[Federal Register Volume 88, Number 189 (Monday, October 2, 2023)]
[Notices]
[Pages 67817-67822]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-21731]


-----------------------------------------------------------------------

DEPARTMENT OF LABOR

Employee Benefits Security Administration

[Prohibited Transaction Exemption 2023-19; Exemption Application No. D-
12003]


Exemption From Certain Prohibited Transaction Restrictions 
Involving the Mitsubishi UFJ Trust and Banking Corporation Located in 
New York, NY

AGENCY: Employee Benefits Security Administration, Labor.

ACTION: Notice of exemption.

-----------------------------------------------------------------------

SUMMARY: This document contains a notice of an exemption issued by the 
Department of Labor (the Department) from certain of the prohibited 
transaction restrictions of the Employee Retirement Income Security Act 
of 1974 (ERISA or the Act). The exemption permits certain transactions 
arising from credit arrangements involving Mitsubishi UFJ Trust and 
Banking Corporation (the Applicant or MUTB) and investment funds in 
which employee benefit plans invest.

[[Page 67818]]


DATES: This exemption will be in effect on the date that this grant 
notice is published in the Federal Register.

FOR FURTHER INFORMATION CONTACT: Mr. Frank Gonzalez of the Department 
at (202) 693-8553. (This is not a toll-free number.)

SUPPLEMENTARY INFORMATION: The Applicant requested an exemption 
pursuant to ERISA Section 408(a) and supplemented the request with 
certain additional information (collectively, this information is 
referred to as ``the Initial Application'').\1\ On June 28, 2021, the 
Department published a notice of proposed exemption in the Federal 
Register at 86 FR 34048 (Proposed Exemption).
---------------------------------------------------------------------------

    \1\ The procedures for requesting an exemption are set forth in 
29 CFR part 2570, subpart B (76 FR 66637, 66644, October 27, 2011). 
Effective December 31, 1978, section 102 of the Reorganization Plan 
No. 4 of 1978, 5 U.S.C. App. 1 (1996), transferred the authority of 
the Secretary of the Treasury to issue administrative exemptions 
under the Code Section 4975(c)(2) to the Secretary of Labor. 
Accordingly, the Department grants this exemption under its sole 
authority.
---------------------------------------------------------------------------

    Based on the record, the Department has determined to grant the 
Proposed Exemption. This exemption provides only the relief specified 
herein. It provides no relief from violations of any law other than the 
prohibited transaction provisions of ERISA, as expressly stated herein.
    The Department makes the requisite findings under ERISA Section 
408(a) based on the Applicants' adherence to all the conditions of the 
exemption. Accordingly, affected parties should be aware that the 
conditions incorporated in this exemption are, taken individually and 
as a whole, necessary for the Department to grant the relief requested 
by the Applicants. Absent these conditions, the Department would not 
have granted this exemption.

Background

    The Applicant seeks to provide secured revolving lines of credit (a 
Credit Facility or Credit Facilities) for certain funds (Fund(s)). The 
Funds invest directly or indirectly in private equity investments, real 
estate investments, non-real estate operating company ventures, or 
other investments. The Funds are formed and operated through the Funds' 
organizing and governing documents (Fund Agreements).
    A Credit Facility provides a Fund with access to direct or indirect 
borrowing, letters of credit and similar forms of credit arrangements 
without the Fund having to seek permanent or interim financing before 
making an investment. The Credit Facility eliminates the delay that a 
Fund will encounter in obtaining capital if it makes capital calls to 
Investors. Covered plans may invest in the Funds, as may endowment 
funds, private or public persons, insurance companies, public or 
private corporations, trusts, and individuals (collectively, 
Investors).
    The Credit Facility's collateral security includes the right to 
make capital calls on Investors, including in the event of a Fund's 
default, and apply the proceeds to the repayment of the Fund's 
obligations, a secured interest in an account (Collateral Account) the 
Fund maintains in a financial institution into which capital 
contributions can be made, and the Investor's acknowledgement of the 
Fund's assignment of rights to the Lender (Investor Consent). The 
Investor Consent may include an agreement between the Investor and MUTB 
in which the Investor: (1) acknowledges the Credit Facility, including, 
amongst others, that the Investor will make capital contributions only 
to the Collateral Account (except in limited circumstances); and (2) 
will make Capital Contributions to the Fund without setoff, reduction, 
counterclaim, or defense of any kind or nature, for the purpose of 
repayment of the Credit Facility (Agreement to Fund). The Agreement to 
Fund does not limit the Investor's right to assert a claim or defense 
in a separate action against the Fund, and keeps the risk of the Fund 
mismanagement or fraud between the Investors and the Funds.
    The Department invited all interested persons to submit written 
comments and/or requests for a public hearing with respect to the 
Proposed Exemption. On August 12, 2021, the Department received one 
written comment, which came from the Applicant, and raised a number of 
issues regarding the accuracy of the Proposed Exemption.\2\ On March 
10, 2022, the Department held a tentative denial conference with the 
Applicant to address these accuracy issues.
---------------------------------------------------------------------------

