82 FR 23390 - Solar Capital Ltd., et al.
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 82, Issue 97 (May 22, 2017)
Federal Register Volume 82, Issue 97 (May 22, 2017)
| Page Range | 23390-23394 | |
| FR Document | 2017-10355 |
[Federal Register Volume 82, Number 97 (Monday, May 22, 2017)] [Notices] [Pages 23390-23394] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-10355] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. IC-32638; 812-14735] Solar Capital Ltd., et al. May 17, 2017. AGENCY: Securities and Exchange Commission (``Commission''). ACTION: Notice. ----------------------------------------------------------------------- Notice of application for an order (``Order'') to amend a prior order under sections 17(d) and 57(i) of the Investment Company Act of 1940 (the ``Act'') and rule 17d-1 under the Act permitting certain joint transactions otherwise prohibited by sections 17(d) and 57(a)(4) of the Act and under rule 17d-1 under the Act. Applicants request an order that would permit certain business development companies (each, a ``BDC'') and certain closed-end investment companies to co-invest in portfolio companies with each other and with affiliated investment funds. The Order would supersede the prior order.\1\ --------------------------------------------------------------------------- \1\ Solar Capital Ltd., et al., Investment Company Act Rel. Nos. 31143 (Jul. 1, 2014) (notice) and 31187 (Jul. 28, 2014) (order). --------------------------------------------------------------------------- Applicants: Solar Capital Ltd. (``Solar Capital''); Solar Senior Capital Ltd. (``Solar Senior'' and together with Solar Capital, the ``Solar Funds''); SUNS SPV LLC (``Solar Senior Subsidiary'') and Solar Capital Partners, LLC (``Solar Adviser''). Filing Dates: The application was filed on January 13, 2017, and amended on April 4, 2017 and May 4, 2017. 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 12, 2017, 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 St. NE., Washington, DC 20549-1090. Applicants: Michael S. Gross, Solar Capital Ltd., 500 Park Avenue, New York, NY 10022. FOR FURTHER INFORMATION CONTACT: Barbara T. Heussler, Senior Counsel, at (202) 551-6990 or Robert H. Shapiro, Branch Chief, at (202) 551-6821 (Division of Investment Management, Chief Counsel's Office). SUPPLEMENTARY INFORMATION: The following is a summary of the application. The complete application may be obtained via the Commission's Web site by searching for the file number, or for an applicant using the Company name box, at http://www.sec.gov/search/search.htm or by calling (202) 551-8090. Summary of the Application 1. The Solar Funds are Maryland corporations organized as closed- end management investment companies that have elected to be regulated as BDC's under section 54(a) of the Act.\2\ Solar Capital's investment objective is to generate both current income and capital appreciation through debt and equity investment. Solar Senior's investment objective is to seek to maximize current income consistent with the preservation of capital. The Solar Funds each have a five-member Board,\3\ of which the same three members serve as Non-Interested Directors.\4\ --------------------------------------------------------------------------- \2\ 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. \3\ The term ``Board'' refers to the Board of Directors of the relevant Regulated Fund. \4\ The term ``Non-Interested Directors'' means, with respect to any Board, the directors who are not ``interested persons'' within the meaning of section 2(a)(19). --------------------------------------------------------------------------- 2. Solar Senior Subsidiary is a Wholly-Owned Investment Sub, as defined below, whose sole business purpose is to hold one or more investments on behalf of Solar Senior. Because it is a wholly-owned, consolidated subsidiary of Solar Senior, and Solar Senior's investment adviser is Solar Adviser, Solar Adviser also manages the assets the Solar Senior Subsidiary. 3. Solar Adviser, a privately held investment adviser registered with the Commission under the Investment Advisers Act of 1940 (the ``Advisers Act''), was organized as a limited liability company under the laws of the state of Delaware. Solar Adviser serves as the investment adviser to each of the Solar Funds. 4. Applicants seek an Order to permit a Regulated Fund \5\ and one or more other Regulated Funds and/or one or more Affiliated Funds \6\ to participate in the same investment opportunities through a proposed co-investment program (the ``Co-Investment Program'') where such participation would otherwise be prohibited under section 57(a)(4) and rule 17d-1 by (a) co-investing with each other in securities issued by issuers in private placement transactions in which an Adviser negotiates terms in addition to price; \7\ and (b) making additional investments in securities of such issuers, including through the exercise of warrants, conversion privileges, and other rights to purchase securities of the issuers (``Follow-On Investments''). ``Co- Investment Transaction'' means any transaction in which a Regulated Fund (or its Wholly-Owned Investment Sub) participated together with one or more other Regulated Funds and/or one or more Affiliated Funds in reliance on the requested Order. ``Potential Co-Investment Transaction'' means any investment opportunity in which a Regulated Fund (or its Wholly-Owned Investment Sub) could not participate together with one or more Affiliated Funds and/or one or more other Regulated Funds without obtaining and relying on the Order.\8\ --------------------------------------------------------------------------- \5\ ``Regulated Fund'' means Solar Capital, Solar Senior and any Future Regulated Fund. ``Future Regulated Fund'' means any closed- end management investment company (a) that is registered under the Act or has elected to be regulated as a BDC, (b) whose investment adviser is an Adviser, and (c) that intends to participate in the Co-Investment Program. The term ``Adviser'' means (a) Solar Adviser or its successors, and (b) any future investment adviser that controls, is controlled by, or is under common control with Solar Adviser and is registered as an investment adviser under the Advisers Act. The term ``successor'' means an entity that results from a reorganization into another jurisdiction or change in the type of business organization. \6\ ``Affiliated Fund'' means any entity (a) whose investment adviser is an Adviser, (b) that would be an investment company but for section 3(c)(1) or 3(c)(7) of the Act, and (c) that intends to participate in the Co-Investment Program. \7\ The term ``private placement transactions'' means transactions in which the offer and sale of securities by the issuer are exempt from registration under the Securities Act of 1933 (the ``Securities Act''). \8\ All existing entities that currently intend to rely upon the requested Order have been named as applicants. Any other existing or future entity that subsequently relies on the Order will comply with the terms and conditions of the application. --------------------------------------------------------------------------- [[Page 23391]] 5. Applicants state any of the Regulated Funds may, from time to time, form a Wholly-Owned Investment Sub.