Federal Register / Vol. 77, No. 50 / Wednesday, March 14, 2012 / Notices 15145 

1Section 2(a)(48) defines a BDC to be any closedend investment company that operates for the 

purpose of making investments in securities 

described in sections 55(a)(1) through 55(a)(3) of the 

Act, makes available significant managerial 

assistance with respect to the issuers of such 

securities, and has elected to be subject to the 

provisions of sections 55 through 65 of the Act. 

NOTIFICATION PROCEDURE: 

Address inquiries to the System 

Manager listed above. 

RECORD ACCESS PROCEDURES: 

The major part of this system is 

exempt from this requirement pursuant 

to 5 U.S.C. 552a(j)(2) and (k)(2). To the 

extent that this system is not subject to 

exemption, it is subject to access. A 

determination as to exemption shall be 

made at the time a request for access is 

received. A request for access to records 

contained in this system shall be made 

in writing, with the envelope and the 

letter clearly marked ‘‘Privacy Access 

Request.’’ Include in the request the full 

name of the individual involved, his or 

her current address, date and place of 

birth, notarized signature (or submitted 

with date and signature under penalty 

of perjury), and any other identifying 

number or information which may be of 

assistance in locating the record. The 

requester shall also provide a return 

address for transmitting the information. 

Access requests shall be directed to the 

System Manager listed above. 

CONTESTING RECORDS PROCEDURES: 

Requesters shall direct their request to 

the System Manager listed above, stating 

clearly and concisely what information 

is being contested, the reason for 

contesting it, and the proposed 

amendment to the information. 

RECORD SOURCE CATEGORIES: 

The subjects of investigations and 

inquiries; individuals and entities with 

which the subjects of investigations and 

inquiries are associated; federal, state, 

local, and foreign law enforcement and 

non-law enforcement agencies and 

entities; private citizens; witnesses; 

informants; and public and/or 

commercially available source 

materials. 

ADDRESSES: Comments may be 

submitted: 

By Mail or Hand Delivery: Atticus 

Reaser, Office of General Counsel, 

Recovery Accountability and 

Transparency Board, 1717 Pennsylvania 

Avenue NW., Suite 700, Washington, 

DC 20006; 

By Fax: (202) 254–7970; or 

By Email to the Board: 

comments@ratb.gov. 

All comments on the proposed 

amended systems of records should be 

clearly identified as such. 

FOR FURTHER INFORMATION CONTACT: 

Atticus Reaser, Acting General Counsel, 

Recovery Accountability and 

Transparency Board, 1717 Pennsylvania 

Avenue NW., Suite 700, Washington, 

DC 20006, (202) 254–7900. 

SUPPLEMENTARY INFORMATION: Title 

5 U.S.C. 552a(e)(4) and (11) provide that 

the public be given a 30-day period in 

which to comment on any new routine 

use of a system of records. The Office 

of Management and Budget (OMB), 

which has oversight responsibilities 

under the Act, requires a 40-day period 

in which to conclude its review. 

Therefore, please submit any comments 

by April 23, 2012. 

In accordance with 5 U.S.C. 552a(r), 

the Board has provided a report to OMB 

and the Congress on the proposed 

systems of records. 

Ivan J. Flores, 

Paralegal Specialist, Recovery Accountability 

and Transparency Board. 

[FR Doc. 2012–6103 Filed 3–13–12; 8:45 am] 

BILLING CODE 6821–15–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Company Act Release No. 

29977; File No. 812–13847] 

Ares Capital Corporation et al.; Notice 

of Application 

March 9, 2012. 

AGENCY: Securities and Exchange 

Commission (‘‘Commission’’). 

ACTION: Notice of application for an 

order under section 6(c) of the 

Investment Company Act of 1940 (the 

‘‘Act’’) for an exemption from section 

12(d)(3) of the Act. 

Applicants: Ares Capital Corporation 

(the ‘‘Company’’), Ares Capital 

Management LLC (‘‘ACM’’) and Ivy Hill 

Asset Management, L.P. (‘‘Ivy Hill’’). 

SUMMARY: Summary of Application: 

Applicants request an order (‘‘Order’’) to 

permit the Company to (a) continue to 

own (directly or indirectly) up to 100% 

of the outstanding equity interests of Ivy 

Hill and (b) make additional 

investments in Ivy Hill, in each case, 

following such time as Ivy Hill is 

required to become a registered 

investment adviser under the 

Investment Advisers Act of 1940 

(‘‘Advisers Act’’). 