    \2\ Applicants and recipients of an exemption are strongly 
cautioned to immediately alert the Department regarding any material 
statement in an application or proposed exemption that may not be, 
or may no longer be, completely and factually accurate.
---------------------------------------------------------------------------

    On April 1, 2022, the Applicant submitted additional information to 
the Department. The material issues that the Applicant raised and the 
material information it submitted to the Department are discussed 
below.\3\
---------------------------------------------------------------------------

    \3\ All information submitted by the Applicant to the Department 
in connection with this exemption is available through the 
Department's Public Disclosure Office, by referencing D-12003.
---------------------------------------------------------------------------

Written Comments

Comments From the Applicant

    As a general comment, the Applicant states that its primary goal is 
to obtain a credit facility exemption that is substantially similar (if 
not identical in all material respects) to the Prior Credit Facility 
Exemptions,\4\ and thereby to have equal footing with other financial 
institutions that have received the Prior Credit Facility Exemptions. 
The Applicant maintains it is critical for the final exemption to be 
substantially similar to the Prior Credit Facility Exemptions.
---------------------------------------------------------------------------

    \4\ The term Prior Credit Facility Exemptions refers to similar 
exemptions that the Department has either granted or authorized; see 
PTE 2004-02, FAN 2005-19E, FAN 2006-04E, FAN 2007-07E, and FAN 2008-
01E.
---------------------------------------------------------------------------

    The Department notes that the existence of previously issued 
administrative exemptions is not determinative of whether the 
Department will propose future exemption applications with the same or 
similar facts, or whether a proposed exemption will contain the same 
conditions as a similar previously issued administrative exemption. The 
Department has the sole authority to issue exemptions and is not bound 
by the facts or conditions of prior exemptions in making determinations 
with respect to an exemption application. This policy allows the 
Department to retain sufficient flexibility to grant exemptions that 
are appropriate in an ever-changing business, legislative, and 
regulatory policy environment.
I. Section I(e) of the Proposed Exemption
    Section I(e) states that: ``A Covered Plan's execution of an 
agreement (the Investor Consent) consenting to the assignment by the 
Fund and General Partner (or Manager) to Mitsubishi Bank, as sole 
Lender or Agent, of their right to make Capital Calls.''
    Applicant's Request: The Applicant seeks to add the following new 
language to Section I(e), as it relates to the Investor Consent. 
According to the Applicant, Covered Plans generally expect to see and 
take comfort in seeing the list of items that may be included in the 
Investor Consent, and it reduces ambiguity for the Covered Plan 
Investors and improves administrative efficiency and negotiation with 
the Covered Plan Investors:
    ``(e) The execution by a Covered Plan of an agreement (``Investor 
Consent'') consenting to the assignment by the Fund and General Partner 
(or Manager) to Mitsubishi Bank, as sole Lender or

[[Page 67819]]

