the
proposed BDC multiple class structure
does not raise the concerns underlying
Section 18 of the Act to any greater
degree than open-end management
investment companies’ multiple class
structures that are permitted by Rule
18f–3 under the Act.
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Applicants’ Condition
Applicants agree that any order
granting the requested relief will be
subject to the following condition:
1. Each Fund will comply with the
provisions of Rules 6c–10 (except to the
extent a Fund will comply with FINRA
Rule 2310 rather than FINRA Rule
2341), 12b–1, 17d–3, 18f–3, 22d–1, and,
where applicable, 11a–3 under the Act,
as amended from time to time, or any
successor rules thereto, as if those rules
applied to BDCs. In addition, each Fund
will comply with FINRA Rule 2310, as
amended from time to time, or any
successor rule thereto, and will make
available to any distributor of a Fund’s
shares all of the information necessary
to permit the distributor to prepare
client account statements in compliance
with FINRA Rule 2231.
For the Commission, by the Division of
Investment Management, pursuant to
delegated authority.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–18336 Filed 8–20–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–89576; File No. SR–GEMX–
2020–19]
Self-Regulatory Organizations; Nasdaq
GEMX, LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend Options 6,
Section 5 (Transfer of Positions)
August 17, 2020.
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 August 6,
2020, Nasdaq GEMX, LLC (‘‘GEMX’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission (the
‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the Exchange. The Exchange filed the
proposal as a ‘‘non-controversial’’
proposed rule change pursuant to
Section 19(b)(3)(A)(iii) of the Act 3 and
Rule 19b–4(f)(6) thereunder.4 The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(iii).
4 17 CFR 240.19b–4(f)(6).
2 17
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51809
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend
Options 6, Section 5, titled ‘‘Transfer of
Positions.’’
The text of the proposed rule change
is available on the Exchange’s website at
https://listingcenter.nasdaq.com/
rulebook/gemx/rules, 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 aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend
Options 6, Section 5, titled ‘‘Transfer of
Positions.’’ The proposed rule change is
similar to Cboe Exchange, Inc. (‘‘Cboe’’)
Rule 6.7.5
Options 6, Section 5 permits market
participants to move positions from one
account to another without first
exposure of the transaction on the
Exchange, provided certain exceptions
are met. Specifically, Options 6, Section
5(a)(2) 6 provides that transfers of
positions are permissible if from one
account to another account where no
change in ownership is involved (i.e.,
5 See Securities and Exchange Act Release No.
89389 (July 23, 2020), 85 FR 45709 (July 29, 2020)
(SR–Cboe–2020–067) (Notice of Filing and
Immediate Effectiveness of a Proposed Rule Change
to Amend Rule 6.7 Concerning Off-Floor Transfers).
6 Options 6, Section 5(a) states, ‘‘Permissible
Transfers. Existing positions in options listed on
the Exchange of a Member or non-Member that are
to be transferred on, from, or to the books of a
Clearing Member may be transferred off the
Exchange if the transfer involves on or more of the
following events: . . . . . (2) the transfer of
positions from one account to another account
where no change in ownership is involved (i.e.,
accounts of the same Person, provided the accounts
are not in separate aggregation units or otherwise
subject to information barrier or account segregation
requirements; . . .’’
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]]>Agencies
[Federal Register Volume 85, Number 163 (Friday, August 21, 2020)]
[Notices]
[Pages 51807-51809]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-18336]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 33972; 812-15095]
Owl Rock Capital Corporation II, et al.
August 17, 2020.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice of an application under Section 6(c) of the Investment
Company Act of 1940 (the ``Act'') for an exemption from Sections
18(a)(2), 18(c), 18(i) and Section 61(a) of the Act.
-----------------------------------------------------------------------
Summary of Application: Applicants request an order to permit
certain closed-end management investment companies that have elected to
be regulated as business development companies (``BDCs'') to issue
multiple classes of shares with varying sales loads and asset-based
service and/or distribution fees.