DATES: Filing Dates: The application was 

filed on November 16, 2010, and 

amended on June 27, 2011, December 

29, 2011, March 7, 2012, and March 9, 

2012. 

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 March 29, 2012, and 

should be accompanied by proof of 

service on applicants, in the form of an 

affidavit or, for lawyers, a certificate of 

service. Hearing requests should state 

the nature of the writer’s interest, 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: Elizabeth M. Murphy, 

Secretary, U.S. Securities and Exchange 

Commission, 100 F Street NE., 

Washington, DC, 20549–1090. 

Applicants, Ares Capital Corporation, 

Ares Capital Management LLC and Ivy 

Hill Asset Management, L.P., 245 Park 

Avenue, 44th Floor, New York, NY 

10167. 

FOR FURTHER INFORMATION CONTACT: 

Laura L. Solomon, Senior Counsel, at 

(202) 551–6915, or Daniele Marchesani, 

Branch Chief, at (202) 551–6821 

(Division of Investment Management, 

Office of Investment Company 

Regulation). 

SUPPLEMENTARY INFORMATION: The 

following is a summary of the 

application. The complete application 

may be obtained via the Commission’s 

Web site by searching for the file 

number, or an applicant using the 

Company name box, at http:// 

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

calling (202) 551–8090. 

Applicants’ Representations 

1. The Company, a Maryland 

corporation, is an externally managed, 

non-diversified, closed-end 

management investment company that 

has elected to be regulated as a business 

development company (‘‘BDC’’) under 

the Act.1 Shares of the Company’s 

common stock are traded on The 

NASDAQ Global Select market. 

2. The Company’s business and affairs 

are managed under the direction of a 

nine member board of directors 

(‘‘Board’’), of whom five are not 

considered interested persons of the 

Company within the meaning of section 

2(a)(19) of the Act (the ‘‘Independent 

Directors’’). The Board has delegated 

daily management and investment 

authority to ACM pursuant to an 

investment advisory and management 

agreement between ACM and the 


srobinson on DSK4SPTVN1PROD with NOTICES
15146 Federal Register / Vol. 77, No. 50 / Wednesday, March 14, 2012 / Notices 

2Each of the Funds relies on section 3(c)(7) for 

an exclusion from the definition of investment 

company under the Act. 

3 Ivy Hill GP has no other business other than 

serving as the general partner of Ivy Hill and will 

not have any other business so long as Applicants 

rely on the Order. 

4Applicants note that each of the Funds that 

would participate in such transactions has a 

mechanism for reviewing certain affiliate 

transactions, generally consisting of the approval of 

an individual otherwise unaffiliated with Ivy Hill 

and the Company who is engaged by the Fund for 

the purpose of reviewing such affiliate transactions. 

5While there is no formal agreement regarding 

the sharing of non-public information (‘‘Information 

Sharing’’) between ACM, on the one hand, and Ivy 

Hill, on the other, applicants believe that most 

opportunities for Information Sharing are beneficial 

to the Company and the Funds. The Administrator’s 

legal and compliance department monitors 

Information Sharing and has implemented controls 

to ensure that information is not shared where it 

would be inappropriate. There is no compensation 

involved in the information sharing process. 

6Private Fund Investment Advisers Registration 

Act of 2010, Title IV of the Dodd-Frank Wall Street 

Reform and Consumer Protection Act, Public Law 

111–203, 124 Stat. 1376 (2010). 

7Rule 12d3–1 under the Act provides certain 

limited relief from the restrictions of section 

12(d)(3). Since the Company expects that a 

significant portion of Ivy Hill’s gross revenues will 

be derived from ‘‘securities related activities’’ as 

defined in rule 12d3–1, and since the Company will 

own no less than 50% of the outstanding equity 

securities of Ivy Hill, the requirements of rule 

12d3–1 would not be satisfied. 

Company. ACM, a Delaware limited 

liability company, is an investment 

adviser registered under the Advisers 

Act. 

3. The Company’s investment 

objective is to generate both current 

income and capital appreciation 

through debt and equity investments. 