the Agent, of their right to make Capital Calls, which may contain, 
among other things: (i) an acknowledgment of the Covered Plan's 
obligation to deliver the Covered Plan's financial information 
statements to Mitsubishi Bank, as sole Lender or the Agent; (ii) an 
acknowledgment of the Covered Plan's unpaid and owing capital 
commitment amount and the Covered Plan's obligation to make Capital 
Contributions (up to its unfunded Capital Commitment amount) to satisfy 
the indebtedness incurred by the Fund under the Credit Facility; (iii) 
an acknowledgment by the Covered Plan of the Fund's assignment to 
Mitsubishi Bank, as sole Lender or the Agent, of the right to make 
Capital Calls upon the Covered Plan, enforce the Capital Calls, collect 
the Capital Contributions, and apply them to any amount due under the 
Credit Facility; (iv) a consent (as either part of the Fund Agreements 
or as a separate agreement) by the Covered Plan to make Capital 
Contributions to the Fund without setoff, reduction, counterclaim, or 
defense of any kind or nature, for the purpose of repayment of the 
Credit Facility; (v) a representation that the Covered Plan has no 
knowledge of claims, offsets or defenses that would adversely affect 
its obligation to fund Capital Contributions under the Fund Agreements, 
or events which, with the passage of time would constitute a default or 
would constitute a defense to, or right of offset against the Covered 
Plan's obligation to fund its Capital Commitment to the Fund; and (vi) 
an agreement that the Covered Plan will fund Capital Contributions only 
into the Collateral Account; provided that with respect to all 
transactions described above, the conditions set forth below in Section 
III are met.''
    Department's Response: The Department has revised the condition 
consistent with the Applicant's request.
II. Section III(i) of the Proposed Exemption
    Section III(i) of the Proposed Exemption states that: ``The Funds 
will not hold `plan assets' for purposes of ERISA or Code section 
4975.''
    Applicant's Request: The Applicant objects to the inclusion of the 
condition in Section III(i). The Applicant states that no ``Covered 
Transaction'' is impacted by, or has any relationship to, the ``plan 
asset'' status of the Fund. Further, the Applicant states that it does 
not have any control over the ``plan asset'' status of the Fund.
    According to the Applicant, to condition the availability of the 
exemption on a condition for which the Applicant has no control, and 
for which the condition has no impact on the relationship between the 
Covered Plan and the Applicant, would be arbitrary and lead to 
inequitable consequences to the Covered Plan and the Applicant. 
Although the Prior Credit Facility Exemptions note that the Funds 
typically do not hold ``plan assets,'' the operative language in those 
exemptions does not expressly make this status a condition. Requiring 
that the Funds will not hold ``plan assets'' for purposes of ERISA or 
Code section 4975 would place the Applicant at a significant 
competitive disadvantage because Fund Managers of Plan Asset Entities 
would seek to borrow from Agent/Lenders that have a less restrictive 
exemption that does not discriminate against them based on their ``plan 
asset'' status.
    Department's Response: The Department notes that the Applicant made 
the following representation in its application: ``. . . [i]n certain 
rare instances, a Fund's underlying assets may constitute plan assets 
for purposes of the [Department's] Plan Assets Regulation.\5\ However, 
in such cases, the Applicant would not enter into a Credit Facility 
with such Fund unless the Fund was managed by a QPAM [qualified 
professional asset manager] and the extension of credit under the 
Credit Facility to the Fund and the Fund's pledge of collateral would 
be covered by the QPAM Exemption, or unless another exemption was 
applicable.'' The Department has revised Section III(i) of this 
exemption for consistency with that representation.
---------------------------------------------------------------------------

    \5\ See the Department's Plan Assets Regulation, 29 CFR part 
2510.3-101 (51 FR 41280, Nov. 13, 1986), as amended at 51 FR 47226, 
(Dec. 31, 1986).
---------------------------------------------------------------------------

