81 FR 35419 - Ares Capital Corporation, et al.;
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 106 (June 2, 2016)
Federal Register Volume 81, Issue 106 (June 2, 2016)
| Page Range | 35419-35421 | |
| FR Document | 2016-12878 |
[Federal Register Volume 81, Number 106 (Thursday, June 2, 2016)] [Notices] [Pages 35419-35421] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-12878] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Investment Company Act Release No. 32127; 812-14399] Ares Capital Corporation, et al.; Notice of Application May 26, 2016. AGENCY: Securities and Exchange Commission (``Commission''). ACTION: Notice of an application for an order under section 6(c) of the Investment Company Act of 1940 (the ``Act'') for an exemption from sections 18(a) and 61(a) of the Act. ----------------------------------------------------------------------- Applicants: Ares Capital Corporation (the ``Company''), Ares Capital [[Page 35420]] Management LLC (the ``Adviser''), Ares Venture Finance GP LLC (the ``General Partner''), and Ares Venture Finance, L.P. (``Ares SBIC''). SUMMARY: Summary of the Application: The Company requests an order to permit it to adhere to a modified asset coverage requirement. DATES: Filing Dates: The application was filed on December 12, 2014, and amended on May 11, 2015, and May 11, 2016. Hearing or Notification of Hearing: An order granting the requested relief will be issued unless the Commission orders a hearing. Interested persons may request a hearing by writing to the Commission's Secretary and serving applicants with a copy of the request, personally or by mail. Hearing requests should be received by the Commission by 5:30 p.m. on June 20, 2016, and should be accompanied by proof of service on applicants, in the form of an affidavit or, for lawyers, a certificate of service. Pursuant to rule 0-5 under the Act, hearing requests should state the nature of the writer's interest, any facts bearing upon the desirability of a hearing on the matter, the reason for the request, and the issues contested. Persons who wish to be notified of a hearing may request notification by writing to the Commission's Secretary. ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090. Applicants: Kipp deVeer, Chief Executive Officer, and Joshua M. Bloomstein, General Counsel, Ares Capital Corporation, 245 Park Avenue, 44th Floor, New York, NY 10167. FOR FURTHER INFORMATION CONTACT: Kieran G. Brown, Senior Counsel, at (202) 551-6773, or James M. Curtis, Branch Chief, at (202) 551-6712 (Division of Investment Management, Chief Counsel's Office). SUPPLEMENTARY INFORMATION: The following is a summary of the application. The complete application may be obtained via the Commission's Web site by searching for the file number, or for an applicant using the Company name box, at http://www.sec.gov/search/search.htm or by calling (202) 551-8090. Applicants' Representations 1. The Company, a Maryland corporation, is an externally managed, non-diversified, closed-end management investment company that has elected to be regulated as a business development company (``BDC'') under the Act.\1\ The Company's investment objective is to generate both current income and capital appreciation through debt and equity investments. The Adviser, a Delaware limited liability company, is the investment adviser to the Company. The Adviser is registered under the Investment Advisers Act of 1940. --------------------------------------------------------------------------- \1\ Section 2(a)(48) defines a BDC to be any closed-end investment company that operates for the purpose of making investments in securities described in section 55(a)(1) through 55(a)(3) of the Act and makes available significant managerial assistance with respect to the issuers of such securities. --------------------------------------------------------------------------- 2. Ares SBIC, a Delaware limited partnership, received approval for a license from the Small Business Administration (``SBA'') to operate as a small business investment company (``SBIC'') under the Small Business Investment Act of 1958 (``SBIA''). Ares SBIC is excluded from the definition of investment company by section 3(c)(7) of the Act. The General Partner is the sole general partner of Ares SBIC and the Company is the sole member of the General Partner. The Company is the sole limited partner of Ares SBIC. The Company, directly or indirectly through the General Partner, wholly owns Ares SBIC. Applicants' Legal Analysis 1. The Company requests an exemption pursuant to section 6(c) of the Act from the provisions of sections 18(a) and 61(a) of the Act to permit it to adhere to a modified asset coverage requirement with respect to any direct or indirect wholly-owned subsidiary of the Company that is licensed by the SBA to operate under the SBIA as an SBIC and relies on section 3(c)(7) for an exemption from the definition of ``investment company'' under the Act (each, an ``SBIC Subsidiary'').