The Company invests primarily in U.S. 

middle market companies, where it 

believes the supply of primary capital is 

limited and investment opportunities 

are most attractive. The Company 

invests primarily in first and second 

lien senior loans and mezzanine debt, 

which in some cases includes an equity 

component like warrants. 

4. Ivy Hill, a Delaware limited 

partnership, manages the investment 

and, if applicable, reinvestment of the 

assets of a number of private investment 

funds and also serves as sub-adviser or 

sub-manager to certain other private 

investment funds, whose investment 

advisers are not ACM or affiliates 

thereof (collectively, ‘‘Funds’’).2 Ares 

Operations LLC (the ‘‘Administrator’’) 

provides both the Company and Ivy Hill 

with administrative services. Both ACM 

and the Administrator are whollyowned direct subsidiaries of Ares 

Management LLC. 

5. The Company directly or indirectly 

owns 100% of Ivy Hill’s voting and 

equity interests. Ivy Hill Asset 

Management GP, LLC (‘‘Ivy Hill GP’’) is 

the general partner of Ivy Hill and the 

Company is the sole member of Ivy Hill 

GP.3 The Company will only rely on the 

Order with respect to its investment in 

Ivy Hill. 

6. ACM maintains an investment 

committee for management of the 

Company, and Ivy Hill maintains two 

investment committees with 

responsibility for the management of 

designated Funds. On each of Ivy Hill’s 

investment committees there are three 

members that also sit on ACM’s 

investment committee. There is no 

overlap of employees between ACM and 

Ivy Hill. 

7. Applicants state that while both the 

Company and the Funds share the same 

overall investment objective of investing 

in middle-market companies, each uses 

a different strategy to implement this 

objective. Specifically, the Company 

focuses on structuring, originating and 

leading investments directly with 

issuers while the Funds generally focus 

on acquiring middle-market investments 

through secondary market purchases 

where the investment has been 

structured, originated and led by a third 

party. Applicants further state that in 

some cases, the Company and a Fund 

may acquire the same instruments from 

an issuer or other third party. The 

Company and the Funds may also enter 

into transactions such as purchases and 

sales of assets.4 There may also be 

situations in which the Company and 

one or more Funds might invest in 

different instruments issued by the same 

issuer, such as where a Fund has 

purchased first lien debt and the 

Company invests in second lien or 

mezzanine debt. The Administrator’s 

legal and compliance team monitors the 

portfolios and potential investments of 

both the Company and the Funds for 

potential conflicts of interest. 

Procedures are, where appropriate, 

implemented to restrict 

communications between Ivy Hill’s and 

ACM’s investment professionals so that 

those investment professionals are not 

conflicted when making decisions 

regarding such investments that are in 

the best interests of their respective 

clients.5

8. In addition to managing the Funds, 

from time to time, Ivy Hill invests in 

debt and/or equity securities issued by 

certain of the Funds and the Company 

has also invested, and may in the future 

invest, in securities issued by one or 

more of the Funds. Furthermore, entities 

managed by affiliates of ACM, including 

entities managed by Ares Management 

LLC, have invested, and such entities 

and/or entities managed by affiliates of 

ACM may in the future invest, in 

securities issued by one or more of the 

Funds. 

9. Ivy Hill currently relies on the 

exemption set forth in section 203(b)(3) 

of the Advisers Act, which provides 

generally that an investment adviser 

with fewer than 15 clients is not 

required to register with the 

Commission. However, the Dodd-Frank 

Wall Street Reform and Consumer 

Protection Act 6 eliminated this 

exemption, and based on the amount of 

its committed capital under 

management, Ivy Hill will be required to 

register with the Commission as an 

investment adviser. 

10. Applicants believe it would cause 

economic harm to the Company and, 

thus, the Company’s shareholders, for 

the Company to prematurely be forced 

to divest its investment in Ivy Hill prior 

to Ivy Hill achieving its maximum 

potential value, which, absent the relief 

requested, the Company believes that it 

would be required to do. 