III. Section III(j) of the Proposed Exemption
    Section III(j) of the Proposed Exemption states that: ``Any service 
covered by the exemption must be necessary for the establishment or 
operation of the plan, and no more than reasonable compensation may be 
paid.''
    Applicant's Request: The Applicant objects to this condition. The 
Applicant states that this condition improperly implies that there is 
some form of service relationship between the Applicant/Lenders and the 
Covered Plan Investors. The condition is therefore likely to confuse 
Covered Plan Investors and add additional costs and delays if the 
Covered Plan expends additional resources to evaluate this condition 
since it does not appear in the Prior Credit Facility Exemptions.
    The Applicant states that while it is possible that a Covered Plan 
Investor may inquire about the status of, or request information from 
the Applicant or a Lender, with respect to a credit facility, including 
outstanding obligations thereunder, these communications would be 
relayed by the Covered Plan Investors through the Fund to the 
Applicant/Lenders, and not made directly.
    The Applicant represents that these would be ``incidental 
interactions'' that would not cause the Applicant or a Lender, to be a 
``covered service provider'' for purposes of ERISA Section 408(b)(2), 
particularly where no compensation is being paid for any services. The 
Applicant states that, to the extent there is any ``service'' 
relationship between the Applicant/Lenders and the Covered Plans, it 
would be appropriate for the Applicant to rely on ERISA Section 
408(b)(2) and not the credit facility exemption.
    Department's Response: In a letter to the Department dated August 
7, 2020, the Applicant stated that ``. . . from time to time, there may 
be interactions between [the Applicant/Lenders] and the Covered Plan 
Investors which may be construed as a service. For example, Covered 
Plan Investors may inquire about the status and/or request information 
from [the Applicant/Lenders] with respect to the Credit Facility and 
the outstanding obligations thereunder, although, typically, such 
communication would be relayed by the Covered Plan Investors through 
the Fund to [the Applicant/Lenders], and not made directly.''
    Although the Department has not made any determination regarding 
whether any transaction permitted by this exemption falls within the 
scope of ERISA Section 408(b)(2), this exemption is not intended to 
provide exemptive relief for any transaction that is within the scope 
of ERISA Section 408(b)(2). Accordingly, the Department has decided not 
to delete the condition as requested. However, based on the Applicant's 
representations, the Department is revising the condition as follows: 
``The relief in this exemption does not extend to any transaction that 
is within the scope of ERISA Section 408(b)(2).''
IV. Section III(k) of the Proposed Exemption
    Section III(k) of the Proposed Exemption states that: ``No Lender 
will have any influence, authority, or control over a Client Plan's 
investment in the Fund.''
    Applicant's Request: The Applicant requests that the Department 
delete this condition. The Applicant states that the relationship 
between a Covered Plan and the Applicant/Lenders is set forth

[[Page 67820]]

in Section III(a), which provides that: ``The decision to invest in the 
Fund on behalf of each Covered Plan and to execute an Investor Consent 
in favor of Mitsubishi Bank, as sole Lender or Agent, is made by 
fiduciaries of the Covered Plan that are not included among and are 
independent of and unaffiliated with, the Lenders (including Mitsubishi 
Bank) and the Fund.''
    Department's Response: Given the similarity between Section III(k) 
and Section III(a), the Department is deleting Section III(k). The 
Department has also redesignated Section III(l) of the Proposed 
Exemption (further discussed below) as Section III(k) in the final 
exemption.
    Department's Note: Recipients of any administrative exemption from 
the Department, including any Prior Credit Facility Exemption, are 
strongly cautioned to immediately alert the Department regarding any 
statement in an application or proposed exemption that may not be, or 
may no longer be, completely and factually accurate. The Department is 
granting this exemption with the expectation that all of the material 
representations that the Applicant made in its exemption application, 
including all factual information it submitted to the Department 
subsequent to the Proposed Exemption's publication and all of the 
statements set forth in the Proposed Exemption's Summary of Facts and 
Representations, and in this exemption, are factually complete and 
accurate, and will be fully complied with and adhered to.
    For greater consistency with the Department's most recent 
individual administrative exemptions, the Department has revised 
condition (k) of the Proposed Exemption as follows: ``All of the 
material facts and representations set forth in the Summary of Facts 
and Representations are true and accurate. If there is any material 
change in a transaction covered by the exemption, or in a material fact 
or representation described by the Applicant in the application, the 
exemption will cease to apply as of the date of the change.'' \6\
---------------------------------------------------------------------------

    \6\ In determining whether a specific fact or representation 
within the application is material, the Applicant is urged to 
contact the Department's Office of Exemption Determinations prior to 
such fact or representation being changed.
---------------------------------------------------------------------------

    After considering the entire record developed in connection with 
the Applicant's exemption application, along with the Applicant's 
comment letter and the additional factual information it submitted 
subsequent to the Proposed Exemption, the Department has determined to 
grant the exemption described below.
    The complete application file (D-12003) is available for public 
inspection in the Public Disclosure Room of the Employee Benefits 
Security Administration, Room N-1515, U.S. Department of Labor, 200 
Constitution Avenue NW, Washington, DC 20210. For a more complete 
statement of the facts and representations supporting the Department's 
decision to grant this exemption, refer to the notice of proposed 
exemption published on June 28, 2021, at 86 FR 34048.