\2\ Applicants state that companies operating under the SBIA, such as the SBIC Subsidiary, are subject to the SBA's substantial regulation of permissible leverage in their capital structure. --------------------------------------------------------------------------- \2\ All existing entities that currently intend to rely on the order are named as applicants. Any other existing or future entity that may rely on the order in the future will comply with the terms and condition of the order. --------------------------------------------------------------------------- 2. Section 18(a) of the Act prohibits a registered closed-end investment company from issuing any class of senior security or selling any such security of which it is the issuer unless the company complies with the asset coverage requirements set forth in that section. Section 61(a) of the Act makes section 18 applicable to BDCs, with certain modifications. Section 18(k) exempts an investment company operating as an SBIC from the asset coverage requirements for senior securities representing indebtedness that are contained in section 18(a)(1)(A) and (B). 3. Applicants state that the Company may be required to comply with the asset coverage requirements of section 18(a) (as modified by section 61(a)) on a consolidated basis because the Company may be deemed to be an indirect issuer of any class of senior security issued by Ares SBIC or another SBIC Subsidiary. Applicants state that applying section 18(a) (as modified by section 61(a)) on a consolidated basis generally would require that the Company treat as its own all assets and any liabilities held directly either by itself, by Ares SBIC, or by another SBIC Subsidiary. Accordingly, the Company requests an order under section 6(c) of the Act exempting the Company from the provisions of section 18(a) (as modified by section 61(a)), such that senior securities issued by each SBIC Subsidiary that would be excluded from its individual asset coverage ratio by section 18(k) if it were itself a BDC would also be excluded from the Company's consolidated asset coverage ratio. 4. Section 6(c) of the Act, in relevant part, permits the Commission to exempt any transaction or class of transactions from any provision of the Act if and to the extent that such exemption is necessary or appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act. Applicants state that the requested relief satisfies the section 6(c) standard. Applicants contend that, because the SBIC Subsidiary would be entitled to rely on section 18(k) if it were a BDC, there is no policy reason to deny the benefit of that exemption to the Company. Applicants' Condition Applicants agree that any order granting the requested relief will be subject to the following condition. The Company will not itself issue or sell any senior security and the Company will not cause or permit Ares SBIC or any other SBIC Subsidiary to issue or sell any senior security of which the Company, Ares SBIC or any other SBIC Subsidiary is the issuer except to the extent permitted by section 18 (as modified for BDCs by section 61(a)); provided that, immediately after the issuance or sale of any such senior security by any of the Company, Ares SBIC or any other SBIC Subsidiary, the Company, individually and on a consolidated basis, shall have [[Page 35421]] the asset coverage required by section 18(a) (as modified by section 61(a)). In determining whether the Company, Ares SBIC and any other SBIC Subsidiary on a consolidated basis have the asset coverage required by section 18(a) (as modified by section 61(a)), any senior securities representing indebtedness of Ares SBIC or another SBIC Subsidiary if that SBIC Subsidiary has issued indebtedness that is held or guaranteed by the SBA shall not be considered senior securities and, for purposes of the definition of ``asset coverage'' in section 18(h), shall be treated as indebtedness not represented by senior securities. For the Commission, by the Division of Investment Management, pursuant to delegated authority. Brent J. Fields, Secretary. [FR Doc. 2016-12878 Filed 6-1-16; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 81, No. 106 / Thursday, June 2, 2016 / Notices 35419
it crosses a non-displayed order on the displayed interest (i.e., trade),26 which All submissions should refer to File
NYSE Arca Book. As proposed, ALO would increase the potential for price Number SR–NYSEARCA–2016–80. This
Orders would trade if the limit price of improvement for ALO Orders. Also, file number should be included on the
such order crosses any displayed or according to the Exchange, the proposed subject line if email is used. To help the
non-displayed orders on the NYSE Arca rule change would consistently treat Commission process and review your
Book, thus providing for similar ALO Orders if they lock the price of comments more efficiently, please use