Applicants’ Legal Analysis 

1. Section 12(d)(3) of the Act makes 

it unlawful for any registered 

investment company, and any company 

controlled by a registered investment 

company, to purchase or otherwise 

acquire any security issued by or any 

other interest in certain securitiesrelated businesses, including the 

business of any person who is an 

investment adviser registered under the 

Advisers Act, unless (a) such person is 

a corporation all the outstanding 

securities of which are owned by one or 

more registered investment companies; 

and (b) such person is primarily 

engaged in the business of underwriting 

and distributing securities issued by 

other persons, selling securities issued 

by other persons, selling securities to 

customers, or any one or more of such 

or related activities, and the gross 

income of such person normally is 

derived principally from such business 

or related activities. Section 60 of the 

Act states that section 12 applies to a 

BDC to the same extent as if it were a 

registered closed-end investment 

company. Applicants state that Ivy Hill 

will not be primarily engaged in the 

business of underwriting and 

distributing securities issued by other 

persons.7

2. Section 6(c) of the Act provides that 

the Commission may conditionally or 

unconditionally exempt any person, 

security or transaction from any 

provision of the Act or any rule 

thereunder, if and to the extent that 

such exemption is necessary or 

appropriate in the public interest and 


srobinson on DSK4SPTVN1PROD with NOTICES
Federal Register / Vol. 77, No. 50 / Wednesday, March 14, 2012 / Notices 15147 

8Applicants state that they will adopt and 

implement policies and procedures reasonably 

designed to ensure compliance with the conditions 

of the Order. Applicants further note that at such 

time as Ivy Hill is required to register as an 

investment adviser under the Advisers Act, it will 

maintain formal policies and procedures related to 

its operations, including appointing a chief 

compliance officer, which are designed to ensure 

that management of Ivy Hill is conducted in the 

best interests of the Funds, as well as the Company 

(as the indirect equity owner of Ivy Hill) and the 

shareholders of the Company. 

consistent with the protection of 

investors and the purposes fairly 

intended by the policy and provisions of 

the Act. 

3. Applicants request an order 

pursuant to section 6(c) of the Act 

granting an exemption from the 

provisions of section 12(d)(3) of the Act 

to the extent necessary to permit the 

Company to (a) continue to own 

(directly or indirectly) up to 100% of 

the outstanding equity interests of Ivy 

Hill and (b) make additional 

investments in Ivy Hill, in each case, 

following such time as Ivy Hill is 

required to become an investment 

adviser registered under the Advisers 

Act. 

4. Applicants state that section 

12(d)(3) was intended to safeguard 

investment companies from (a) 

entrepreneurial risks of securities 

related businesses, and (b) conflicts of 

interest and reciprocal practices 

between investment companies and 

securities related businesses. 

5. Applicants submit that its 

investment in Ivy Hill does not raise the 

same type of entrepreneurial risks that 

may have concerned Congress in 

enacting section 12(d)(3). Applicants 

note that the ownership structure of 

most securities related businesses has 

changed since the time of enactment of 

the Act from privately held general 

partnerships, which exposed an 

investment company to the unlimited 

liability of a general partner, to 

structures characterized by limited 

liability. Applicants point out that the 

Company’s shareholders are not 

exposed to the risk of unlimited liability 

associated with an interest in Ivy Hill 

because Ivy Hill GP, through which the 

Company holds its equity investment in 

Ivy Hill, is structured as a limited 

liability company. Therefore, if Ivy Hill 

were to experience a total loss of capital, 

the Company would lose only the 

capital invested in Ivy Hill (and in Ivy 

Hill GP), but would be protected from 

any additional monetary or legal 

liability. 

