Federal Register / Vol. 83, No. 166 / Monday, August 27, 2018 / Notices 43715 

1 ‘‘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 of 1933 (the ‘‘Securities Act’’), or 

under the Securities Exchange Act of 1934, and the 

Regulated Fund’s reports to shareholders. 

2The term ‘‘Board’’ refers to the board of directors 

of any Regulated Fund. 

3The term ‘‘Non-Interested Directors’’ refers to 

the directors of any Regulated Fund that are not 

‘‘interested persons’’ of the Regulated Fund within 

the meaning of section 2(a)(19) of the Act. 

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. Section 12(d)(1)(J) of the Act 

provides that the Commission may 

exempt any person, security, or 

transaction, or any class or classes of 

persons, securities, or transactions, from 

any provision of section 12(d)(1) if the 

exemption is consistent with the public 

interest and the protection of investors. 

Section 17(b) of the Act authorizes the 

Commission to grant an order 

permitting a transaction otherwise 

prohibited by section 17(a) if it finds 

that (a) the terms of the proposed 

transaction are fair and reasonable and 

do not involve overreaching on the part 

of any person concerned; (b) the 

proposed transaction is consistent with 

the policies of each registered 

investment company involved; and (c) 

the proposed transaction is consistent 

with the general purposes of the Act. 

For the Commission, by the Division of 

Investment Management, under delegated 

authority. 

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–18419 Filed 8–24–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Company Act Release No. 

33205; File No. 812–14839] 

Tortoise Capital Advisors, L.L.C., et al. 

August 21, 2018. 

AGENCY: Securities and Exchange 

Commission (‘‘Commission’’). 

ACTION: Notice. 

Notice of application for an order 

under sections 17(d) and 57(i) of the 

Investment Company Act of 1940 (the 

‘‘Act’’) and rule 17d–1 under the Act to 

permit certain joint transactions 

otherwise prohibited by sections 17(d) 

and 57(a)(4) of the Act and rule 17d–1 

under the Act. 

SUMMARY OF APPLICATION: Applicants 

request an order to permit certain 

business development companies 

(‘‘BDC’’) and closed-end management 

investment companies to co-invest in 

portfolio companies with each other and 

with affiliated investment funds. 

APPLICANTS: Tortoise Energy 

Infrastructure Corporation (‘‘Energy 

Infrastructure Corp.’’), Tortoise MLP 

Fund, Inc. (‘‘MLP Fund’’), Tortoise 

Pipeline & Energy Fund, Inc. (‘‘Pipeline 

Fund’’), Tortoise Energy Independence 

Fund, Inc. (‘‘Independence Fund’’), 

Tortoise Power and Energy 

Infrastructure Fund, Inc. (‘‘Power 

Fund’’), Tortoise Essential Assets 

Income 2024 Term Fund, Inc. (‘‘Income 

Fund’’), Tortoise Tax-Advantaged Social 

Infrastructure Fund, Inc. (‘‘Social 

Infrastructure Fund’’ and together with 

Energy Infrastructure Corp., MLP Fund, 

Pipeline Fund, Independence Fund, 

Power Fund, and Income Fund, the 

‘‘Existing Regulated Funds’’), Tortoise 

Capital Advisors, L.L.C. (‘‘Tortoise 

Advisors’’), on behalf of itself and its 

successors, Tortoise Direct 

Opportunities Fund, LP (‘‘DO Fund’’), 

Tortoise Direct Opportunities Fund II, 

LP (‘‘DO Fund II’’), Tortoise Direct 

Municipal Opportunities Fund, LP 

(‘‘Municipal Fund’’ and, together with 

DO Fund and DO Fund II, the ‘‘Existing 

Affiliated Funds’’), and Tortoise Credit 

Strategies, LLC (the ‘‘Existing Affiliated 

Adviser’’). 

FILING DATES: The application was filed 

on November 7, 2017, and amended on 

March 29, 2018, and August 1, 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 

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 September 17, 2018, 

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, 11550 Ash Street, Suite 300, 

Leawood, KS 66211. 

FOR FURTHER INFORMATION CONTACT: 

Christine Y. Greenlees, Senior Counsel, 

at (202) 551–6879 or Andrea 

Ottomanelli Magovern, Branch Chief, at 

(202) 551–6821 (Chief Counsel’s Office, 

Division of Investment Management). 