General Information

    The attention of interested persons is directed to the following:
    (1) The fact that a transaction is the subject of an exemption 
under ERISA Section 408(a) does not relieve a fiduciary or other party 
in interest from certain requirements of other ERISA provisions, 
including any prohibited transaction provisions to which the exemption 
does not apply and the general fiduciary responsibility provisions of 
ERISA Section 404, which, among other things, require a fiduciary to 
discharge their duties respecting the plan solely in the interest of 
the plan's participants and beneficiaries and in a prudent fashion in 
accordance with ERISA Section 404(a)(1)(B).
    (2) As required by ERISA Section 408(a), the Department hereby 
finds that the exemption is (1) administratively feasible, (2) in the 
interests of affected plans and of their participants and 
beneficiaries, and (3) protective of the rights of participants and 
beneficiaries of such plans;
    (3) The exemption is supplemental to, and not in derogation of, any 
other ERISA provisions, including statutory or administrative 
exemptions and transitional rules. Furthermore, the fact that a 
transaction is subject to an administrative or statutory exemption is 
not dispositive of determining whether the transaction is in fact a 
prohibited transaction; and
    (4) The availability of this exemption is subject to the express 
condition that the material facts and representations contained in the 
application accurately describe all material terms of the transaction 
that are the subject of the exemption.
    Accordingly, the following exemption is granted under the authority 
of ERISA Section 408(a) and in accordance with the procedures set forth 
in 29 CFR part 2570, subpart B (76 FR 66637, 66644, October 27, 2011):

Exemption

Section I. Covered Transactions

    The restrictions of ERISA Sections 406(a)(1)(A)-(D), and the 
sanctions resulting from the application of Code Section 4975, by 
reason of Code Sections 4975(c)(l)(A)-(D), shall not apply to:
    (a) The granting by the Funds to Mitsubishi UFJ Trust and Banking 
Corporation (Mitsubishi Bank), as an agent (Agent) for one or more 
financial institutions (Lender(s)), which may include, without 
limitation, Mitsubishi Bank) or as sole Lender, that will fund a credit 
facility (Credit Facility) providing credit to certain investment funds 
(Fund(s)), of a security interest in and lien on the capital 
commitments (Capital Commitments), reserve amounts, and capital 
contributions (Capital Contributions) of certain investors (Investors) 
that are employee benefit plans (Covered Plan(s), as defined in Section 
II(a)), investing in the Fund;
    (b) Any Fund's collateral assignment and pledge to Mitsubishi Bank, 
as sole Lender or Agent, of the Fund's security interest in an Investor 
Covered Plan's equity interest in such Fund;
    (c) The Fund's grant to Mitsubishi Bank, as sole Lender or Agent, 
of a security interest in a collateral account (Collateral Account) to 
which all Capital Contributions in the Fund will be deposited when paid 
(except in certain limited circumstances that do not involve Covered 
Plans);
    (d) The granting by the Fund and/or its general partner (General 
Partner) or manager (Manager) to Mitsubishi Bank, as sole Lender or 
Agent, of its right to make calls on Covered Plan Investors for Capital 
Contributions (the Capital Call), which shall be in cash, under the 
operative Fund Agreements (as defined in Section II(d)), enforce the 
Capital Calls, collect the Capital Contributions, and apply them to any 
amount due under the Credit Facility; and
    (e) The execution by a Covered Plan of an agreement (``Investor 
Consent'') consenting to the assignment by the Fund and General Partner 
(or Manager) to Mitsubishi Bank, as sole Lender or the Agent, of their 
right to make Capital Calls, which may contain, among other things: (i) 
an acknowledgment of the Covered Plan's obligation to deliver the 
Covered Plan's financial information statements to Mitsubishi Bank, as 
sole Lender or the Agent; (ii) an acknowledgment of the Covered Plan's 
unpaid and owing capital commitment amount and the Covered Plan's 
obligation to make Capital Contributions (up to its unfunded Capital

[[Page 67821]]

