Federal Register / Vol. 83, No. 248 / Friday, December 28, 2018 / Notices 67447 

9 Id. 

10 17 CFR 240.17Ad–22(d)(8). 11 15 U.S.C. 78q–1. 12 17 CFR 240.17Ad–22(d)(8). 

13 17 CFR 200.30–3(a)(12). 1Employees, officers and employee directors, 

together the ‘‘Employee Participants’’ and each an 

‘‘Employee Participant.’’ The Employee Participants 

and the Non-Employee Directors, together the 

‘‘Participants’’ and each, a ‘‘Participant.’’ 2Restricted Stock and Restricted Stock Units are 

collectively referred to herein as Restricted Stock. 

development of appropriate systems, 

controls, and procedures, consistent 

with the requirements of Rule 17Ad22(d)(4).9

Rule 17Ad–22(d)(8) 10 requires ICC to 

establish, implement, maintain and 

enforce written policies and procedures 

reasonably designed to have governance 

arrangements that are clear and 

transparent to fulfill the public interest 

requirements in Section 17A of the 

Act.11 The NIA Policy clearly assigns 

and documents responsibility and 

accountability for the identification, 

review, and approval of New Initiatives 

by the NIAC, the maintenance of the 

NIA Policy by the Chair of the NIAC, 

and the approval of material changes to 

the NIA Policy by the Board. These 

governance arrangements are clear and 

transparent, such that information 

relating to the assignment of 

responsibilities and the requisite 

involvement of department heads, the 

NIAC, and the Board is clearly 

documented, consistent with the 

requirements of Rule 17Ad–22(d)(8).12

(B) Clearing Agency’s Statement on 

Burden on Competition 

ICC does not believe the proposed 

rule change would have any impact, or 

impose any burden, on competition. 

The proposed change to formalize ICC’s 

NIA Policy will apply uniformly across 

all market participants. Therefore, ICC 

does not believe the proposed rule 

change imposes any burden on 

competition that is inappropriate in 

furtherance of the purposes of the Act. 

(C) Clearing Agency’s Statement on 

Comments on the Proposed Rule 

Change Received From Members, 

Participants or Others 

Written comments relating to the 

proposed rule change have not been 

solicited or received. ICC will notify the 

Commission of any written comments 

received by ICC. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Within 45 days of the date of 

publication of this notice in the Federal 

Register or within such longer period 

up to 90 days (i) as the Commission may 

designate if it finds such longer period 

to be appropriate and publishes its 

reasons for so finding or (ii) as to which 

the self-regulatory organization 

consents, the Commission will: 

(A) By order approve or disapprove 

such proposed rule change, or 

(B) institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

ICC–2018–011 on the subject line. 

Paper Comments 

Send paper comments in triplicate to 

Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549. 

All submissions should refer to File 

Number SR–ICC–2018–011. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

internet website (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of such 

filings will also be available for 

inspection and copying at the principal 

office of ICE Clear Credit and on ICE 

Clear Credit’s website at https://

www.theice.com/clear-credit/regulation. 

All comments received will be posted 

without change. Persons submitting 

comments are cautioned that we do not 

redact or edit personal identifying 

information from comment submissions. 

You should submit only information 

that you wish to make available 

publicly. All submissions should refer 

to File Number SR–ICC–2018–011 and 

should be submitted on or before 

January 18, 2019. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.13

Brent J. Fields, 

Secretary. 

[FR Doc. 2018–28186 Filed 12–27–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Company Act Release No. 

33341; File No. 812–14910] 

Hercules Capital, Inc. 

December 21, 2018. 

AGENCY: Securities and Exchange 

Commission (‘‘Commission’’). 

ACTION: Notice. 

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 23(a), 23(b) 

and 63 of the Act; under sections 

57(a)(4) and 57(i) of the Act and rule 

17d–1 under the Act permitting certain 

joint transactions otherwise prohibited 

by section 57(a)(4) of the Act; and under 

section 23(c)(3) of the Act for an 

exemption from section 23(c) of the Act. 