Applicants: Owl Rock Capital Corporation II (the ``Current Fund''),
Owl Rock Core Income Corp. (``ORCIC'') and Owl Rock Capital Advisors
LLC (the ``Investment Adviser'').
DATES: The application was filed on February 14, 2020 and amended on
May 29, 2020 and June 30, 2020.
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 emailing the Commission's
Secretary at [email protected] and serving applicants with a
copy of the request by email. Hearing requests should be received by
the Commission by 5:30 p.m. on September 11, 2020 and should be
accompanied by proof of service on the 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 emailing to the Commission's Secretary at [email protected].
ADDRESSES: The Commission: [email protected]. Applicants:
[email protected].
FOR FURTHER INFORMATION CONTACT: Marc Mehrespand, Senior Counsel, at
(202) 551-8453 or Trace Rakestraw, 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 website 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 Current Fund is a Maryland corporation that is an externally
managed, closed-end management investment company and that has elected
to be regulated as a BDC under the Act.\1\ The Current Fund's
investment objective is to generate current income and, to a lesser
extent, capital appreciation.
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\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. ORCIC is a newly-formed Maryland corporation that is expected to
be an externally managed, closed-end management investment company and
that intends to elect to be regulated as a BDC under the Act. Prior to
relying on the relief requested in its application, ORCIC will have
filed an election to be regulated as a BDC under the Act. It is
expected that ORCIC's investment objective will be to generate current
income and, to a lesser extent, capital appreciation by targeting
investment opportunities with favorable risk-adjusted returns.
3. The Investment Adviser is registered as an investment adviser
under the Investment Advisers Act of 1940 and serves as investment
adviser to the Current Fund. The Investment Adviser is also expected to
serve as the investment adviser to ORCIC.
4. Applicants seek an order to permit the Funds (defined below) to
offer investors multiple classes of shares, interests or units of
beneficial interest, as the case may be (``Shares''), with varying
sales loads and asset-based service and/or distribution fees.
5. Applicants request that the order also apply to any continuously
offered registered closed-end management investment company that elects
to be regulated as a BDC that has been previously organized or that may
be organized in the future for which the Investment Adviser or any
entity controlling, controlled by, or under common control with the
Investment Adviser, or any successor in interest to any such entity,\2\
acts as investment
[[Page 51808]]
adviser which periodically offers to repurchase its Shares pursuant to
Rule 13e-4 under the Securities Exchange Act of 1934 (``Exchange Act'')
and Section 23(c)(2) of the Act (each, a ``Future Fund'' and together
with the Current Fund and ORCIC, the ``Funds'').\3\
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\2\ For purposes of the requested order, ``successor'' is
limited to any entity that results from a reorganization into
another jurisdiction or a change in the type of a business
organization.
\3\ Any Fund relying on this relief in the future will do so in
compliance with the terms and conditions of the application.
Applicants represent that each entity presently intending to rely on
the requested relief is listed as an applicant.
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6. As a BDC, the Current Fund is organized as a closed-end
investment company, but offers its Shares continuously, similar to an
open-end management investment company. The Current Fund has only
issued one class of Shares, but anticipates that, if it receives the
relief requested in its application, it will consider adding additional
classes of Shares to its public offering. Shares of the Funds will not
be offered or traded in a secondary market and will not be listed on
any securities exchange and do not trade on an over-the-counter
system.\4\
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\4\ Applicants are not requesting relief with respect to any
Fund listed on a securities exchange. Any Fund which relies on the
relief requested herein will cease relying on such relief upon the
listing of any class of its Shares on a securities exchange.
---------------------------------------------------------------------------
7. ORCIC anticipates that, if it receives the relief requested in
its application, it will offer multiple classes of Shares upon the
commencement of its offering.
8. Each Fund is seeking the ability to offer multiple classes of
Shares that may charge differing front-end sales loads, contingent
deferred sales charges (``CDSCs''), an early withdrawal charge
(``Repurchase Fee''), and/or annual asset-based service and/or
distribution fees. Each class of Shares will comply with the provisions
of Rule 2310 of the Financial Industry Regulatory Authority, Inc.
