HPS Corporate Lending Fund and HPS Investment Partners, LLC, 23764-23766 [2021-09385]
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23764
Federal Register / Vol. 86, No. 84 / Tuesday, May 4, 2021 / Notices
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.25
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–09283 Filed 5–3–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–544, OMB Control No.
3235–0604]
Proposed Collection; Comment
Request
Upon Written Request Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE, Washington, DC
20549–2736.
khammond on DSKJM1Z7X2PROD with NOTICES
Extension:
Form 10–D.
Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.), the Securities
and Exchange Commission
(‘‘Commission’’) is soliciting comments
on this collection of information
summarized below. The Commission
plans to submit this existing collection
of information to the Office of
Management and Budget for extension
and approval.
Form 10–D is a periodic report used
by asset-backed issuers to file
distribution and pool performance
information pursuant to Rule 13a–17 (17
CFR 240.13a–17) or Rule 15d–17 (17
CFR 240.15d–17) of the Securities
Exchange Act of 1934 (‘‘Exchange Act’’)
(15 U.S.C.78a et seq.). The form is
required to be filed within 15 days after
each required distribution date on the
asset-backed securities, as specified in
the governing documents for such
securities. The information provided by
Form 10–D is mandatory and all
information is made available to the
public upon request. Form 10–D takes
approximately 39.0 hours per response
to prepare and is filed by approximately
8,258 respondents. We estimate that
75% of the 39.0 hours per response
(29.25 hours) is prepared by the
company for a total annual reporting
burden of 241,547 hours (29.25 hours
per response × 8,258 responses).
Written comments are invited on: (a)
Whether this proposed collection of
information is necessary for the proper
performance of the functions of the
agency, including whether the
information will have practical utility;
(b) the accuracy of the agency’s estimate
25 17
CFR 200.30–3(a)(12).
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Jkt 253001
of the burden imposed by the collection
of information; (c) ways to enhance the
quality, utility, and clarity of the
information collected; and (d) ways to
minimize the burden of the collection of
information on respondents, including
through the use of automated collection
techniques or other forms of information
technology. Consideration will be given
to comments and suggestions submitted
in writing within 60 days of this
publication.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless it displays a currently valid
control number.
Please direct your written comment to
David Bottom, Director/Chief
Information Officer, Securities and
Exchange Commission, c/o Cynthia
Roscoe, 100 F Street NE, Washington,
DC 20549 or send an email to: PRA_
Mailbox@sec.gov.
Dated: April 29, 2021.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–09348 Filed 5–3–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–50, OMB Control No.
3235–0060]
Proposed Collection; Comment
Request
Upon Written Request Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE, Washington, DC
20549–2736.
Extension:
Form 8–K.
Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.), the Securities
and Exchange Commission
(‘‘Commission’’) is soliciting comments
on the collection of information
summarized below. The Commission
plans to submit this existing collection
of information to the Office of
Management and Budget for extension
and approval.
Form 8–K (17 CFR 249.308) is filed by
issuers to satisfy their current reporting
obligations pursuant to Sections 13 and
15(d) of the Securities Exchange Act of
1934 (15 U.S.C. 78m and 78o(d)) in
connection with the occurrence of
significant corporate events. The
purpose of Form 8–K is to provide
investors with prompt disclosure of
material information so that investors
will be able to make investment and
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voting decisions better informed and
receive information more timely. We
estimate that Form 8–K takes 9.2145
hours per response and is filed by
118,387 responses annually. We
estimate that 75% of the 9.2145 hours
per response (6.91087 hours) is
prepared by the issuer for a total annual
reporting burden of 818,158 hours
(6.91087 hours per response × 118,387
responses).
Written comments are invited on: (a)
Whether this proposed collection of
information is necessary for the proper
performance of the functions of the
agency, including whether the
information will have practical utility;
(b) the accuracy of the agency’s estimate
of the burden imposed by the collection
of information; (c) ways to enhance the
quality, utility, and clarity of the
information collected; and (d) ways to
minimize the burden of the collection of
information on respondents, including
through the use of automated collection
techniques or other forms of information
technology. Consideration will be given
to comments and suggestions submitted
in writing within 60 days of this
publication.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless it displays a currently valid
control number.
Please direct your written comment to
David Bottom, Director/Chief
Information Officer, Securities and
Exchange Commission, c/o Cynthia
Roscoe, 100 F Street NE, Washington,
DC 20549 or send an email to: PRA_
Mailbox@sec.gov.
Dated: April 29, 2021.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–09353 Filed 5–3–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
34259; 812–15207]
HPS Corporate Lending Fund and HPS
Investment Partners, LLC
April 29, 2021.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice.
AGENCY:
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.
E:\FR\FM\04MYN1.SGM
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Federal Register / Vol. 86, No. 84 / Tuesday, May 4, 2021 / Notices
Applicants
request an order to permit certain
closed-end management investment
companies that intend to elect 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: HPS Corporate Lending
Fund (the ‘‘Current Fund’’) and HPS
Investment Partners, LLC (the ‘‘Current
Investment Adviser’’).