treatment regardless of whether the any-sized displayed interest (i.e., re- only one method. The Commission will
contra-side order is displayed or not. In price), which would reduce the post all comments on the Commission’s
addition, currently, an ALO Order is re- potential for ALO Orders to lock the Internet Web site (http://www.sec.gov/
priced so it would not lock the price of displayed price of an odd lot order and rules/sro.shtml). Copies of the
the BO or BB. As proposed, the therefore reduce confusion in the submission, all subsequent
Exchange would provide for similar market. In addition, the Exchange states amendments, all written statements
treatment so that an ALO Order would that it anticipates that it will be able to with respect to the proposed rule
not lock the price of a displayed order implement the technology changes change that are filed with the
of any size. The proposed rule change supporting this proposed rule change in Commission, and all written
would further reduce the burden on less than 30 days from the date of filing. communications relating to the
competition for its ETP Holders by The Commission believes the waiver of proposed rule change between the
harmonizing the operation of ALO the operative delay is consistent with Commission and any person, other than
Orders with how similar orders function the protection of investors and the those that may be withheld from the
on other exchanges.21 public interest. Therefore, the public in accordance with the
Commission hereby waives the provisions of 5 U.S.C. 552, will be
C. Self-Regulatory Organization’s
operative delay and designates the available for Web site viewing and
Statement on Comments on the
proposal operative upon filing.27 printing in the Commission’s Public
Proposed Rule Change Received From
At any time within 60 days of the Reference Room, 100 F Street NE.,
Members, Participants, or Others
filing of such proposed rule change, the Washington, DC 20549 on official
No written comments were solicited business days between the hours of
Commission summarily may
or received with respect to the proposed 10:00 a.m. and 3:00 p.m. Copies of the
temporarily suspend such rule change if
rule change. filing also will be available for
it appears to the Commission that such
III. Date of Effectiveness of the action is necessary or appropriate in the inspection and copying at the principal
Proposed Rule Change and Timing for public interest, for the protection of office of the Exchange. All comments
Commission Action investors, or otherwise in furtherance of received will be posted without change;
the purposes of the Act. If the the Commission does not edit personal
Because the proposed rule change identifying information from
does not (i) significantly affect the Commission takes such action, the
Commission shall institute proceedings submissions. You should submit only
protection of investors or the public information that you wish to make
interest; (ii) impose any significant to determine whether the proposed rule
available publicly. All submissions
burden on competition; and (iii) become change should be approved or
should refer to File Number SR–
operative for 30 days from the date on disapproved.
NYSEARCA–2016–80 and should be
which it was filed, or such shorter time IV. Solicitation of Comments submitted on or before June 23, 2016.
as the Commission may designate, it has
become effective pursuant to Section Interested persons are invited to For the Commission, by the Division of
submit written data, views, and Trading and Markets, pursuant to delegated
19(b)(3)(A) of the Act 22 and Rule 19b– authority.28
4(f)(6) thereunder.23 arguments concerning the foregoing,
including whether the proposed rule Brent J. Fields,
A proposed rule change filed under
Rule 19b–4(f)(6) 24 normally does not change is consistent with the Act. Secretary.
become operative for 30 days after the Comments may be submitted by any of [FR Doc. 2016–12891 Filed 6–1–16; 8:45 am]
date of the filing. However Rule 19b– the following methods: BILLING CODE 8011–01–P
4(f)(6)(iii) 25 permits the Commission to
Electronic Comments
designate a shorter time if such action
is consistent with the protection of • Use the Commission’s Internet SECURITIES AND EXCHANGE
investors and the public interest. The comment form (http://www.sec.gov/ COMMISSION
Exchange has asked the Commission to rules/sro.shtml); or [Investment Company Act Release No.
waive the 30-day operative delay so that • Send an email to rule-comments@ 32127; 812–14399]
the proposal may become operative sec.gov. Please include File Number SR–
immediately upon filing. According to NYSEARCA–2016–80 on the subject Ares Capital Corporation, et al.; Notice
the Exchange, the proposed rule change line. of Application
would consistently treat ALO Orders if May 26, 2016.
they cross the price of displayed or non- Paper Comments
AGENCY: Securities and Exchange
• Send paper comments in triplicate Commission (‘‘Commission’’).