\9\ Such a subsidiary would be prohibited from investing in a Co-Investment Transaction with any other Regulated Fund or Affiliated Fund because it would be a company controlled by its parent Regulated Fund for purposes of section 57(a)(4) and rule 17d-1. Applicants request that each Wholly-Owned Investment Sub be permitted to participate in Co-Investment Transactions in lieu of its parent Regulated Fund and that the Wholly- Owned Investment Sub's participation in any such transaction be treated, for purposes of the Order, as though the Regulated Fund were participating directly. Applicants represent that this treatment is justified because a Wholly-Owned Investment Sub would have no purpose other than serving as a holding vehicle for the Regulated Fund's investments and, therefore, no conflicts of interest could arise between the Regulated Fund and the Wholly-Owned Investment Sub. The Regulated Fund's Board would make all relevant determinations under the conditions with regard to a Wholly-Owned Investment Sub's participation in a Co-Investment Transaction, and the Regulated Fund's Board would be informed of, and take into consideration, any proposed use of a Wholly- Owned Investment Sub in the Regulated Fund's place. If the Regulated Fund proposes to participate in the same Co-Investment Transaction with any of its Wholly-Owned Investment Subs, the Board will also be informed of, and take into consideration, the relative participation of the Regulated Fund and the Wholly-Owned Investment Sub. --------------------------------------------------------------------------- \9\ The term ``Wholly-Owned Investment Sub'' means an entity (i) whose sole business purpose is to hold one or more investments on behalf of a Regulated Fund (and, in the case of an SBIC Subsidiary (as defined below), maintain a license under the SBA Act (as defined below) and issue debentures guaranteed by the SBA (as defined below)); (ii) that is wholly-owned by the Regulated Fund (with the Regulated Fund at all times holding, beneficially and of record, 100% of the voting and economic interests); (iii) with respect to which the Regulated Fund's Board has the sole authority to make all determinations with respect to the entity's participation under the conditions of the application; and (iv) that would be an investment company but for section 3(c)(1) or 3(c)(7) of the Act. All subsidiaries of the Regulated Fund participating in the Co- Investment Transactions will be Wholly-Owned Investment Subs and will have Objectives and Strategies (as defined below) that are either the same as, or a subset of, the Regulated Fund's Objectives and Strategies. The term ``SBIC Subsidiary'' means a Wholly-Owned Investment Sub that is licensed by the Small Business Administration (the ``SBA'') to operate under the Small Business Investment Act of 1958, as amended (the ``SBA Act'') as a small business investment company (an ``SBIC''). --------------------------------------------------------------------------- 6. When considering Potential Co-Investment Transactions for any Regulated Fund, the applicable Adviser will consider only the Objectives and Strategies,\10\ investment policies, investment positions, capital available for investment as described in the application (``Available Capital''), and other pertinent factors applicable to that Regulated Fund. The Advisers expect that any portfolio company that is an appropriate investment for a Regulated Fund should also be an appropriate investment for one or more other Regulated Funds and/or one or more Affiliated Funds, with certain exceptions based on available capital or diversification.\11\ --------------------------------------------------------------------------- \10\ ``Objectives and Strategies'' means a Regulated Fund's investment objectives and strategies as described in the Regulated Fund's registration statement on Form N-2, other filings the Regulated Fund has made with the Commission under the Securities Act or the Securities Exchange Act of 1934, and the Regulated Fund's reports to shareholders. \11\ The Regulated Funds, however, will not be obligated to invest, or co-invest, when investment opportunities are referred to them. --------------------------------------------------------------------------- 7. Other than pro rata dispositions and Follow-On Investments as provided in conditions 7 and 8, and after making the determinations required in conditions 1 and 2(a), the Adviser will present each Potential Co-Investment Transaction and the proposed allocation to the directors of the Board eligible to vote under section 57(o) of the Act (``Eligible Directors''), and the ``required majority,'' as defined in section 57(o) of the Act (``Required Majority'') \12\ will approve each Co-Investment Transaction prior to any investment by the participating Regulated Fund. --------------------------------------------------------------------------- \12\ In the case of a Regulated Fund that is a registered closed-end fund, the Board members that make up the Required Majority will be determined as if the Regulated Fund were a BDC subject to section 57(o). --------------------------------------------------------------------------- 8. With respect to the pro rata dispositions and Follow-On Investments provided in conditions 7 and 8, a Regulated Fund may participate in a pro rata disposition or Follow-On Investment without obtaining prior approval of the Required Majority if, among other things: (i) The proposed participation of each Regulated Fund and Affiliated Fund in such disposition is proportionate to its outstanding investments in the issuer immediately preceding the disposition or Follow-On Investment, as the case may be; and (ii) the Board of the Regulated Fund has approved that Regulated Fund's participation in pro rata dispositions and Follow-On Investments as being in the best interests of the Regulated Fund. If the Board does not so approve, any such disposition or Follow-On Investment will be submitted to the Regulated Fund's Eligible Directors. The Board of any Regulated Fund may at any time rescind, suspend or qualify its approval of pro rata dispositions and Follow-On Investments with the result that all dispositions and/or Follow-On Investments must be submitted to the Eligible Directors. 