6. Applicants also submit that the 

continued ownership of, and making 

additional investments in, Ivy Hill will 

not present potential conflicts of interest 

and reciprocal practices. The Company 

owns 100% of the voting and equity 

interests in Ivy Hill and, if the requested 

relief is granted, will maintain at least 

a majority ownership of the voting and 

equity interests in Ivy Hill in order to 

continue to exercise oversight for the 

strategic direction of Ivy Hill, including 

the power to control the policies that 

affect the Company and to protect the 

Company from potential conflicts of 

interest and reciprocal practices. Ivy 

Hill, moreover, will not serve as an 

investment adviser to the Company or 

otherwise be in a position to exercise 

influence over the Company. As a 

result, Applicants believe that 

ultimately the interests of the two 

companies are generally aligned and 

that the likelihood of conflicts arising 

between them is low.8

7. In certain limited circumstances, 

Information Sharing and certain 

downstream affiliate transactions may 

raise the potential for conflicts of 

interests. Applicants acknowledge that 

section 57(a) makes it unlawful for 

certain persons acting as principal to 

purchase property from, or sell property 

to, a BDC or any company controlled by 

such BDC, or enter into certain joint 

transactions with the BDC or a company 

controlled by such BDC. Applicants 

further acknowledge that the sharing of 

Covered Information (defined in 

condition 3) by Ivy Hill and persons 

controlled by Ivy Hill (collectively, 

‘‘Information Providers’’) with ACM or 

persons affiliated with ACM (other than 

the Company and persons controlled by 

the Company and other than as 

necessary to be provided to ACM and 

the Administrator to provide advisory 

and administrative services to the 

Company and Ivy Hill) could be deemed 

by the Commission to be prohibited 

under section 57(a) or rule 17d–1. 

Applicants agree to comply with 

condition 3 and are not seeking any 

relief from those provisions in the 

application. 

8. Principal or side-by-side 

transactions involving the Company or 

Ivy Hill or any entity controlled by Ivy 

Hill, on the one hand, and any Fund, on 

the other hand, would not trigger the 

application of section 57(a) because the 

participating Funds are ‘‘downstream’’ 

affiliates of the Company and rule 

57b–1 would apply. In some 

transactions, however, entities managed 

by certain persons associated with 

ACM, who are not ‘‘downstream’’ 

affiliates of the Company, may be 

invested in the Fund that participates in 

the transaction. Because such persons 

would have an interest in such 

transaction, even if an indirect one, 

ACM or the Administrator might face a 

conflict of interest when evaluating 

such transaction between the Company 

and the Fund. Accordingly, under 

condition 4, a majority of the 

Independent Directors who have no 

financial interest in such transaction 

will approve any transaction involving 

the Company, Ivy Hill or any entity 

controlled by Ivy Hill other than the 

Funds, on the one hand, and any Fund 

in which ACM, any person affiliated 

with ACM (other than the Company or 

any entity controlled by the Company), 

any of their clients, or the 

Administrator, is invested, on the other 

hand, where such transaction would 

violate section 57(a) but for rule 57b–1. 

9. Applicants submit that their 

request is necessary and appropriate in 

the public interest and consistent with 

the protection of investors. Applicants 

assert that to continue its ownership of, 

and ability to make additional 

investments in, Ivy Hill, its portfolio 

company, does not present the concerns 

that section 12(d)(3) was intended to 

safeguard against and that the 

exemption would otherwise be 

consistent with the purposes fairly 

intended by the policy and provisions of 

the Act. Applicants believe that the 

Company’s ownership of and continued 

investment in Ivy Hill will permit the 

Company to continue to realize the 

increase in value of Ivy Hill, in which 

it has invested considerable resources. 

Moreover, if the requested relief is not 

granted, and Ivy Hill is required to 

become a registered adviser, the 

Company will be forced to dispose of its 

interests in Ivy Hill, thus causing 

economic harm to the Company and its 

shareholders by preventing the 

Company from preserving the value of 

its existing investment in Ivy Hill and 

losing the value of expected continued 

growth and development potential of 

Ivy Hill and by potentially incurring a 

loss on its investment in Ivy Hill in 

connection with such sale. 

10. For the foregoing reasons, 

applicants believe that permitting the 

Company to continue to own, and make 

further investments in, Ivy Hill is in the 

best interests of the Company and its 

shareholders and that the standards set 

forth in section 6(c) have been met. 

Applicants’ Conditions 

Applicants agree that the order 

granting the requested relief will be 

subject to the following conditions: 

1. The Company will not dispose of 

the voting or equity interests of Ivy Hill 

if, as a result, the Company would own, 

directly or indirectly, less than 50 

percent of the outstanding voting and 

equity interests of Ivy Hill unless the 


srobinson on DSK4SPTVN1PROD with NOTICES
15148 Federal Register / Vol. 77, No. 50 / Wednesday, March 14, 2012 / Notices 

1 15 U.S.C. 78l(h). 

2 15 U.S.C. 78l(g). 

3 17 CFR 240.12g5–1. Exchange Act Rule 12g–5 

states that: ‘‘For purposes of determining whether 

an issuer is subject to the provisions of sections 

12(g) and 15(d) of the Act, securities shall be 

deemed to be ‘held of record’ by each person who 

is identified as the owner of such securities on 

records of security holders maintained by or on 

behalf of the issuer,’’ which is subject to certain 

conditions set forth in Rule 12g–5. 