SUPPLEMENTARY INFORMATION: The 

following is a summary of the 

application. The complete application 

may be obtained via the Commission’s 

website by searching for the file 

number, or for an applicant using the 

Company name box, at http://

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

calling (202) 551–8090. 

Applicants’ Representations: 

1. Energy Infrastructure Corp. was 

organized as a Maryland corporation for 

the purpose of operating as an 

externally-managed, non-diversified, 

closed-end management investment 

company. Energy Infrastructure Corp. is 

a registered investment company under 

the Act. Energy Infrastructure Corp.’s 

Objectives and Strategies 1 are to seek a 

high level of total return with an 

emphasis on current distributions 

primarily through investments in 

publicly traded master limited 

partnerships (‘‘MLPs’’) and their 

affiliates in the energy infrastructure 

sector. Energy Infrastructure Corp. has a 

six member Board,2 of which four 

members are Non-Interested Directors.3

2. MLP Fund was organized as a 

Maryland corporation for the purpose of 

operating as an externally-managed, 

non-diversified, closed-end 

management investment company. MLP 

Fund is a registered investment 

company under the Act. MLP Fund’s 

Objectives and Strategies are to seek a 

high level of total return with an 

emphasis on current distributions 

primarily through investments in energy 

MLPs and their affiliates, with an 

emphasis on natural gas infrastructure 

MLPs. MLP Fund has a six member 

Board, of which four members are NonInterested Directors. 

3. Pipeline Fund was organized as a 

Maryland corporation for the purpose of 

operating as an externally-managed, 

non-diversified, closed-end 

management investment company. 

Pipeline Fund is a registered investment 

company under the Act. Pipeline Fund 

has elected to be treated, and intends to 

comply with the requirements to 

continue to qualify annually, as a 

regulated investment company (‘‘RIC’’) 

under the Internal Revenue Code of 

1986, as amended (the ‘‘Code’’), and 

intends to continue to make such 

election in the future. Pipeline Fund’s 

Objectives and Strategies are to seek a 

high level of total return with an 

emphasis on current distributions 

primarily through investments in equity 

securities of North American pipeline 

companies that transport natural gas, 


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4 ‘‘Regulated Fund’’ means the Existing Regulated 

Funds 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) Tortoise Advisors, (b) the Existing 

Affiliated Adviser, and (c) any future investment 

adviser that is controlled by Tortoise Advisors and 

is registered under the Advisers Act. 

5 ‘‘Affiliated Fund’’ means (a) the Existing 

Affiliated Funds and (b) any Future Affiliated Fund. 

‘‘Future 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. 

6The 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. 

7All 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. 

8The term ‘‘Wholly-Owned Investment Sub’’ 

means an entity (i) that is wholly-owned by a 

Regulated Fund (with the Regulated Fund at all 

times holding, beneficially and of record, 100% of 

the voting and economic interests); (ii) whose sole 

business purpose is to hold one or more 

investments on behalf of the Regulated Fund; (iii) 

with respect to which the Regulated Fund’s Board 

natural gas liquids, crude oil and 

refined products, and other energy 

infrastructure companies. Pipeline Fund 

has a six member Board, of which four 

members are Non-Interested Directors. 

4. Independence Fund was organized 

as a Maryland corporation for the 

purpose of operating as an externallymanaged, non-diversified, closed-end 

management investment company. 

Independence Fund is a registered 

investment company under the Act. 

Independence Fund has elected to be 

treated, and intends to comply with the 

requirements to continue to qualify 

annually, as a RIC under the Code, and 

intends to continue to make such 

election in the future. Independence 

Fund’s Objectives and Strategies are to 

seek a high level of total return with an 

emphasis on current distributions 

primarily through investments in North 

American energy companies that engage 

in the exploration and production of 

crude oil, condensate, natural gas and 

natural gas liquids that generally have a 

strong presence in North American oil 

and gas reservoirs, including shale, and, 

to a lesser extent, on companies that 

provide associated transportation, 

processing, storage, servicing and 

equipment. Independence Fund has a 

six member Board, of which four 

members are Non-Interested Directors. 