SUMMARY OF THE APPLICATION: Hercules 

Capital, Inc. (‘‘Company’’ or 

‘‘Applicant’’) requests an order that 

would permit Applicant to (i) issue 

restricted shares of its common stock 

(‘‘Restricted Stock’’) as part of the 

compensation package for its nonemployee directors (the ‘‘Non-Employee 

Directors’’) 1 through its 2018 NonEmployee Director Plan (the ‘‘NonEmployee Director Plan’’) for NonEmployee Director Participants, (ii) 

issue Restricted Stock and Restricted 

Stock Units 2 (i.e., the right to receive, 

on the date of settlement, one share of 

common stock or an amount equal to 

the fair market value of one share of 

common stock) as part of the 

compensation package for certain of its 

employees, officers and directors, 

excluding the Non-Employee Directors, 

through its Amended and Restated 2018 

Equity Incentive Plan (the ‘‘Equity 

Incentive Plan’’), (iii) withhold shares of 

the Applicant’s common stock or 

purchase shares of Applicant’s common 

stock from Participants to satisfy tax 


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3Options will not be granted to Non-Employee 

Directors and, therefore, no relief is sought in the 

application for the grant of Options. 

4Section 57(o) of the Act provides that the term 

‘‘required majority,’’ when used with respect to the 

approval of a proposed transaction, plan, or 

arrangement, means both a majority of a BDC’s 

directors or general partners who have no financial 

interest in such transaction, plan, or arrangement 

and a majority of such directors or general partners 

who are not interested persons of such company. 

withholding obligations relating to the 

vesting of Restricted Stock or Restricted 

Stock Units or the exercise of options to 

purchase shares of Applicant’s common 

stock (‘‘Options’’) that will be granted 

pursuant to the Equity Incentive Plan 3

and (iv) permit Participants to pay the 

exercise price of Options that will be 

granted to them pursuant to the Equity 

Incentive Plan with shares of 

Applicant’s common stock. 

APPLICANT: Hercules Capital, Inc. 

FILING DATES: The application was filed 

on May 29, 2018, and amended on 

September 27, 2018. 

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 

applicant with a copy of the request, 

personally or by mail. Hearing requests 

should be received by the Commission 

by 5:30 p.m. on January 15, 2019 and 

should be accompanied by proof of 

service on applicant, 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, Securities and 

Exchange Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

Applicant: Manuel A. Henriquez, Chief 

Executive Officer, Hercules Capital, Inc., 

400 Hamilton Avenue, Suite 310, Palo 

Alto, California 94301. 

FOR FURTHER INFORMATION CONTACT: 

Elizabeth G. Miller, Senior Counsel, at 

(202) 551–8707, or Aaron Gilbride, 

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 the applicant using the 

Company name box, at http://

www.sec.gov/search/search.htm or by 

calling (202) 551–8090. 

Applicant’s Representations 

1. The Company is an internally 

managed, non-diversified, closed-end 

investment company that has elected to 

be regulated as a business development 

company (‘‘BDC’’) under the Act. 

Applicant represents that it is a 

specialty finance company focused on 

providing senior secured loans to highgrowth, innovative venture capitalbacked companies in a variety of 

technology, life sciences, and 

sustainable and renewable technology 

industries. Applicant was incorporated 

under General Corporation Law of the 

State of Maryland in December 2003. As 

of March 31, 2018, Applicant had 64 

employees. 

2. Hercules Technology II, L.P. (‘‘HT 

II’’), Hercules Technology III, L.P. (‘‘HT 

III’’), and Hercules Technology IV, L.P. 

(‘‘HT IV’’) are Delaware limited 

partnerships that were formed in 

January 2005, September 2009 and 

December 2010, respectively. HT II and 

HT III were licensed to operate as small 

business investment companies 

(‘‘SBICs’’) under the authority of the 

Small Business Administration on 

September 27, 2006 and May 26, 2010, 

respectively. HT IV was formed in 

anticipation of receiving an additional 

SBIC license; however, the Company 

has not received such license and HT IV 

currently has no material assets or 

liabilities. The Company also formed 

Hercules Technology SBIC 

Management, LLC (‘‘HTM’’), a limited 

liability company in November 2003. 