(``FINRA'') Manual (``FINRA Rule 2310'').\5\
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\5\ Any reference to FINRA Rule 2310 includes any successor or
replacement rule that may be adopted by FINRA.
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9. Any Share of a Fund that is subject to asset-based service or
distribution fees shall convert to a class with no asset based service
or distribution fees upon such Share reaching the applicable sales
charge cap determined in accordance with FINRA Rule 2310. Further, if a
class of Shares were to be listed on an exchange in the future, all
other then-existing classes of Shares of the listing Fund will be
converted into the listed class, without the imposition of any sales
load, fee or other charge.
10. In order to provide a limited degree of liquidity to
shareholders, Applicants state that each Fund may from time to time
offer to repurchase Shares in accordance with Rule 13e-4 under the
Exchange Act and Section 23(c)(2) of the Act. Applicants state further
that repurchases of each Fund's Shares will be made at such times, in
such amounts and on such terms as may be determined by the applicable
Fund's board of directors or trustees in its sole discretion.
11. Each Fund will disclose in its prospectus the fees, expenses
and other characteristics of each class of Shares offered for sale by
the prospectus, as is required for open-end, multiple-class funds under
Form N-1A. As if it were an open-end management investment company,
each Fund will disclose fund expenses in shareholder reports,\6\ and
disclose in its prospectus any arrangements that result in breakpoints
in, or elimination of, sales loads.\7\ Each Fund will also comply with
any requirements the Commission or FINRA may adopt regarding disclosure
at the point of sale and in transaction confirmations about the costs
and conflicts of interest arising out of the distribution of open-end
management investment company shares, and regarding prospectus
disclosure of sales loads and revenue sharing arrangements as if those
requirements applied to the Fund.\8\ Each Fund will contractually
require that any distributor of a Fund's Shares comply with such
requirements in connection with the distribution of such Fund's shares.
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\6\ See Shareholder Reports and Quarterly Portfolio Disclosure
of Registered Management Investment Companies, Investment Co. Act
Rel. No. 26372 (Feb. 27, 2004) (adopting release).
\7\ See Disclosure of Breakpoint Discounts by Mutual Funds,
Investment Co. Act Rel. No. 26464 (June 7, 2004) (adopting release).
\8\ See Confirmation Requirements and Point of Sale Disclosure
Requirements for Transactions in Certain Mutual Funds and Other
Securities, and Other Confirmation Requirement Amendments, and
Amendments to the Registration Form for Mutual Funds, Investment Co.
Act Rel. No. 26341 (Jan. 29, 2004) (proposing release).
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12. Distribution fees will be paid pursuant to a plan of
distribution adopted by each Fund in compliance with Rules 12b-1 and
17d-3 under the Act, as if those rules applied to closed-end funds
electing to be regulated as BDCs, with respect to a class (a
``Distribution Plan'').
13. Each Fund will allocate all expenses incurred by it among the
various classes of Shares based on the respective net assets of the
Fund attributable to each such class, except that the net asset value
and expenses of each class will reflect the expenses associated with
the Distribution Plan of that class (if any), shareholder servicing
fees attributable to a particular class (including transfer agency
fees, if any) and any other incremental expenses of that class.
Expenses of the Fund allocated to a particular class of the Fund's
Shares will be borne on a pro rata basis by each outstanding Share of
that class. Applicants state that each Fund will comply with the
provisions of Rule 18f-3 under the Act as if it were an open-end
management investment company.
14. Any Fund that imposes a CDSC will comply with the provisions of
Rule 6c-10 (except to the extent a Fund will comply with FINRA Rule
2310 rather than FINRA Rule 2341, as such rule may be amended (``FINRA
Rule 2341'')), as if that rule applied to BDCs. With respect to any
waiver of, scheduled variation in, or elimination of the CDSC, a Fund
will comply with the requirements of Rule 22d-1 under the Act as if the
Fund were an open-end management investment company. Each Fund also
will disclose CDSCs in accordance with the requirements of Form N-1A
concerning CDSCs as if the Fund were an open-end management investment
company.