5. Power Fund was organized as a 

Maryland corporation for the purpose of 

operating as an externally-managed, 

non-diversified, closed-end 

management investment company. 

Power Fund is a registered investment 

company under the Act. Power Fund 

has elected to be treated, and intends to 

comply with the requirements to 

continue to qualify annually, as a RIC 

under the Code, and intends to continue 

to make such election in the future. 

Power Fund’s Objectives and Strategies 

are to seek a high level of current 

income, with a secondary objective of 

capital appreciation primarily through 

investments in income-producing fixed 

income and equity securities issued by 

power and energy infrastructure 

companies. Power Fund has a six 

member Board, of which four members 

are Non-Interested Directors. 

6. Income Fund was organized as a 

Maryland corporation for the purpose of 

operating as an externally-managed, 

non-diversified, closed-end 

management investment company. 

Income Fund is a registered investment 

company under the Act. Income Fund 

has elected to be treated, and intends to 

comply with the requirements to 

continue to qualify annually, as a RIC 

under the Code, and intends to continue 

to make such election in the future. 

Income Fund’s Objectives and Strategies 

are to seek a high level of current 

income, with a secondary objective of 

capital appreciation primarily through 

investments in corporate debt securities, 

and private investments. Income Fund 

has a six member Board, of which four 

members are Non-Interested Directors. 

7. Social Infrastructure Fund was 

organized as a Maryland corporation for 

the purpose of operating as an 

externally-managed, non-diversified, 

closed-end management investment 

company. Social Infrastructure Fund is 

a registered investment company under 

the Act. Social Infrastructure Fund has 

elected to be treated, and intends to 

comply with the requirements to 

continue to qualify annually, as a RIC 

under the Code, and intends to continue 

to make such election in the future. 

Social Infrastructure Fund’s Objectives 

and Strategies are to seek a high level 

of total return with an emphasis on taxadvantaged income primarily through 

investments in the social infrastructure 

sector. Social Infrastructure Fund has a 

four member Board, of which three 

members are Non-Interested Directors. 

8. Each of the Existing Affiliated 

Funds was organized as a Delaware 

limited partnership and would be an 

investment company but for section 

3(c)(7) of the Act. Each Existing 

Affiliated Fund has investment 

objectives and policies that are similar 

to those of the Existing Regulated 

Funds. 

9. Tortoise Advisors is a Delaware 

limited liability company and is 

registered as an investment adviser 

under the Investment Advisers Act of 

1940 (the ‘‘Advisers Act’’). Tortoise 

Advisors is wholly-owned by Tortoise 

Investments, LLC. Lovell Minnick 

Partners LLC (‘‘Lovell Minnick’’) owns a 

majority interest in Tortoise 

Investments, LLC (‘‘Tortoise’’). An 

entity formed by Lovell Minnick owned 

by certain private funds sponsored by 

Lovell Minnick and a group of 

institutional co-investors owns a 

controlling interest in Tortoise. Certain 

employees in the Tortoise complex also 

own interests in Tortoise. Tortoise 

Advisors serves as investment adviser to 

Energy Infrastructure Corp., MLP Fund, 

Pipeline Fund, Independence Fund, 

Power Fund, DO Fund, and DO Fund II. 

10. The Existing Affiliated Adviser is 

a Delaware limited liability company 

and is registered as an investment 

adviser under the Advisers Act. The 

Existing Affiliated Adviser is privately 

held and is an affiliate of, and under 

common control with, Tortoise 

Advisors. The Existing Affiliated 

Adviser serves as investment adviser to 

Income Fund, Social Infrastructure 

Fund, and Municipal Fund. 

11. Applicants seek an order 

(‘‘Order’’) to permit one or more 

Regulated Funds 4 and/or one or more 

Affiliated Funds 5 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 sections 17(d) and 

57(a)(4) and rule 17d–1 by (a) coinvesting with each other in securities 

issued by issuers in private placement 

transactions in which an Adviser 

negotiates terms in addition to price; 6

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’’). ‘‘CoInvestment Transaction’’ means any 

transaction in which a Regulated Fund 

(or its Wholly-Owned Investment Sub, 

as defined below) 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 WhollyOwned 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.7

12. Applicants state that a Regulated 

Fund may, from time to time, form a 

Wholly-Owned Investment Sub.8 Such a 


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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. Any future subsidiaries of the 

Regulated Funds that participate in Co-Investment 

Transactions will be Wholly-Owned Investment 

Subs. 