HTM is a wholly owned subsidiary of 

Applicant and serves as the limited 

partner and general partner of HT II and 

HT III. HT II and HT III hold 

approximately $113.1 million and 

$285.8 million in assets, respectively, 

and they accounted for approximately 

5.7% and 14.4% of Applicant’s total 

assets, respectively, prior to 

consolidation at March 31, 2018. 

3. Applicant also established wholly 

own subsidiaries, all of which are 

structured as Delaware corporations and 

limited liability companies, to hold 

portfolio companies organized as 

limited liability companies (or other 

forms of pass-through entities). 

4. Applicant currently has an eightmember board of directors (the ‘‘Board’’) 

of whom seven are Non-Employee 

Directors or non-interested persons of 

Applicant within the meaning of section 

2(a)(19), and one is considered an 

‘‘interested person’’ of Applicant. 

5. Applicant believes that, because the 

market for superior investment 

professionals is highly competitive, 

Applicant’s successful performance 

depends on its ability to offer fair 

compensation packages to its 

professionals that are competitive with 

those offered by other investment 

management businesses. Applicant 

states that the ability to offer equitybased compensation to its employees 

and Non-Employee Directors, which 

both aligns employee and Board 

behavior with stockholder interests and 

provides a retention tool, is vital to 

Applicant’s future growth and success. 

6. The Applicant’s 2006 NonEmployee Director Plan, as amended in 

2007 (the ‘‘2006 Plan’’) terminated in 

accordance with its terms in 2017, and 

no new awards are permitted to be 

granted under the 2006 Plan after its 

termination. The 2006 Plan provided for 

the grant of Options and shares of 

Restricted Stock subject to certain 

forfeiture restrictions to Non-Employee 

Directors. As a result of the termination 

of the 2006 Plan, the Non-Employee 

Director Plan was adopted on May 13, 

2018 by the Board, including the 

required majority as defined in Section 

57(o) (the ‘‘Required Majority’’),4 and 

will be administered by a committee 

designated by the Board, the 

composition of which consists of ‘‘nonemployee directors’’ within the meaning 

of rule 16b–3 (the ‘‘Compensation 

Committee’’). 

7. The Non-Employee Plan provides 

for the grant of Restricted Stock, but 

unlike the 2006 Plan, does not provide 

for the grant of Options. Issuance of the 

Restricted Stock will allow the NonEmployee Directors to become owners 

of the Applicant’s stock with a vested 

interest in value maintenance, income 

stream and stock appreciation, which 

interests align with those of the 

Applicant’s stockholders. 

8. Shares of Restricted Stock granted 

automatically under the Non-Employee 

Director Plan (i) upon initial election to 

the Board, are no longer subject to 

forfeiture restrictions, as to one-third 

immediately after the expiration of 33% 

of the initial three-year term, as to an 

additional one-third immediately after 

the expiration of 66% of the initial 

three-year term and the remaining onethird on the third anniversary of the 

commencement date of the applicable 

three-year staggered class term, and (ii) 

upon reelection to the Board, are no 

longer subject to forfeiture restrictions 

as to one-third of such shares on the 

anniversary of such grant over three 

years. 

9. The maximum aggregate number of 

shares of common stock that may be 

authorized for issuance under awards of 

Restricted Stock under the NonVerDate Sep<11>2014 18:13 Dec 27, 2018 Jkt 247001 PO 00000 Frm 00238 Fmt 4703 Sfmt 4703 E:\FR\FM\28DEN1.SGM 28DEN1

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Employee Director Plan is 300,000 

shares. The maximum number of shares 

of common stock for which any NonEmployee Director may be granted 

awards under the Non-Employee 

Director Plan in any calendar year is 

20,000 shares. 

10. Shares of Restricted Stock will not 

be transferable except for disposition by 

will or the laws of descent and 

distribution or by gift to a permitted 

transferee. If any award of Restricted 

Stock for any reason is forfeited or 

otherwise terminates, in whole or in 

part, the shares not acquired under such 

award of Restricted Stock will revert to 

and again become available for issuance 

under the Non-Employee Director Plan 

on a one-for-one basis. 