9. No Non-Interested Director of a Regulated Fund will have any direct or indirect financial interest in any Co-Investment Transaction or any interest in any portfolio company, other than through an interest (if any) in the securities of the Regulated Funds. 10. If an Adviser or its principal owners (the ``Principals''), or any person controlling, controlled by, or under common control with an Adviser or the Principals, and the Affiliated Funds (collectively, the ``Holders'') own in the aggregate more than 25 percent of the outstanding voting shares of a Regulated Fund (the ``Shares''), then the Holders will vote such Shares as required under condition 14. Applicants believe that this condition will ensure that the Non- Interested Directors will act independently in evaluating the Co- Investment Program, because the ability of an Adviser or the Principals to influence the Non-Interested Directors by a suggestion, explicit or implied, that the Non-Interested Directors can be removed if desired by the Holders will be limited significantly. The Non-Interested Directors shall evaluate and approve any such independent party, taking into account its qualifications, reputation for independence, cost to the shareholders, and other factors that they deem relevant. Applicants' Legal Analysis 1. Section 57(a)(4) of the Act prohibits certain affiliated persons of a BDC from participating in joint transactions with the BDC or a company controlled by a BDC in contravention of rules as prescribed by the Commission. Under section 57(b)(2) of the Act, any person who is directly or indirectly controlling, controlled by, or under common control with a BDC is subject to section 57(a)(4). Applicants submit that each of the Regulated Funds and Affiliated Funds could be deemed to be a person related to each Regulated Fund in a manner described by section 57(b) by virtue of being under common control. Section 57(i) of the Act provides that, until the Commission prescribes rules under section 57(a)(4), the Commission's rules under section 17(d) of the Act applicable to registered closed-end investment companies will be deemed to apply to transactions subject to [[Page 23392]] section 57(a)(4). Because the Commission has not adopted any rules under section 57(a)(4), rule 17d-1 also applies to joint transactions with Regulated Funds that are BDCs. Section 17(d) of the Act and rule 17d-1 under the Act are applicable to Regulated Funds that are registered closed-end investment companies. 2. Section 17(d) of the Act and rule 17d-1 under the Act prohibit affiliated persons of a registered investment company from participating in joint transactions with the company unless the Commission has granted an order permitting such transactions. In passing upon applications under rule 17d-1, the Commission considers whether the company's participation in the joint transaction is consistent with the provisions, policies, and purposes of the Act and the extent to which such participation is on a basis different from or less advantageous than that of other participants. 3. Applicants state that in the absence of the requested relief, the Regulated Funds would be, in some circumstances, limited in their ability to participate in attractive and appropriate investment opportunities. Applicants believe that the proposed terms and conditions will ensure that the Co-Investment Transactions are consistent with the protection of each Regulated Fund's shareholders and with the purposes intended by the policies and provisions of the Act. Applicants state that the Regulated Funds' participation in the Co-Investment Transactions will be consistent with the provisions, policies, and purposes of the Act and on a basis that is not different from or less advantageous than that of other participants. Applicants' Conditions Applicants agree that the Order will be subject to the following conditions: 1. Each time an Adviser considers a Potential Co-Investment Transaction for an Affiliated Fund or another Regulated Fund that falls within a Regulated Fund's then-current Objectives and Strategies, the Regulated Fund's Adviser will make an independent determination of the appropriateness of the investment for such Regulated Fund in light of the Regulated Fund's then-current circumstances. 2. (a) If the Adviser deems a Regulated Fund's participation in any Potential Co-Investment Transaction to be appropriate for the Regulated Fund, it will then determine an appropriate level of investment for the Regulated Fund. (b) If the aggregate amount recommended by the applicable Adviser to be invested by the applicable Regulated Fund in the Potential Co- Investment Transaction, together with the amount proposed to be invested by the other participating Regulated Funds and Affiliated Funds, collectively, in the same transaction, exceeds the amount of the investment opportunity, the investment opportunity will be allocated among them pro rata based on each participant's Available Capital, up to the amount proposed to be invested by each. The applicable Adviser will provide the Eligible Directors of each participating Regulated Fund with information concerning each participating party's Available Capital to assist the Eligible Directors with their review of the Regulated Fund's investments for compliance with these allocation procedures. (c) After making the determinations required in conditions 1 and 2(a), the applicable Adviser will distribute written information concerning the Potential Co-Investment Transaction (including the amount proposed to be invested by each participating Regulated Fund and Affiliated Fund) to the Eligible Directors of each participating Regulated Fund for their consideration. A Regulated Fund will co-invest with one or more other Regulated Funds and/or one or more Affiliated Funds only if, prior to the Regulated Fund's participation in the Potential Co-Investment Transaction, a Required Majority