21 See supra note 7. to Brent J. Fields, Secretary, Securities ACTION: Notice of an application for an
22 15 U.S.C. 78s(b)(3)(A).
and Exchange Commission, 100 F Street
asabaliauskas on DSK3SPTVN1PROD with NOTICES
23 17 CFR 240.19b–4(f)(6). As required under Rule order under section 6(c) of the
19b–4(f)(6)(iii), the Exchange provided the
NE., Washington, DC 20549–1090. Investment Company Act of 1940 (the
Commission with written notice of its intent to file ‘‘Act’’) for an exemption from sections
the proposed rule change, along with a brief 26 The Exchange states that this proposed change
description and the text of the proposed rule
18(a) and 61(a) of the Act.
is based on the rules of BZX and Nasdaq. See supra
change, at least five business days prior to the date note 7.
of filing of the proposed rule change, or such 27 For purposes only of waiving the 30-day
Applicants: Ares Capital Corporation
shorter time as designated by the Commission. operative delay, the Commission has considered the (the ‘‘Company’’), Ares Capital
24 17 CFR 240.19b–4(f)(6).
proposed rule’s impact on efficiency, competition,
25 17 CFR 240.19b–4(f)(6)(iii). and capital formation. See 15 U.S.C. 78c(f). 28 17 CFR 200.30–3(a)(12).
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![Federal Register / Vol. 81, No. 106 / Thursday, June 2, 2016 / Notices 35421
the asset coverage required by section II. Self-Regulatory Organization’s Tier 3 of the VIP, and 30% Market-
18(a) (as modified by section 61(a)). In Statement of the Purpose of, and Maker Trading Permit fee credit for
determining whether the Company, Statutory Basis for, the Proposed Rule reaching Tier 4 of the VIP) (‘‘Access
Ares SBIC and any other SBIC Change Credit’’). ‘‘Affiliate’’ for purposes of
Subsidiary on a consolidated basis have In its filing with the Commission, the AVP (i.e., the Liquidity Provider Sliding
the asset coverage required by section Exchange included statements Scale Credit and Access Credit) is
18(a) (as modified by section 61(a)), any concerning the purpose of and basis for currently defined as having at least 75%
senior securities representing the proposed rule change and discussed common ownership between the two
indebtedness of Ares SBIC or another any comments it received on the entities as reflected on each entity’s
SBIC Subsidiary if that SBIC Subsidiary proposed rule change. The text of these Form BD, Schedule A.
has issued indebtedness that is held or statements may be examined at the The Exchange now proposes to
guaranteed by the SBA shall not be places specified in Item IV below. The expand the availability of the credits
considered senior securities and, for Exchange has prepared summaries, set under AVP. Specifically, the Exchange
purposes of the definition of ‘‘asset forth in sections A, B, and C below, of proposes to allow any Market-Maker to
coverage’’ in section 18(h), shall be the most significant aspects of such designate an OFP as its ‘‘Appointed
treated as indebtedness not represented statements. OFP’’ and any OFP to designate a
by senior securities. Market-Maker to be its ‘‘Appointed
A. Self-Regulatory Organization’s Market-Maker’’ for purposes of
For the Commission, by the Division of
Investment Management, pursuant to Statement of the Purpose of, and the qualifying for credits under AVP. TPHs
delegated authority. Statutory Basis for, the Proposed Rule would effectuate the designation by
Brent J. Fields, Change submitting a form to the Exchange.5 The
Secretary. 1. Purpose form would need to be submitted to the
[FR Doc. 2016–12878 Filed 6–1–16; 8:45 am]
Exchange by 3:00 p.m. on the first
The Exchange proposes to amend its business day of a month in order to be
BILLING CODE 8011–01–P Fees Schedule.3 Specifically, the eligible to qualify for credits under AVP
Exchange proposes to allow Market- for that month. The Exchange would
Makers to designate a Trading Permit view transmittal of the completed form
SECURITIES AND EXCHANGE Holder with agency operations (‘‘Order
COMMISSION as acceptance of such an appointment
Flow Provider’’ or ‘‘OFP’’) and Order and would only recognize one such
[Release No. 34–77926; File No. SR–CBOE– Flow Providers to designate a Market- designation for each party once every
2016–045] Maker for purposes of being able to take calendar month, which designation
advantage of credits available under the would remain [sic] automatically renew
Self-Regulatory Organizations; Affiliate Volume Plan (‘‘AVP’’). each month and remain in effect unless
Chicago Board Options Exchange, By way of background, the Exchange or until the Exchange receives an email
Incorporated; Notice of Filing and currently has in place various incentive from either party indicating that the
Immediate Effectiveness of a Proposed programs that benefit ‘‘affiliated’’ appointment has been terminated.