11. Unless sooner terminated by the 

Board, the Non-Employee Director Plan 

will terminate on the day before the 

tenth anniversary of the date the NonEmployee Director Plan is initially 

adopted by the Board or approved by 

stockholders, whichever is earlier. 

12. The Applicant’s Amended and 

Restated 2004 Equity Incentive Plan (the 

‘‘2004 EIP’’) provides for grants of 

Options, Restricted Stock, restricted 

stock units (i.e., the right to receive, on 

the date of settlement, one share of 

common stock or an amount equal to 

the fair market value of one share of 

common stock) (‘‘Restricted Stock 

Units’’), Performance Restricted Stock 

Units and other performance-based 

awards (collectively, ‘‘Awards’’) and 

warrants to Employee Participants. 

Applicant proposes to amend and 

restate the 2004 EIP, in its entirety, as 

the ‘‘Equity Incentive Plan.’’ The Equity 

Incentive Plan was adopted on May 13, 

2018 by the Board, including the 

Required Majority, and will be 

administered by the Compensation 

Committee. 

13. The Equity Incentive Plan 

provides for grants of Awards, but, 

unlike the 2004 EIP, does not provide 

for grants of warrants. The Equity 

Incentive Plan permits Employee 

Participants, subject to approval of the 

Board and if permitted by law, to pay 

the exercise price of Options with 

shares of the Applicant’s common stock. 

The maximum aggregate number of 

shares of common stock that may be 

authorized for issuance under Awards 

granted under the Equity Incentive Plan 

is 9,261,229 shares, less one share for 

every one share issued under the plan 

after March 31, 2018 and prior to the 

date the plan is approved by 

stockholders. Notwithstanding anything 

to the contrary, the following shares will 

not revert to and again be available for 

issuance: (i) Shares tendered by an 

Employee Participant or withheld by the 

Applicant in payment of the purchase 

price of an Option; (ii) shares tendered 

by an Employee Participant or withheld 

by the Applicant to satisfy any tax 

withholding obligation with respect to 

Options; and (iii) shares reacquired by 

the Applicant on the open market or 

otherwise using cash proceeds from the 

exercise of Options. 

14. The Board, including the Required 

Majority, found that the issuance of 

Awards will allow the Applicant to 

align its business plan, stockholder 

interests and employee interests based 

on the nature of the Applicant’s 

business. Issuance of certain Awards 

will allow the Employee Participants to 

become owners of the Applicant’s stock 

with a vested interest in value 

maintenance, income stream and stock 

appreciation, which interests align with 

those of the Applicant’s stockholders. 

15. Unless sooner terminated by the 

Board, the Equity Incentive Plan will 

terminate on the day before the tenth 

anniversary of the date the Equity 

Incentive Plan is initially adopted by 

the Board or approved by stockholders, 

whichever is earlier. 

Applicant’s Legal Analysis 

Sections 23(a) and (b), Section 63 

1. Under section 63 of the Act, the 

provisions of section 23(a) of the Act 

generally prohibiting a registered 

closed-end investment company from 

issuing securities for services or for 

property other than cash or securities 

are made applicable to BDCs. This 

provision would prohibit the issuance 

of Restricted Stock as a part of the Plans. 

2. Section 23(b) of the Act generally 

prohibits a registered closed-end 

investment company from selling any 

common stock of which it is the issuer 

at a price below its current net asset 

value. Section 63(2) of the Act makes 

section 23(b) applicable to BDCs unless 

certain conditions are met. Because 

Restricted Stock that would be granted 

under the Plans would not meet the 

terms of section 63(2), sections 23(b) 

and 63 would prevent the issuance of 

Restricted Stock. 

3. Section 6(c) provides, in part, that 

the Commission may, by order upon 

application, conditionally or 

unconditionally exempt any person, 

security, or transaction, or any class or 

classes thereof, from any provision of 

the Act, if and to the extent that the 

exemption is necessary or appropriate 

in the public interest and consistent 

with the protection of investors and the 

purposes fairly intended by the policy 

and provisions of the Act. 