concludes that: (i) The terms of the Potential Co-Investment Transaction, including the consideration to be paid, are reasonable and fair to the Regulated Fund and its shareholders and do not involve overreaching in respect of the Regulated Fund or its shareholders on the part of any person concerned; (ii) the Potential Co-Investment Transaction is consistent with: (A) the interests of the shareholders of the Regulated Fund; and (B) the Regulated Fund's then-current Objectives and Strategies; (iii) the investment by any other Regulated Funds or Affiliated Funds would not disadvantage the Regulated Fund, and participation by the Regulated Fund would not be on a basis different from or less advantageous than that of other Regulated Funds or Affiliated Funds; provided that, if any other Regulated Fund or Affiliated Fund, but not the Regulated Fund itself, gains the right to nominate a director for election to a portfolio company's board of directors or the right to have a board observer or any similar right to participate in the governance or management of the portfolio company, such event shall not be interpreted to prohibit the Required Majority from reaching the conclusions required by this condition (2)(c)(iii), if: (A) The Eligible Directors will have the right to ratify the selection of such director or board observer, if any; (B) the applicable Adviser agrees to, and does, provide periodic reports to the Regulated Fund's Board with respect to the actions of such director or the information received by such board observer or obtained through the exercise of any similar right to participate in the governance or management of the portfolio company; and (C) any fees or other compensation that any Affiliated Fund or any Regulated Fund or any affiliated person of any Affiliated Fund or any Regulated Fund receives in connection with the right of the Affiliated Fund or a Regulated Fund to nominate a director or appoint a board observer or otherwise to participate in the governance or management of the portfolio company will be shared proportionately among the participating Affiliated Funds (who each may, in turn, share its portion with its affiliated persons) and the participating Regulated Funds in accordance with the amount of each party's investment; and (iv) the proposed investment by the Regulated Fund will not benefit the Advisers, the Affiliated Funds or the other Regulated Funds or any affiliated person of any of them (other than the parties to the Co- Investment Transaction), except (A) to the extent permitted by condition 13, (B) to the extent permitted by section 17(e) or 57(k) of the Act, as applicable, (C) indirectly, as a result of an interest in the securities issued by one of the parties to the Co-Investment Transaction, or (D) in the case of fees or other compensation described in condition 2(c)(iii)(C). 3. Each Regulated Fund has the right to decline to participate in any Potential Co-Investment Transaction or to invest less than the amount proposed. 4. The applicable Adviser will present to the Board of each Regulated Fund, on a quarterly basis, a record of all investments in Potential Co-Investment Transactions made by any of the other Regulated Funds or Affiliated Funds during the preceding quarter that fell within the Regulated Fund's then-current Objectives and Strategies that were not made available to the Regulated Fund, and an explanation of why the investment opportunities were not offered to the Regulated Fund. All information presented to the Board pursuant to this condition will be kept for the life of the Regulated Fund and at least two years thereafter, and will be [[Page 23393]] subject to examination by the Commission and its staff. 5. Except for Follow-On Investments made in accordance with condition 8,\13\ a Regulated Fund will not invest in reliance on the Order in any issuer in which another Regulated Fund, Affiliated Fund, or any affiliated person of another Regulated Fund or Affiliated Fund is an existing investor. --------------------------------------------------------------------------- \13\ This exception applies only to Follow-On Investments by a Regulated Fund in issuers in which that Regulated Fund already holds investments. --------------------------------------------------------------------------- 6. A Regulated Fund will not participate in any Potential Co- Investment Transaction unless the terms, conditions, price, class of securities to be purchased, settlement date, and registration rights will be the same for each participating Regulated Fund and Affiliated Fund. The grant to an Affiliated Fund or another Regulated Fund, but not the Regulated Fund, of the right to nominate a director for election to a portfolio company's board of directors, the right to have an observer on the board of directors or similar rights to participate in the governance or management of the portfolio company will not be interpreted so as to violate this condition 6, if conditions 2(c)(iii)(A), (B) and (C) are met. 7. (a) If any Affiliated Fund or any Regulated Fund elects to sell, exchange or otherwise dispose of an interest in a security that was acquired in a Co-Investment Transaction, the applicable Advisers will: (i) Notify each Regulated Fund that participated in the Co- Investment Transaction of the proposed disposition at the earliest practical time; and (ii) formulate a recommendation as to participation by each Regulated Fund in the disposition. (b) Each Regulated Fund will have the right to participate in such disposition on a proportionate basis, at the same price and on the same terms and conditions as those applicable to the participating Affiliated Funds and Regulated Funds. (c) A Regulated Fund may participate in such disposition without obtaining prior approval of the Required Majority if: (i) The proposed participation of each Regulated Fund and each Affiliated Fund in such disposition is proportionate to its outstanding investments in the issuer immediately preceding the disposition; (ii) the Board of the Regulated Fund has approved as being in the best interests of the Regulated Fund the ability to participate in such dispositions on a pro rata basis (as described in greater detail in the application); and (iii) the Board of the Regulated Fund is provided on a quarterly basis with a list of all dispositions made in accordance with this condition. In all other cases, the Adviser will provide its written recommendation as to the Regulated Fund's participation to the Eligible Directors, and the Regulated Fund will participate in such disposition solely to the extent that a Required Majority determines that it is in the Regulated Fund's best interests. (d) Each Affiliated Fund and each Regulated Fund will bear its own expenses in connection with any such disposition. 