Rule To Amend the Fees Schedule Trading Permit Holders (‘‘TPHs’’). The Exchange notes that the proposal
May 26, 2016. Particularly, under AVP, if a TPH would be available to all Market-Makers
Pursuant to Section 19(b)(1) of the Affiliate of a Market-Maker (including a and OFPs, even those who already have
Securities Exchange Act of 1934 (the Designated Primary Market-Maker an ‘‘Affiliate’’ under the current
‘‘Act’’),1 and Rule 19b–4 thereunder,2 (‘‘DPM’’) or Lead Market-Maker definition. More specifically, the
notice is hereby given that on May 16, (‘‘LMM’’)) qualifies under the Volume proposed change would enable a
2016, Chicago Board Options Exchange, Incentive Program (‘‘VIP’’), that Market- Market-Maker without an Affiliate OFP
Incorporated (the ‘‘Exchange’’ or Maker will also qualify for a discount on (i.e., an OFP with at least 75% common
‘‘CBOE’’) filed with the Securities and that Market-Maker’s Liquidity Provider ownership between itself and that
Exchange Commission (the Sliding Scale (‘‘Sliding Scale’’) Market-Maker as reflected on each
‘‘Commission’’) the proposed rule transaction fees (‘‘Liquidity Provider entity’s Form BD, Schedule A)—or with
change as described in Items I, II, and Sliding Scale Credit’’). More an Affiliate OFP—to enter into a
III below, which Items have been specifically, if a Market-Maker’s relationship with an Appointed OFP.
prepared by the Exchange. The Affiliate reaches Tier 2, Tier 3 or Tier Similarly, an OFP with or without an
Commission is publishing this notice to 4 of VIP, that Market-Maker will receive Affiliate Market-Maker would be able to
solicit comments on the proposed rule a Liquidity Provider Sliding Scale enter into a relationship with an
change from interested persons. Credit of 10%, 20% or 30%, Appointed Market-Maker. The proposed
respectively. Additionally, if a Market- change increases opportunities for TPHs
I. Self-Regulatory Organization’s Maker’s Affiliate receives a credit under to qualify for credits under AVP, as it
Statement of the Terms of Substance of VIP, that Market-Maker will also receive would enable TPHs that are not
the Proposed Rule Change a credit on its Market-Maker Trading currently eligible for AVP (i.e., doesn’t
The Exchange proposes to amend the Permit fees 4 corresponding to the VIP have an ‘‘Affiliate’’) to avail themselves
Fees Schedule. The text of the proposed tier reached (10% Market-Maker of AVP, as well as assist TPHs that are
rule change is available on the Trading Permit fee credit for reaching currently eligible for AVP (i.e., has an
asabaliauskas on DSK3SPTVN1PROD with NOTICES
Exchange’s Web site (http:// Tier 2 of the VIP, 20% Market-Maker Affiliate) to potentially achieve a higher
www.cboe.com/AboutCBOE/ Trading Permit fee credit for reaching AVP tier, thus qualifying for higher
CBOELegalRegulatoryHome.aspx), at credits. The Exchange notes that a
the Exchange’s Office of the Secretary, 3 The Exchange initially filed the proposed fee
Market-Maker that has both an Affiliate
and at the Commission’s Public change on May 2, 2016 (SR–CBOE–2016–044). On
May 16, 2016, the Exchange withdrew that filing
OFP and Appointed OFP may only
Reference Room. and submitted this filing. qualify based upon the volume of its
4 This credit does not apply to Market-Maker
1 15 U.S.C. 78s(b)(1). Trading Permits used for appointments in SPX, 5 The Appointed Affiliate Form may be submitted
2 17 CFR 240.19b–4. SPXpm, RUT, VIX, OEX and XEO. to Registration@cboe.com.
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Document Created: 2016-06-02 01:23:03
Document Modified: 2016-06-02 01:23:03
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| Action | Notice of an application for an order under section 6(c) of the Investment Company Act of 1940 (the ``Act'') for an exemption from sections 18(a) and 61(a) of the Act. | |
| Contact | Kieran G. Brown, Senior Counsel, at (202) 551-6773, or James M. Curtis, Branch Chief, at (202) 551-6712 (Division of Investment Management, Chief Counsel's Office). | |
| FR Citation | 81 FR 35419 |
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