4. Applicant requests an order 

pursuant to section 6(c) of the Act 

granting an exemption from the 

provisions of sections 23(a), 23(b) and 

63 of the Act. Applicant states that the 

Plans would not violate the concerns 

underlying these sections, which 

include: (a) Preferential treatment of 

investment company insiders and the 

use of options and other rights by 

insiders to obtain control of the 

investment company; (b) complication 

of the investment company’s structure 

that made it difficult to determine the 

value of the company’s shares; and (c) 

dilution of shareholders’ equity in the 

investment company. Applicant asserts 

that the Restricted Stock element of the 

Plans does not raise concerns about 

preferential treatment of Applicant’s 

insiders because this element is a bona 

fide compensation plan of the type that 

is common among corporations 

generally. In addition, section 

61(a)(3)(B) of the Act permits a BDC to 

issue to its directors, officers, 

employees, and general partners 

warrants, options, and rights to 

purchase the BDC’s voting securities 

pursuant to an executive compensation 

plan, subject to certain conditions. 

Applicant states that, for reasons that 

are unclear, section 61 and its legislative 

history do not address the issuance by 

a BDC of restricted stock as incentive 

compensation. Applicant believes, 

however, that the issuance of Restricted 

Stock is substantially similar, for 

purposes of investor protection under 

the Act, to the issuance of warrants, 

options, and rights as contemplated by 

section 61. Applicant also asserts that 

the issuance of Restricted Stock would 

not become a means for insiders to 

obtain control of Applicant because the 

maximum amount of Restricted Stock 

that may be issued under the Plans and 

the 2006 Plan at any one time will be 

ten percent of the outstanding shares of 

common stock of Applicant. 

5. Applicant further states that the 

Restricted Stock feature will not unduly 

complicate Applicant’s capital structure 

because equity-based incentive 

compensation arrangements are widely 

used among corporations and 

commonly known to investors. 

Applicant notes that the Plans will be 

submitted for approval to the 

Applicant’s stockholders. Applicant 

represents that the proxy materials 

submitted to Applicant’s stockholders 

will contain a concise ‘‘plain English’’ 

description of the Plans and their 

potential dilutive effect. Applicant also 

states that it will comply with the proxy 

disclosure requirements in Item 10 of 

Schedule 14A under the Securities 

Exchange Act of 1934. Applicant further 

notes that the Plans will be disclosed to 


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5See Executive Compensation and Related Party 

Disclosure, Securities Act Release No. 8655 (Jan. 27, 

2006) (proposed rule); Executive Compensation and 

Related Party Disclosure, Securities Act Release No. 

8732A (Aug. 29, 2006) (final rule and proposed 

rule), as amended by Executive Compensation 

Disclosure, Securities Act Release No. 8756 (Dec. 

22, 2006) (adopted as interim final rules with 

request for comments). 

investors in accordance with the 

requirements of the Form N–2 

registration statement for closed-end 

investment companies and pursuant to 

the standards and guidelines adopted by 

the Financial Accounting Standards 

Board for operating companies. 

Applicant also will comply with the 

disclosure requirements for executive 

compensation plans applicable to 

BDCs.5 Applicant thus concludes that 

the Plans will be adequately disclosed 

to investors and appropriately reflected 

in the market value of Applicant’s 

shares. 

6. Applicant acknowledges that 

awards granted under the Plans may 

have a dilutive effect on the 

stockholders’ equity per share in 

Applicant, but believes that effect 

would be outweighed by the anticipated 

benefits of the Plans to Applicant and 

its stockholders. Moreover, based on the 

manner in which the issuance of 

Restricted Stock pursuant to the Plans 

will be administered, the Restricted 

Stock will be no more dilutive than if 

Applicant were to issue only Options to 

Participants who are employees, as is 

permitted by section 61(a)(3) of the Act. 