Commitment amount) to satisfy the indebtedness incurred by the Fund 
under the Credit Facility; (iii) an acknowledgment by the Covered Plan 
of the Fund's assignment to Mitsubishi Bank, as sole Lender or the 
Agent, of the right to make Capital Calls upon the Covered Plan, 
enforce the Capital Calls, collect the Capital Contributions, and apply 
them to any amount due under the Credit Facility; (iv) a consent (as 
either part of the Fund Agreements or as a separate agreement) by the 
Covered Plan to make Capital Contributions to the Fund without setoff, 
reduction, counterclaim, or defense of any kind or nature, for the 
purpose of repayment of the Credit Facility; (v) a representation that 
the Covered Plan has no knowledge of claims, offsets or defenses that 
would adversely affect its obligation to fund Capital Contributions 
under the Fund Agreements, or events which, with the passage of time 
would constitute a default or would constitute a defense to, or right 
of offset against the Covered Plan's obligation to fund its Capital 
Commitment to the Fund; and (vi) an agreement that the Covered Plan 
will fund Capital Contributions only into the Collateral Account; 
provided that with respect to all transactions described above, the 
conditions set forth below in Section III are met.

Section II. Definitions

    (a) The terms ``Covered Plan'' or ``Covered Plans'' means an 
investor in a Fund (as defined below) that is an employee benefit plan, 
as defined in ERISA Section 3(3) and that is covered by Title I, Part 4 
of ERISA, and/or a plan defined in Code Section 4975, that satisfies 
the conditions set forth herein in Section II.
    (b) The terms ``Covered Transaction'' or ``Covered Transactions'' 
mean any combination of transactions described in Section I(a) through 
(d), in conjunction with the Investor Consent described in Section 
I(e).
    (c) The terms ``Fund'' or ``Funds'' means an investment or venture 
capital fund (organized as a corporation, limited partnership, limited 
liability company, or another business entity authorized by applicable 
law) in which one or more investors invest, including employee benefit 
plans or special purpose entities holding ``plan assets'' subject to 
ERISA, as described herein, by making capital contributions in cash to 
such Fund, pursuant to specific Capital Commitments as established by 
the Fund Agreement(s) and other operative documents executed by the 
parties, for purposes of making certain real estate investments 
(including real estate-related investments, such as venture capital 
investments) or non-real estate investments (including, without 
limitation, assets and/or interests relating to infrastructure, 
maritime, energy, etc.).
    Each Covered Plan investing in such special purpose entity must 
satisfy the conditions set forth herein in Section III. The term 
``Fund'' includes an entity created by the Fund that may borrow, or 
receive, funds from the Credit Facility, provided that such entity is 
considered an affiliate of the Fund as a subsidiary or other controlled 
entity.
    (d) The terms ``Fund Agreement'' or ``Fund Agreements'' mean the 
written agreements under which a Fund (as defined above) is formed 
(such as a limited partnership agreement, a limited liability company 
agreement, trust agreement, or articles of incorporation, together with 
ancillary related agreements, such as subscription agreements) that 
obligate each Investor to make cash contributions of capital with 
respect to Capital Commitments, upon receipt of a call for Capital 
Contributions.
    (e) The term ``officer'' means a president, any vice president in 
charge of a principal business unit, division or function (such as 
sales, administration or finance), or any other officer who performs a 
policy-making function for the entity.
    (f) The term ``Mitsubishi Bank'' means Mitsubishi UFJ Trust and 
Banking Corporation, which is a foreign banking corporation organized 
under the laws of Japan, and its indirectly wholly-owned subsidiary 
named MUFG Alternative Fund Services (Cayman) Limited, an ordinary 
resident company incorporated and existing under the laws of the Cayman 
Islands. This exemption is intended to cover Mitsubishi Bank, and all 
of its current and future branches.
    (g) For purposes of determining whether a fiduciary is not included 
among, is independent of, and unaffiliated with, a Fund, the term Fund 
shall be deemed, as appropriate, to include the governing entity of the 
Fund, or a member of the governing body of the Fund, as appropriate, 
e.g., a general partner of a partnership, a manager of a limited 
liability company, a member of a member-managed limited liability 
company, or a member of the board of directors of a corporation. For 
purposes of this exemption request, a fiduciary of a Covered Plan is 
not included among, is independent of, and unaffiliated with, a Lender 
(including Mitsubishi Bank) or a Fund, as applicable, if:
    (i) The fiduciary is not, directly or indirectly, through one or 
more intermediaries, controlling, controlled by, or under common 
control with such Lender or Fund;
    (ii) The fiduciary is not an officer, director, employee or 
relative of, or partner in, such Lender or Fund; and
    (iii) No officer, director, highly-compensated employee (within the 
meaning of Code Section 4975(e)(2)(H)), or partner of the Fund, or any 
officer, director or highly-compensated employee, or partner of the 
Lender who is involved in the transactions described in Section I of 
the exemption request, is also an officer, director, highly-compensated 
employee, or partner of the fiduciary. However, if such individual is a 
director of the Lender, and if they abstain from participation in, and 
is not otherwise involved with, the decision made by the Covered Plan 
to invest in the Fund, then this condition shall be deemed satisfied.