8. (a) If any Affiliated Fund or any Regulated Fund desires to make a Follow-On Investment in a portfolio company whose securities were acquired in a Co-Investment Transaction, the applicable Advisers will: (i) Notify each Regulated Fund that participated in the Co- Investment Transaction of the proposed transaction at the earliest practical time; and (ii) formulate a recommendation as to the proposed participation, including the amount of the proposed Follow-On Investment, by each Regulated Fund. (b) A Regulated Fund may participate in such Follow-On Investment without obtaining prior approval of the Required Majority if: (i) The proposed participation of each Regulated Fund and each Affiliated Fund in such investment is proportionate to its outstanding investments in the issuer immediately preceding the Follow-On Investment; and (ii) the Board of the Regulated Fund has approved as being in the best interests of the Regulated Fund the ability to participate in Follow-On Investments on a pro rata basis (as described in greater detail in the application). In all other cases, the Adviser will provide its written recommendation as to the Regulated Fund's participation to the Eligible Directors, and the Regulated Fund will participate in such Follow-On Investment solely to the extent that a Required Majority determines that it is in the Regulated Fund's best interests. (c) If, with respect to any Follow-On Investment: (i) the amount of the opportunity is not based on the Regulated Funds' and the Affiliated Funds' outstanding investments immediately preceding the Follow-On Investment; and (ii) the aggregate amount recommended by the applicable Adviser to be invested by the applicable Regulated Fund in the Follow-On Investment, together with the amount proposed to be invested by the other participating Regulated Funds and Affiliated Funds, collectively, in the same transaction, exceeds the amount of the investment opportunity; then the investment opportunity will be allocated among them pro rata based on each participant's Available Capital, up to the maximum amount proposed to be invested by each. (d) The acquisition of Follow-On Investments as permitted by this condition will be considered a Co-Investment Transaction for all purposes and subject to the other conditions set forth in this application. 9. The Non-Interested Directors of each Regulated Fund will be provided quarterly for review all information concerning Potential Co- Investment Transactions and Co-Investment Transactions, including investments made by other Regulated Funds or Affiliated Funds that the Regulated Fund considered but declined to participate in, so that the Non-Interested Directors may determine whether all investments made during the preceding quarter, including those investments that the Regulated Fund considered but declined to participate in, comply with the conditions of the Order. In addition, the Non-Interested Directors will consider at least annually the continued appropriateness for the Regulated Fund of participating in new and existing Co-Investment Transactions. 10. Each Regulated Fund will maintain the records required by section 57(f)(3) of the Act as if each of the Regulated Funds were a BDC and each of the investments permitted under these conditions were approved by the Required Majority under section 57(f) of the Act. 11. No Non-Interested Director of a Regulated Fund will also be a director, general partner, managing member or principal, or otherwise an ``affiliated person'' (as defined in the Act) of an Affiliated Fund. 12. The expenses, if any, associated with acquiring, holding or disposing of any securities acquired in a Co-Investment Transaction (including, without limitation, the expenses of the distribution of any such securities registered for sale under the Securities Act) will, to the extent not payable by the Advisers under their respective investment advisory agreements with Affiliated Funds and the Regulated Funds, be shared by the Regulated Funds and the Affiliated Funds in proportion to the relative amounts of the securities held or to be acquired or disposed of, as the case may be. [[Page 23394]] 13. Any transaction fee \14\ (including break-up or commitment fees but excluding broker's fees contemplated by section 17(e) or 57(k) of the Act, as applicable), received in connection with a Co-Investment Transaction will be distributed to the participating Regulated Funds and Affiliated Funds on a pro rata basis based on the amounts they invested or committed, as the case may be, in such Co-Investment Transaction. If any transaction fee is to be held by an Adviser pending consummation of the transaction, the fee will be deposited into an account maintained by such Adviser at a bank or banks having the qualifications prescribed in section 26(a)(1) of the Act, and the account will earn a competitive rate of interest that will also be divided pro rata among the participating Regulated Funds and Affiliated Funds based on the amounts they invest in such Co-Investment Transaction. None of the Affiliated Funds, the Advisers, the other Regulated Funds or any affiliated person of the Regulated Funds or Affiliated Funds will receive additional compensation or remuneration of any kind as a result of or in connection with a Co-Investment Transaction (other than (a) in the case of the Regulated Funds and the Affiliated Funds, the pro rata transaction fees described above and fees or other compensation described in condition 2(c)(iii)(C); and (b) in the case of an Adviser, investment advisory fees paid in accordance with the agreement between the Adviser and the Regulated Fund or Affiliated Fund. --------------------------------------------------------------------------- \14\ Applicants are not requesting and the staff is not providing any relief for transaction fees received in connection with any Co-Investment Transaction. --------------------------------------------------------------------------- 14. If the Holders own in the aggregate more than 25 percent of the Shares of a Regulated Fund, then the Holders will vote such Shares as directed by an independent third party when voting on (1) the election of directors; (2) the removal of one or more directors; or (3) any other matter under either the Act or applicable state law affecting the Board's composition, size or manner of election. 15. Each Regulated Fund's chief compliance officer, as defined in rule 38a-1(a)(4), will prepare an annual report for its Board each year that evaluates (and documents the basis of that evaluation) the Regulated Fund's compliance with the terms and conditions of the application and the procedures established to achieve such compliance. For the Commission, by the Division of Investment Management, under delegated authority. Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017-10355 Filed 5-19-17; 8:45 am] BILLING CODE 8011-01-P