FILING DATES: The application was filed
on March 5, 2021, and amended on
April 20, 2021.
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 SecretarysOffice@sec.gov 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 May
24, 2021 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 SecretarysOffice@sec.gov.
ADDRESSES: The Commission:
Secretarys-Office@sec.gov. Applicants:
Yoohyun K. Choi, HPS Investment
Partners, LLC, kathy.choi@
hpspartners.com; Richard Horowitz,
Esq., Dechert LLP, richard.horowitz@
dechert.com.
SUMMARY OF APPLICATION:
khammond on DSKJM1Z7X2PROD with NOTICES
FOR FURTHER INFORMATION CONTACT:
Deepak Pai, Senior Counsel, at (202)
551–6876 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 Delaware
statutory trust that is an externally
managed, non-diversified, closed-end
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management investment company that
intends to elect to be regulated as a BDC
under the Act.1 The Current Fund’s
investment objective will be to produce
current income while preserving capital,
by investing primarily in newly
originated secured debt. Prior to relying
on the requested order, the Current
Fund will have filed an election to be
regulated as a BDC under the Act.
2. The Current Investment Adviser is
registered as an investment adviser
under the Investment Advisers Act of
1940 and serves as investment adviser
to the Current Fund.
3. 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.
4. 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
Current Investment Adviser or any
entity controlling, controlled by, or
under common control with the Current
Investment Adviser, or any successor in
interest to any such entity,2 acts as
investment 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, the ‘‘Funds’’).3
5. As a BDC, the Current Fund is
organized as a closed-end investment
company, but will offer its Shares
continuously, similar to an open-end
management investment company. The
Current Fund currently will only issue
a single class of Shares, but anticipates
that if the relief requested in its
application is granted, then it may
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
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 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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23765
not trade on an over-the-counter
system.4
6. 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
7. 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.
8. 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.
9. 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
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.
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).
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khammond on DSKJM1Z7X2PROD with NOTICES
23766
Federal Register / Vol. 86, No. 84 / Tuesday, May 4, 2021 / Notices
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.
10. 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’’).
11. 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.
12. 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.
13. Funds may impose a Repurchase
Fee at a rate no greater than 2% of the
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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17:13 May 03, 2021
Jkt 253001
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.
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.
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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, under delegated
authority.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–09385 Filed 5–3–21; 8:45 am]
BILLING CODE 8011–01–P
E:\FR\FM\04MYN1.SGM
04MYN1
]]>Agencies
[Federal Register Volume 86, Number 84 (Tuesday, May 4, 2021)]
[Notices]
[Pages 23764-23766]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-09385]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 34259; 812-15207]
HPS Corporate Lending Fund and HPS Investment Partners, LLC
April 29, 2021.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice.
-----------------------------------------------------------------------
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.
[[Page 23765]]
Summary of Application: Applicants request an order to permit certain
closed-end management investment companies that intend to elect 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: HPS Corporate Lending Fund (the ``Current Fund'') and HPS
Investment Partners, LLC (the ``Current Investment Adviser'').
Filing Dates: The application was filed on March 5, 2021, and amended
on April 20, 2021.
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 May 24, 2021 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:
Yoohyun K. Choi, HPS Investment Partners, LLC,
[email protected]; Richard Horowitz, Esq., Dechert LLP,
ric[email protected].
FOR FURTHER INFORMATION CONTACT: Deepak Pai, Senior Counsel, at (202)
551-6876 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 Delaware statutory trust that is an
externally managed, non-diversified, closed-end management investment
company that intends to elect to be regulated as a BDC under the
Act.\1\ The Current Fund's investment objective will be to produce
current income while preserving capital, by investing primarily in
newly originated secured debt. Prior to relying on the requested order,
the Current Fund will have filed an election to be regulated as a BDC
under the Act.
---------------------------------------------------------------------------
\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. The Current Investment Adviser is registered as an investment
adviser under the Investment Advisers Act of 1940 and serves as
investment adviser to the Current Fund.
3. 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.
4. 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 Current Investment Adviser or
any entity controlling, controlled by, or under common control with the
Current Investment Adviser, or any successor in interest to any such
entity,\2\ acts as investment 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, the
``Funds'').\3\
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
5. As a BDC, the Current Fund is organized as a closed-end
investment company, but will offer its Shares continuously, similar to
an open-end management investment company. The Current Fund currently
will only issue a single class of Shares, but anticipates that if the
relief requested in its application is granted, then it may 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\
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
6. 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\
---------------------------------------------------------------------------
\5\ Any reference to FINRA Rule 2310 includes any successor or
replacement rule that may be adopted by FINRA.
---------------------------------------------------------------------------
7. 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.
8. 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.
9. 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
[[Page 23766]]
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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10. 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'').
11. 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.
12. 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.
13. 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.
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,
under delegated authority.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-09385 Filed 5-3-21; 8:45 am]
BILLING CODE 8011-01-P