Section III. Conditions

    (a) The decision to invest in the Fund on behalf of each Covered 
Plan and to execute an Investor Consent in favor of Mitsubishi Bank, as 
sole Lender or Agent, is made by fiduciaries of the Covered Plan that 
are not included among and are independent of and unaffiliated with, 
the Lenders (including Mitsubishi Bank) and the Fund;
    (b) The transaction is on terms that are no less favorable to the 
Covered Plans than those which the Covered Plans could obtain in arm's-
length transactions with unrelated parties;
    (c) At the time of the execution of an Investor Consent, the 
Covered Plan has assets of not less than $100 million. In the case of 
multiple plans maintained by the same employer, or by members of a 
controlled group of corporations (within the meaning of Code Section 
4l4(b)), or members of a group of trades or businesses under common 
control (within the meaning of Code Section 414(c)) (hereafter, 
referred to as ``members of a controlled group''), whose assets are 
invested on a commingled basis (e.g., through a master trust), this 
$100 million threshold applies to the aggregate assets of the 
commingled entity;
    (d) Not more than 5% of the assets of any Covered Plan, measured at 
the time of the execution of an Investor Consent, is invested in the 
Fund. In the case of multiple plans maintained by the same employer, or 
by members of a controlled group, whose assets are invested on a 
commingled basis (e.g., through a master trust), the 5% limit applies 
to the aggregate assets of the commingled entity;
    (e) Neither Mitsubishi Bank, nor any Lender, has discretionary 
authority or

[[Page 67822]]

control with respect to a Covered Plan's investment in the Fund nor 
renders investment advice (within the meaning of 29 CFR 2510.3-21(c)) 
with respect to such investment;
    (f) Upon request, the Covered Plan fiduciaries must receive from 
Mitsubishi Bank, a copy of this notice of proposed exemption and a copy 
of the final exemption, as published in the Federal Register;
    (g) Mitsubishi Bank receives from the Covered Plan fiduciaries a 
written representation, or a written authorization, that permits 
Mitsubishi Bank to rely on a written representation made to the Fund, 
that the conditions set forth above in Section III(a), (c), and (d) are 
satisfied for such transaction with respect to the Covered Plan for 
which they are fiduciaries;
    (h) No Covered Transaction is part of an arrangement, agreement or 
understanding, designed to benefit a party in interest or disqualified 
person with respect to a Covered Plan;
    (i) In the event that a Fund's underlying assets constitute plan 
assets for purposes of the Department's Plan Assets Regulation, 
Mitsubishi Bank or any Lender will not enter into a Credit Facility 
with such Fund unless the Fund is managed by a QPAM, and the extension 
of credit under the Credit Facility to the Fund and the Fund's pledge 
of collateral would be covered by the QPAM Exemption or another 
applicable exemption; \7\
---------------------------------------------------------------------------

    \7\ See the Department's Plan Assets Regulation. 29 CFR part 
2510.3-101 (51 FR 41280, Nov. 13, 1986), as amended at 51 FR 47226, 
(Dec. 31, 1986).
---------------------------------------------------------------------------

    (j) The relief in this exemption does not extend to any transaction 
that is within the scope of ERISA Section 408(b)(2); and
    (k) All of the material facts and representations set forth in the 
Summary of Facts and Representations are true and accurate. If there is 
any material change in a transaction covered by the exemption, or in a 
material fact or representation described by the Applicant in the 
application, the exemption will cease to apply as of the date of the 
change.
    Effective Date: This exemption will be in effect on the date that 
this grant notice is published in the Federal Register.

George Christopher Cosby,
Director Office of Exemption Determinations, Employee Benefits Security 
Administration, U.S. Department of Labor.
[FR Doc. 2023-21731 Filed 9-29-23; 8:45 am]
BILLING CODE 4510-29-P