![23390 Federal Register / Vol. 82, No. 97 / Monday, May 22, 2017 / Notices
For the Commission, by the Division of request, and the issues contested. Commission under the Investment
Trading and Markets, pursuant to delegated Persons who wish to be notified of a Advisers Act of 1940 (the ‘‘Advisers
authority.22 hearing may request notification by Act’’), was organized as a limited
Eduardo A. Aleman, writing to the Commission’s Secretary. liability company under the laws of the
Assistant Secretary. ADDRESSES: Secretary, U.S. Securities state of Delaware. Solar Adviser serves
[FR Doc. 2017–10307 Filed 5–19–17; 8:45 am] and Exchange Commission, 100 F St. as the investment adviser to each of the
BILLING CODE 8011–01–P NE., Washington, DC 20549–1090. Solar Funds.
Applicants: Michael S. Gross, Solar 4. Applicants seek an Order to permit
Capital Ltd., 500 Park Avenue, New a Regulated Fund 5 and one or more
SECURITIES AND EXCHANGE York, NY 10022. other Regulated Funds and/or one or
COMMISSION more Affiliated Funds 6 to participate in
FOR FURTHER INFORMATION CONTACT:
[Release No. IC–32638; 812–14735] Barbara T. Heussler, Senior Counsel, at the same investment opportunities
(202) 551–6990 or Robert H. Shapiro, through a proposed co-investment
Solar Capital Ltd., et al. Branch Chief, at (202) 551–6821 program (the ‘‘Co-Investment Program’’)
(Division of Investment Management, where such participation would
May 17, 2017. otherwise be prohibited under section
Chief Counsel’s Office).
AGENCY: Securities and Exchange 57(a)(4) and rule 17d–1 by (a) co-
Commission (‘‘Commission’’). SUPPLEMENTARY INFORMATION: The
investing with each other in securities
following is a summary of the issued by issuers in private placement
ACTION: Notice.
application. The complete application transactions in which an Adviser
Notice of application for an order may be obtained via the Commission’s negotiates terms in addition to price; 7
(‘‘Order’’) to amend a prior order under Web site by searching for the file and (b) making additional investments
sections 17(d) and 57(i) of the number, or for an applicant using the in securities of such issuers, including
Investment Company Act of 1940 (the Company name box, at http:// through the exercise of warrants,
‘‘Act’’) and rule 17d–1 under the Act www.sec.gov/search/search.htm or by conversion privileges, and other rights
permitting certain joint transactions calling (202) 551–8090. to purchase securities of the issuers
otherwise prohibited by sections 17(d) Summary of the Application (‘‘Follow-On Investments’’). ‘‘Co-
and 57(a)(4) of the Act and under rule Investment Transaction’’ means any
17d–1 under the Act. Applicants request 1. The Solar Funds are Maryland
transaction in which a Regulated Fund
an order that would permit certain corporations organized as closed-end
(or its Wholly-Owned Investment Sub)
business development companies (each, management investment companies that
participated together with one or more
a ‘‘BDC’’) and certain closed-end have elected to be regulated as BDC’s
other Regulated Funds and/or one or
investment companies to co-invest in under section 54(a) of the Act.2 Solar
more Affiliated Funds in reliance on the
portfolio companies with each other and Capital’s investment objective is to
requested Order. ‘‘Potential Co-
with affiliated investment funds. The generate both current income and
Investment Transaction’’ means any
Order would supersede the prior order.1 capital appreciation through debt and
investment opportunity in which a
Applicants: Solar Capital Ltd. (‘‘Solar equity investment. Solar Senior’s
Regulated Fund (or its Wholly-Owned
Capital’’); Solar Senior Capital Ltd. investment objective is to seek to
Investment Sub) could not participate
(‘‘Solar Senior’’ and together with Solar maximize current income consistent
together with one or more Affiliated
Capital, the ‘‘Solar Funds’’); SUNS SPV with the preservation of capital. The
Funds and/or one or more other
LLC (‘‘Solar Senior Subsidiary’’) and Solar Funds each have a five-member
Regulated Funds without obtaining and
Solar Capital Partners, LLC (‘‘Solar Board,3 of which the same three
relying on the Order.8
Adviser’’). members serve as Non-Interested
Filing Dates: The application was Directors.4 5 ‘‘Regulated Fund’’ means Solar Capital, Solar
filed on January 13, 2017, and amended 2. Solar Senior Subsidiary is a Senior and any Future Regulated Fund. ‘‘Future
on April 4, 2017 and May 4, 2017. Wholly-Owned Investment Sub, as Regulated Fund’’ means any closed-end
defined below, whose sole business management investment company (a) that is
Hearing or Notification of Hearing: An registered under the Act or has elected to be
order granting the requested relief will purpose is to hold one or more regulated as a BDC, (b) whose investment adviser
be issued unless the Commission orders investments on behalf of Solar Senior. is an Adviser, and (c) that intends to participate in
a hearing. Interested persons may Because it is a wholly-owned, the Co-Investment Program. The term ‘‘Adviser’’
consolidated subsidiary of Solar Senior, means (a) Solar Adviser or its successors, and (b)
request a hearing by writing to the any future investment adviser that controls, is
Commission’s Secretary and serving and Solar Senior’s investment adviser is controlled by, or is under common control with
applicants with a copy of the request, Solar Adviser, Solar Adviser also Solar Adviser and is registered as an investment
personally or by mail. Hearing requests manages the assets the Solar Senior adviser under the Advisers Act. The term
Subsidiary. ‘‘successor’’ means an entity that results from a
should be received by the Commission reorganization into another jurisdiction or change
by 5:30 p.m. on June 12, 2017, and 3. Solar Adviser, a privately held in the type of business organization.