9 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). 

subsidiary would be prohibited from 

investing in a Co-Investment 

Transaction with any Affiliated Fund or 

Regulated 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 WhollyOwned Investment Sub’s participation 

in any such transaction be treated, for 

purposes of the requested Order, as 

though the parent 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 WhollyOwned 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. 

13. When considering Potential CoInvestment Transactions for any 

Regulated Fund, the applicable Adviser 

will consider only the Objectives and 

Strategies, investment policies, 

investment positions, capital available 

for investment (‘‘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. The Regulated Funds, 

however, will not be obligated to invest, 

or co-invest, when investment 

opportunities are referred to them. 

14. 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’’) 9 will 

approve each Co-Investment 

Transaction prior to any investment by 

the participating Regulated Fund. 

15. 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. 

16. No Non-Interested Director of a 

Regulated Fund will have a financial 

interest in any Co-Investment 

Transaction, other than indirectly 

through share ownership in one of the 

Regulated Funds. 

17. Under condition 14, 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% of the outstanding voting 

shares of a Regulated Fund (the 

‘‘Shares’’), then the Holders will vote 

such Shares as directed by an 

independent third party when voting on 

matters specified in the condition. 

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 NonInterested Directors by a suggestion, 

explicit or implied, that the NonInterested Directors can be removed will 

be limited significantly. Applicants 

represent that the Non-Interested 

Directors will 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 17(d) of the Act and rule 

17d–1 under the Act prohibit 

participation by a registered investment 

company and an affiliated person in any 

‘‘joint enterprise or other joint 

arrangement or profit-sharing plan,’’ as 

defined in the rule, without prior 

approval by the Commission by order 

upon application. 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. Similarly, with regard to 

BDCs, section 57(a)(4) of the Act 

generally prohibits certain persons 

specified in section 57(b) from 

participating in joint transactions with 

the BDC or a company controlled by the 

BDC in contravention of rules as 

prescribed by the Commission. 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 

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. 

2. 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 submit that Tortoise 

Advisors and the Existing Affiliated 

Adviser may be deemed to control the 

Existing Regulated Funds and the 

Existing Affiliated Funds, respectively, 

and any other Adviser will be 

controlling, controlled by, or under 

common control with Tortoise Advisors. 


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10This exception applies only to Follow-On 

Investments by a Regulated Fund in issuers in 

which that Regulated Fund already holds 

investments. 

As a result, the Regulated Funds may be 

deemed to be under common control, 

and thus affiliated persons of each other 

under section 2(a)(3)(C) of the Act. In 

addition, the Affiliated Funds may be 

deemed to be under common control 

with the Regulated Funds, and thus 

affiliated persons of each Regulated 

Fund under section 2(a)(3)(C) of the Act. 

As a result, these relationships might 

cause a Regulated Fund and one or more 

other Regulated Funds and/or one or 

more Affiliated Funds participating in 

Co-Investment Transactions to be 

subject to section 17(d) or 57(a)(4) of the 

Act, and thus subject to the provisions 

of rule 17d–1 of the Act. 

4. Applicants state that in the absence 

of the requested relief, in some 

circumstances the Regulated Funds 

would be limited in their ability to 

participate in attractive and appropriate 

investment opportunities. Applicants 

believe that the proposed terms and 

conditions of the application 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 would be 

done in a manner 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 thencurrent 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 CoInvestment 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 CoInvestment Transaction, a Required 

Majority concludes that: 

(i) the terms of the Potential CoInvestment 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 thencurrent 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 

subject to examination by the 

Commission and its staff. 

5. Except for Follow-On Investments 

made in accordance with condition 8,10


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Federal Register / Vol. 83, No. 166 / Monday, August 27, 2018 / Notices 43719 

11Applicants are not requesting and the staff of 

the Commission is not providing any relief for 

transaction fees received in connection with any 

Co-Investment Transaction. 

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. 