15. Funds may impose a Repurchase Fee at a rate no greater than 2%
of the shareholder's repurchase proceeds if the interval between the
date of purchase of the Shares and the valuation date with respect to
the repurchase of such Shares is less than a specified period. Any
Repurchase Fee will apply equally to all shareholders of the applicable
Fund, regardless of class, consistent with Section 18 of the Act and
Rule 18f-3 under the Act. To the extent a Fund determines to waive,
impose scheduled variations of, or eliminate any Repurchase Fees, it
will do so consistently with the requirements of Rule 22d-1 under the
Act as if the Repurchase Fee were a CDSC and as if the Fund were an
open-end investment company and the Fund's waiver of, scheduled
variation in, or elimination of, the Repurchase Fee will apply
uniformly to all shareholders of the Fund.
Applicants' Legal Analysis
Multiple Classes of Shares
1. Section 18(a)(2) of the Act provides that a closed-end
investment company may not issue or sell a senior security that is a
stock unless certain requirements are met. Applicants state that the
creation of multiple classes of shares of the Funds may violate Section
18(a)(2), which is made applicable to BDCs through Section 61(a) of the
Act, because the Funds may not meet such requirements with respect to a
class of shares that may be a senior security.
[[Page 51809]]
2. Section 18(c) of the Act provides, in relevant part, that a
closed-end investment company may not issue or sell any senior security
if, immediately thereafter, the company has outstanding more than one
class of senior security. Applicants state that the creation of
multiple classes of Shares of the Funds may be prohibited by Section
18(c), which is made applicable to BDCs through Section 61(a) of the
Act, as a class may have priority over another class as to payment of
dividends because shareholders of different classes would pay different
fees and expenses.
3. Section 18(i) of the Act provides that each share of stock
issued by a registered management investment company will be a voting
stock and have equal voting rights with every other outstanding voting
stock. Applicants state that multiple classes of shares of the Funds
may violate Section 18(i) of the Act, which is made applicable to BDCs
through Section 61(a) of the Act, because each class would be entitled
to exclusive voting rights with respect to matters solely related to
that class.
4. Section 6(c) of the Act provides that the Commission may exempt
any person, security or transaction or any class or classes of persons,
securities or transactions from any provision of the Act, or from any
rule or regulation under the Act, if and to the extent 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 the Act. Applicants request an exemption under
Section 6(c) from Sections 18(a)(2), 18(c) and 18(i) (which are made
applicable to BDCs by Section 61(a) of the Act) to permit the Funds to
issue multiple classes of Shares.
5. Applicants submit that the proposed allocation of expenses
relating to distribution and voting rights among multiple classes is
equitable and will not discriminate against any group or class of
shareholders. Applicants submit that the proposed arrangements would
permit a Fund to facilitate the distribution of its Shares and provide
investors with a broader choice of fee options. Applicants assert that
the proposed BDC multiple class structure does not raise the concerns
underlying Section 18 of the Act to any greater degree than open-end
management investment companies' multiple class structures that are
permitted by Rule 18f-3 under the Act.
Applicants' Condition
Applicants agree that any order granting the requested relief will
be subject to the following condition:
1. Each Fund will comply with the provisions of Rules 6c-10 (except
to the extent a Fund will comply with FINRA Rule 2310 rather than FINRA
Rule 2341), 12b-1, 17d-3, 18f-3, 22d-1, and, where applicable, 11a-3
under the Act, as amended from time to time, or any successor rules
thereto, as if those rules applied to BDCs. In addition, each Fund will
comply with FINRA Rule 2310, as amended from time to time, or any
successor rule thereto, and will make available to any distributor of a
Fund's shares all of the information necessary to permit the
distributor to prepare client account statements in compliance with
FINRA Rule 2231.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-18336 Filed 8-20-20; 8:45 am]
BILLING CODE 8011-01-P