should be accompanied by proof of investment adviser registered with the 6 ‘‘Affiliated Fund’’ means any entity (a) whose
service on applicants, in the form of an investment adviser is an Adviser, (b) that would be
2 Section 2(a)(48) of the Act defines a BDC to be an investment company but for section 3(c)(1) or
affidavit or, for lawyers, a certificate of any closed-end investment company that operates 3(c)(7) of the Act, and (c) that intends to participate
service. Pursuant to rule 0–5 under the for the purpose of making investments in securities in the Co-Investment Program.
Act, hearing requests should state the described in sections 55(a)(1) through 55(a)(3) of the 7 The term ‘‘private placement transactions’’
mstockstill on DSK30JT082PROD with NOTICES
nature of the writer’s interest, any facts Act and makes available significant managerial means transactions in which the offer and sale of
assistance with respect to the issuers of such securities by the issuer are exempt from registration
bearing upon the desirability of a securities. under the Securities Act of 1933 (the ‘‘Securities
hearing on the matter, the reason for the 3 The term ‘‘Board’’ refers to the Board of Act’’).
Directors of the relevant Regulated Fund. 8 All existing entities that currently intend to rely
22 17 CFR 200.30–3(a)(12). 4 The term ‘‘Non-Interested Directors’’ means, upon the requested Order have been named as
1 Solar Capital Ltd., et al., Investment Company with respect to any Board, the directors who are not applicants. Any other existing or future entity that
Act Rel. Nos. 31143 (Jul. 1, 2014) (notice) and 31187 ‘‘interested persons’’ within the meaning of section subsequently relies on the Order will comply with
(Jul. 28, 2014) (order). 2(a)(19). the terms and conditions of the application.
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![23394 Federal Register / Vol. 82, No. 97 / Monday, May 22, 2017 / Notices
13. Any transaction fee 14 (including For the Commission, by the Division of responded to the comments received by
break-up or commitment fees but Investment Management, under delegated the Commission.5
excluding broker’s fees contemplated by authority.
Eduardo A. Aleman, II. Description of Proposed Rule Change
section 17(e) or 57(k) of the Act, as
applicable), received in connection with Assistant Secretary. According to the MSRB, the purpose
a Co-Investment Transaction will be [FR Doc. 2017–10355 Filed 5–19–17; 8:45 am] of the proposed rule change is to amend
distributed to the participating BILLING CODE 8011–01–P
Rule G–3(i) to prescribe continuing
Regulated Funds and Affiliated Funds education requirements for municipal
on a pro rata basis based on the amounts advisors pursuant to the MSRB’s
they invested or committed, as the case SECURITIES AND EXCHANGE statutory mandate under Section 15B(b)
COMMISSION of the Act. As described in the Notice
may be, in such Co-Investment
Filing, the goal of continuing educations
Transaction. If any transaction fee is to
is to ensure that certain associated
be held by an Adviser pending [Release No. 34–80699; File No. SR–MSRB–
2017–02] persons of municipal advisors stay
consummation of the transaction, the abreast of issues that may affect their job
fee will be deposited into an account responsibilities and of product and
maintained by such Adviser at a bank or Self-Regulatory Organizations;
Municipal Securities Rulemaking regulatory developments.6 The
banks having the qualifications proposed rule change also would amend
Board; Order Granting Approval of a
prescribed in section 26(a)(1) of the Act, Rule G–8 to establish recordkeeping
Proposed Rule Change Consisting of
and the account will earn a competitive requirements related to the
Proposed Amendments to Rule G–3,
rate of interest that will also be divided administration of a municipal advisor’s
on Professional Qualification
pro rata among the participating continuing education program and make
Requirements, and Rule G–8, on
Regulated Funds and Affiliated Funds technical changes to Rule G–3 to reflect
Books and Records, To Establish
based on the amounts they invest in Continuing Education Requirements the renumbering of sections and updates
such Co-Investment Transaction. None for Municipal Advisors and to cross-referenced provisions.