Applicant asserts that it needs the 

flexibility to provide the requested 

equity-based compensation in order to 

be able to compete effectively with 

commercial banks, investment banks, 

and other publicly traded companies 

that also are not investment companies 

registered under the Act for talented 

professionals. These professionals, 

Applicant suggests, in turn are likely to 

increase Applicant’s performance and 

stockholder value. Applicant also 

asserts that equity-based compensation 

would more closely align the interests of 

Applicant’s employees and NonEmployee Directors with those of its 

stockholders. In addition, Applicant 

states that its stockholders will be 

further protected by the conditions to 

the requested order that assure 

continuing oversight of the operation of 

the Plans by the Board. 

Section 57(a)(4), Rule 17d–1 

7. Section 57(a) proscribes certain 

transactions between a BDC and persons 

related to the BDC in the manner 

described in section 57(b) (‘‘57(b) 

persons’’), absent a Commission order. 

Section 57(a)(4) generally prohibits a 

57(b) person from effecting a transaction 

in which the BDC is a joint participant 

absent such an order. Rule l7d-1, made 

applicable to BDCs by section 57(i), 

proscribes participation in a ‘‘joint 

enterprise or other joint arrangement or 

profit-sharing plan,’’ which includes a 

stock option or purchase plan. 

Employees and directors of a BDC are 

57(b) persons. Thus, the issuance of 

shares of Restricted Stock could be 

deemed to involve a joint transaction 

involving a BDC and a 57(b) person in 

contravention of section 57(a)(4). Rule 

17d–1(b) provides that, in considering 

relief pursuant to the rule, the 

Commission will consider (a) whether 

the participation of the BDC in a joint 

enterprise is consistent with the policies 

and purposes of the Act and (b) the 

extent to which such participation is on 

a basis different from or less 

advantageous than that of other 

participants. 

8. Applicant requests an order 

pursuant to sections 57(a)(4) and 57(i) of 

the Act and rule 17d–1 under the Act to 

permit Applicant to issue Restricted 

Stock under the Plans. Applicant 

acknowledges that its role is necessarily 

different from the other participants 

because the other participants are its 

directors and employees. It notes, 

however, that the Plans are in the 

interest of the Applicant’s stockholders, 

because the Plans will help align the 

interests of Applicant’s employees with 

those of its stockholders, which will 

encourage conduct on the part of those 

employees designed to produce a better 

return for Applicant’s stockholders. 

Additionally, section 57(j)(1) of the Act 

expressly permits any director, officer or 

employee of a BDC to acquire warrants, 

options and rights to purchase voting 

securities of such BDC, and the 

securities issued upon the exercise or 

conversion thereof, pursuant to an 

executive compensation plan which 

meets the requirements of section 

61(a)(3)(B) of the Act. Applicant submits 

that the issuance of Restricted Stock 

pursuant to the Plans poses no greater 

risk to stockholders than the issuances 

permitted by section 57(j)(1) of the Act. 

Section 23(c) 

9. Section 23(c) of the Act, which is 

made applicable to BDCs by section 63 

of the Act, generally prohibits a BDC 

from purchasing any securities of which 

it is the issuer except in the open market 

pursuant to tenders, or under other 

circumstances as the Commission may 

permit to ensure that the purchases are 

made in a manner or on a basis that 

does not unfairly discriminate against 

any holders of the class or classes of 

securities to be purchased. Applicant 

states that the withholding or purchase 

of shares of Restricted Stock and 

common stock in payment of applicable 

withholding tax obligations or of 

common stock in payment for the 

exercise price of a stock option might be 

deemed to be purchases by the 

Company of its own securities within 

the meaning of section 23(c) and 

therefore prohibited by the Act. 

10. Section 23(c)(3) of the Act permits 

a BDC to purchase securities of which 

it is the issuer in circumstances in 

which the repurchase is made in a 

manner or on a basis that does not 

unfairly discriminate against any 

holders of the class or classes of 

securities to be purchased. Applicant 

believes that the requested relief meets 

the standards of section 23(c)(3). 