6. A Regulated Fund will not 

participate in any Potential CoInvestment 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 CoInvestment 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 CoInvestment Transaction for all purposes 

and subject to the other conditions set 

forth in the 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 CoInvestment 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 CoInvestment 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. 

13. Any transaction fee 11 (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 


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43720 Federal Register / Vol. 83, No. 166 / Monday, August 27, 2018 / Notices 

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

2 17 CFR 240.19b–4. 

3The independence policy of the board of 

directors of the Exchange’s affiliate NYSE American 

is substantially the same as the Independence 

Policy. NYSE American has submitted substantially 

the same proposed rule change to its independence 

policy as described herein. See SR–NYSEAmer– 

2018–42. 

4 15 U.S.C. 78f. 

5The proposed text would include the definition 

of ‘‘ICE.’’ Accordingly, the Exchange proposes to 

delete the definition of ICE in ‘‘Independence 

Requirements,’’ category 1. 

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. If the Holders own in the aggregate 

more than 25% 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 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. 2018–18427 Filed 8–24–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83892; File No. SR–NYSE– 

2018–38] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Amend the 

Independence Policy of the Board of 

Directors of the Exchange 

August 21, 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 August 

15, 2018, New York Stock Exchange 

LLC (‘‘NYSE’’ or the ‘‘Exchange’’) filed 

with the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change as described in 

Items I, II, and III, below, which Items 

have been prepared by the Exchange. 

The Commission is publishing this 

notice to solicit comments on the 

proposed rule change from interested 

persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend the 

Independence Policy of the Board of 

Directors of the Exchange by (a) 

streamlining references to 

Intercontinental Exchange, Inc. 

subsidiaries that are national securities 

exchanges, (b) removing obsolete 

references, and (c) adding references to 

national securities exchange affiliates of 

the Exchange. The proposed rule change 

is available on the Exchange’s website at 

www.nyse.com, at the principal office of 

the Exchange, and at the Commission’s 

Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

self-regulatory organization included 

statements concerning the purpose of, 

and basis for, the proposed rule change 

and discussed any comments it received 

on the proposed rule change. The text 

of those statements may be examined at 

the places specified in Item IV below. 

The Exchange has prepared summaries, 

set forth in sections A, B, and C below, 

of the most significant parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend the 

Independence Policy by (a) streamlining 

references to ICE subsidiaries that are 

national securities exchanges, (b) 

removing obsolete references, and (c) 

adding references to national securities 

exchange affiliates of the Exchange. 

Definition of ‘‘Exchange’’ 

The Independence Policy includes 

references to the Exchange and its 

national securities exchange affiliates 

NYSE American, Inc. (‘‘NYSE 

American’’) and NYSE Arca, Inc. 

(‘‘NYSE Arca’’).3 It does not include 

references to the Exchange’s newest 

national securities exchange affiliates, 

NYSE National, Inc. (‘‘NYSE National’’) 

and Chicago Stock Exchange, Inc. 

(‘‘CHX’’). The Exchange proposes to 

replace lists of individual national 

securities exchange affiliates in the 

Independence Policy with the term 

‘‘Exchange,’’ defined as any national 

securities exchange registered under 

Section 6 of the Exchange Act 4 and 

controlled, directly or indirectly, by ICE. 

The definition would encompass the 

Exchange, NYSE American, NYSE Arca, 

NYSE National, and CHX (collectively, 

the ‘‘SRO Affiliates’’). 

Specifically, the Exchange proposes to 

add a second paragraph under 

‘‘Purpose’’ with the definition of 

‘‘Exchange.’’ 5 In addition, the Exchange 

proposes to make the following changes 

in the section under ‘‘Independence 

Qualifications’’: 

• Replace ‘‘New York Stock Exchange 

LLC, NYSE Arca, Inc. and NYSE 

American LLC’’ with ‘‘an Exchange’’ in 

category 1(b) and (c); 

• Replace ‘‘New York Stock Exchange 

LLC, on NYSE Arca, Inc. or on NYSE 

American LLC’’ with ‘‘an Exchange’’ in 

category 1(d) and category 4; 

• Replace ‘‘New York Stock Exchange 

LLC, and NYSE Arca, Inc. and NYSE 

American LLC exercise’’ with ‘‘each 

Exchange exercises’’ in the final 

paragraph of category 1; 


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