of the Affiliated Funds, the Advisers, Accompanying Recordkeeping As further described in the Notice of
the other Regulated Funds or any Requirements Filing and the MSRB Response, the
affiliated person of the Regulated Funds development of the proposed rule
or Affiliated Funds will receive May 16, 2017. change drew from the principles and
additional compensation or I. Introduction structure of the continuing education
remuneration of any kind as a result of regulatory framework currently in place
or in connection with a Co-Investment On March 22, 2017, the Municipal for dealers.7
Transaction (other than (a) in the case Securities Rulemaking Board (the Pursuant to the proposed rule change,
of the Regulated Funds and the ‘‘MSRB’’ or ‘‘Board’’) filed with the a municipal advisor would be required
Affiliated Funds, the pro rata Securities and Exchange Commission to, at least annually, conduct a needs
transaction fees described above and (the ‘‘SEC’’ or ‘‘Commission’’), pursuant analysis that evaluates and prioritizes
fees or other compensation described in to Section 19(b)(1) of the Securities their specific training needs, develop a
condition 2(c)(iii)(C); and (b) in the case Exchange Act of 1934 (‘‘Act’’) 1 and Rule written training plan based on the needs
of an Adviser, investment advisory fees 19b–4 thereunder,2 a proposed rule identified in the analysis, and deliver
paid in accordance with the agreement change consisting of (i) proposed training concerning municipal advisory
between the Adviser and the Regulated amendments to MSRB Rule G–3, on activities designed to meet those
Fund or Affiliated Fund. professional qualification requirements, training needs. However, the proposed
to establish continuing education requirements for municipal advisors
14. If the Holders own in the aggregate requirements for municipal advisors; (ii) would differ from dealers with respect
more than 25 percent of the Shares of proposed amendments to MSRB Rule to identifying those individuals that are
a Regulated Fund, then the Holders will G–8, on books and records to be made subject to the training and the content
vote such Shares as directed by an by brokers, dealers and municipal that must be covered as part of the
independent third party when voting on securities dealers (‘‘dealers’’) and minimum standards for the annual
(1) the election of directors; (2) the municipal advisors; and (iii) proposed training.
removal of one or more directors; or (3) amendments to Rule G–3 to make minor Pursuant to proposed Rule G–3(i)(ii),
any other matter under either the Act or technical changes to the rule to reflect a municipal advisor would be required
applicable state law affecting the the renumbering of sections and updates to implement a continuing education
Board’s composition, size or manner of to cross-referenced provisions training program for each individual
election. (collectively the ‘‘proposed rule qualified as either a municipal advisor
15. Each Regulated Fund’s chief change’’). The proposed rule change was representative or as a municipal advisor
compliance officer, as defined in rule published for comment in the Federal principal (collectively, ‘‘covered
38a–1(a)(4), will prepare an annual Register on April 4, 2017.3 persons’’).8 The MSRB states that the
report for its Board each year that The Commission received one
evaluates (and documents the basis of comment letter on the proposed rule 5 See Letter to Secretary, Commission, from Gail
change.4 On May 10, 2017, the MSRB Marshall, Associate General Counsel, MSRB, dated
that evaluation) the Regulated Fund’s May 10, 2017 (the ‘‘MSRB Response Letter’’),
compliance with the terms and available at https://www.sec.gov/comments/sr-msrb-
mstockstill on DSK30JT082PROD with NOTICES
1 15 U.S.C. 78s(b)(1). 2017-02/msrb201702-1745890-151491.pdf.>
conditions of the application and the
2 17 CFR 240.19b–4. 6 See Notice of Filing.
procedures established to achieve such 3 Securities Exchange Act Release No. 80327 7 Id.
compliance. (March 29, 2017) (the ‘‘Notice of Filing’’), 82 FR 8 Under MSRB Rule G–3(d)(i)(A), ‘‘municipal
16449 (April 4, 2017). advisor representative’’ means ‘‘a natural person
14 Applicants are not requesting and the staff is 4 See Letter to Secretary, Commission, from Susan associated with a municipal advisor who engages in
not providing any relief for transaction fees Gaffney, Executive Director, National Association of municipal advisory activities on the municipal
received in connection with any Co-Investment Municipal Advisors, dated April 25, 2017 (the advisor’s behalf.’’ Under MSRB Rule G–3(e)(i),
Transaction. ‘‘NAMA Letter’’). ‘‘municipal advisor principal’’ means ‘‘a natural
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Document Created: 2018-11-08 08:50:02
Document Modified: 2018-11-08 08:50:02
| 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. | |
| Dates | The application was filed on January 13, 2017, and amended on April 4, 2017 and May 4, 2017. | |
| Contact | Barbara T. Heussler, Senior Counsel, at (202) 551-6990 or Robert H. Shapiro, Branch Chief, at (202) 551-6821 (Division of Investment Management, Chief Counsel's Office). | |
| FR Citation | 82 FR 23390 |
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