11. Applicant submits that these 

purchases will be made in a manner that 

does not unfairly discriminate against 

Applicant’s stockholders because all 

purchases of Applicant’s stock will be at 

the closing price of the common stock 

on the Nasdaq Global Market (or any 

primary exchange on which its shares of 

common stock may be traded in the 

future) on the relevant date (i.e., the 

public market price on the date of grant 

of Restricted Stock and the date of grant 

of Options). Applicant submits that 

because all transactions with respect to 

the Plans will take place at the public 

market price for the Applicant’s 

common stock, these transactions will 

not be significantly different than could 

be achieved by any stockholder selling 

in a market transaction. Applicant 

represents that no transactions will be 

conducted pursuant to the requested 

order on days where there are no 

reported market transactions involving 

Applicant’s shares. 

12. Applicant represents that the 

withholding provisions in the Plans do 

not raise concerns about preferential 

treatment of Applicant’s insiders 

because each Plan is a bona fide 

compensation plan of the type that is 

common among corporations generally. 

Furthermore, the vesting schedule is 

determined at the time of the initial 

grant of the Restricted Stock and the 

option exercise price is determined at 

the time of the initial grant of the 

Options. Applicant represents that all 

purchases may be made only as 

permitted by the Plans, which will be 

approved by the Applicant’s 

stockholders prior to any application of 

the relief. Applicant believes that 

granting the requested relief would be 

consistent with the policies underlying 

the provisions of the Act permitting the 

use of equity compensation as well as 

prior exemptive relief granted by the 


amozie on DSK3GDR082PROD with NOTICES1
Federal Register / Vol. 83, No. 248 / Friday, December 28, 2018 / Notices 67451 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3 15 U.S.C. 78s(b)(3)(A). 

4 17 CFR 240.19b–4(f)(4)(ii). 

5Capitalized terms used but not defined herein 

have the meanings specified in the ICE Clear 

Europe Clearing Rules. 

6 ICE Futures Europe is also changing certain 

exchange fees with respect to the IFEU Products at 

the same time. 

7 15 U.S.C. 78q–1(b)(3)(D). Under this provision, 

‘‘[a] clearing agency shall not be registered unless 

Continued 

Commission under section 23(c) of the 

Act. 

Applicant’s Conditions 

Applicant agrees that the order 

granting the requested relief will be 

subject to the following conditions: 

1. The Plans will be authorized by 

Applicant’s stockholders. 

2. Each issuance of Restricted Stock to 

an officer, employee, or Non-Employee 

Director will be approved by the 

Required Majority of Applicant’s 

directors on the basis that such grant is 

in the best interest of Applicant and its 

stockholders. 

3. The amount of voting securities 

that would result from the exercise of all 

of Applicant’s outstanding warrants, 

options and rights, together with any 

Restricted Stock issued under the Plans 

and the 2006 Plan, at the time of 

issuance shall not exceed 25% of the 

outstanding voting securities of the 

Company, except that if the amount of 

voting securities that would result from 

the exercise of all of the Company’s 

outstanding warrants, options and rights 

issued to the Company’s directors, 

officers and employees, together with 

any Restricted Stock issued pursuant to 

the Plans and the 2006 Plan, would 

exceed 15% of the outstanding voting 

securities of the Company, then the total 

amount of voting securities that would 

result from the exercise of all 

outstanding warrants, options and 

rights, together with any Restricted 

Stock issued pursuant to the Plans and 

the 2006 Plan, at the time of issuance 

shall not exceed 20% of the outstanding 

voting securities of the Company. 

4. The amount of Restricted Stock 

issued and outstanding will not at the 

time of issuance of any shares of 

Restricted Stock exceed ten percent of 

Applicant’s outstanding voting 

securities. 

5. The Board will review the Plans at 

least annually. In addition, the Board 

will review periodically the potential 

impact that the issuance of Restricted 

Stock under the Plans could have on 

Applicant’s earnings and net asset value 

per share, such review to take place 

prior to any decisions to grant Restricted 

Stock under the Plans, but in no event 

less frequently than annually. Adequate 

procedures and records will be 

maintained to permit such review. The 

Board will be authorized to take 

appropriate steps to ensure that the 

issuance of Restricted Stock under the 

Plans will be in the best interest of 

Applicant’s stockholders. This authority 

will include the authority to prevent or 

limit the granting of additional 

Restricted Stock under the Plans. All 

records maintained pursuant to this 

condition will be subject to examination 

by the Commission and its staff. 

For the Commission, by the Division of 

Investment Management, pursuant to 

delegated authority. 

Brent J. Fields, 

Secretary. 

[FR Doc. 2018–28318 Filed 12–27–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–84892; File No. SR–ICEEU– 

2018–025] 

Self-Regulatory Organizations; ICE 

Clear Europe Limited; Notice of Filing 

and Immediate Effectiveness of a 

Proposed Rule Change To Adopt 

Revised Clearing Fees 

December 20, 2018. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on December 

18, 2018, ICE Clear Europe Limited 

(‘‘ICE Clear Europe’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

changes described in Items I, II, and III 

below, which Items have been primarily 

prepared by ICE Clear Europe. ICE Clear 

Europe filed the proposed rule changes 

pursuant to Section 19(b)(3)(A) of the 

Act 3 and Rule 19b–4(f)(4)(ii) 

thereunder,4 so that the proposal was 

immediately effective upon filing with 

the Commission. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Clearing Agency’s Statement of the 

Terms of Substance of the Proposed 

Rule Change 

The principal purpose of the 

proposed rule change is to revise 

clearing fees applicable to certain ICE 

Futures Europe Limited (‘‘IFEU’’) 

financials and softs and UK natural gas 

products (‘‘IFEU Products’’). The 

revisions do not involve any changes to 

the ICE Clear Europe Clearing Rules or 

Procedures.5

II. Clearing Agency’s Statement of the 

Purpose of, and Statutory Basis for, the 

Proposed Rule Change 

In its filing with the Commission, ICE 

Clear Europe included statements 

concerning the purpose of and basis for 

the proposed rule change. The text of 

these statements may be examined at 

the places specified in Item IV below. 

ICE Clear Europe has prepared 

summaries, set forth in sections (A), (B), 

and (C) below, of the most significant 

aspects of such statements. 

(A) Clearing Agency’s Statement of the 

Purpose of, and Statutory Basis for, the 

Proposed Rule Change 

(a) Purpose 

The purpose of the proposed rule 

change is for ICE Clear Europe to modify 

certain clearing fees relating to certain 

IFEU Products 6 as set out below: 

• IFEU Softs: Clearing fee would 

increase from £0.37 to £0.55 per lot; 

• IFEU Equities: Clearing fee would 

increase from £0.20 to £0.21 per lot for 

the following contracts: 

Æ FTSE 100 Futures (Z); 

Æ FTSE 100 Dividend Index Futures 

(YZ); 

Æ FTSE 100 Dividend Index—RDSA 

withholding future (XZ); and 

• ICE’s UK Natural Gas: clearing fee 

would increase from £0.26 to £0.34 for 

screen transactions and decrease from 

£0.58 to £0.46 per lot for block/ 

exchange of futures for physicals (EFP)/ 

exchange of futures for swap (EFS) 

transactions. 

Attached as Exhibit 5 are the circulars 

listing the new fees relating to the IFEU 

Products. The relevant fee schedules 

relating to the IFEU Products will be 

updated and are available at: https://

www.theice.com/fees?=custom. The new 

fees are expected to come into effect on 

January 2, 2019. 

(b) Statutory Basis 

ICE Clear Europe has determined that 

the proposed fee changes set forth above 

are reasonable and appropriate. In 

particular, ICE Clear Europe believes 

that the fees have been set at an 

appropriate level given the costs and 

expenses to ICE Clear Europe in offering 

clearing of such IFEU Products, taking 

into account the investments ICE Clear 

Europe has made in clearing the markets 

for these products. The fees will apply 

to all F&O Clearing Members. ICE Clear 

Europe believes that imposing such 

charges thus provides for the equitable 

allocation of reasonable dues, fees, and 

other charges among its Clearing 

Members, within the meaning of Section 

17A(b)(3)(D) of the Act.7 ICE Clear 


amozie on DSK3GDR082PROD with NOTICES1