4 15 U.S.C. 78l(g)(1) and 17 CFR 240.12g–1. When 

Section 12(g) was enacted, the asset threshold was 

set at $1 million. The asset threshold has been 

increased on several occasions, most recently to $10 

million in 1996. See Relief From Reporting by Small 

Issuers, Release No. 34–37157 (May 1, 1996) [61 FR 

21353]. 

Company disposes of all of its interests 

in Ivy Hill. 

2. The Board will review at least 

annually the investment management 

business of the Company and Ivy Hill 

(including a review of transactions 

between the Company and any company 

controlled by the Company, on the one 

hand, and Ivy Hill and any company 

controlled by Ivy Hill, on the other 

hand) in order to determine whether the 

benefits derived by the Company 

warrant the continuation of the 

ownership by the Company of Ivy Hill 

and, if appropriate, will approve (by at 

least a majority of the Independent 

Directors) at least annually, such 

continuation. 

3. Except to the extent permitted 

pursuant to exemptive relief from the 

Commission, neither Ivy Hill (including 

members of its investment committee 

with respect to Covered Information (as 

defined below) received in their 

capacities as such) nor any persons 

controlled by Ivy Hill (‘‘Information 

Providers’’) will directly or indirectly 

provide Covered Information to ACM or 

any person affiliated with ACM (other 

than the Company and persons 

controlled by the Company and as 

necessary to be provided to ACM and 

the Administrator to provide advisory 

and administrative services to the 

Company and Ivy Hill). 

Covered Information means all 

information except information that: 

(i) Is generally available to the public; 

(ii) Is of the nature that Information 

Providers share with unaffiliated market 

participants at no cost and is not 

proprietary to the Information 

Providers; 

(iii) Information Providers have 

obtained from unaffiliated third parties, 

including but not limited to general 

market opinions and analyses, analyst 

reports and diligence reports, and that 

such third parties generally make 

available to others, including market 

participants in the ordinary course, at 

no cost; or 

(iv) Information Providers have 

obtained from, or are providing on 

behalf of, borrowers or potential 

borrowers or their advisors, and that 

such borrowers or advisors generally 

make available to unaffiliated market 

participants at no cost upon request. 

4. None of the Company, Ivy Hill or 

any entity controlled by Ivy Hill, will 

enter into any Covered Transaction, as 

defined below, unless a majority of the 

Independent Directors who have no 

financial interest in such Covered 

Transaction has approved it. A 

‘‘Covered Transaction’’ is any 

transaction involving the Company, Ivy 

Hill or any entity controlled by Ivy Hill 

other than the Funds, on the one hand, 

and any Fund in which ACM, any 

person affiliated with ACM (other than 

the Company or any entity controlled by 

the Company), any of their clients, or 

the Administrator, is invested, on the 

other hand, where such transaction 

would violate section 57(a) of the Act 

but for rule 57b–1 under the Act. 

For the Commission, by the Division of 

Investment Management, under delegated 

authority. 

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–6190 Filed 3–13–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66541; File No. 81–937] 

Order Granting an Application of BF 

Enterprises, Inc. Under the Securities 

Exchange Act of 1934 

March 8, 2012. 

I 

BF Enterprises, Inc. (‘‘BF Enterprises’’ 

or the ‘‘company’’) has filed an 

application under Section 12(h) of the 

Securities Exchange Act of 1934 (the 

‘‘Exchange Act’’) 1 for a Commission 

order exempting the company from the 

requirement to register its common 

stock under Section 12(g) of the 

Exchange Act.2 Section 12(h) grants the 

Commission the authority to exempt by 

order, upon application of an interested 

person and after notice and opportunity 

for a hearing, any issuer from Section 

12(g) ‘‘if the Commission finds, by 

reason of the number of public 

investors, amount of trading interest in 

the securities, the nature and extent of 

the activities of the issuer, income or 

assets of the issuer, or otherwise, that 

such action is not inconsistent with the 

public interest or the protection of 

investors.’’ 

In its application, BF Enterprises 

states that it ‘‘was a reporting company 

under the Exchange Act until 2005 and 

terminated its Exchange Act registration 

pursuant to a Form 15 filed with the 

Commission on August 30, 2005 in 

connection with a reverse/forward stock 

split transaction,’’ which the company’s 

shareholders ‘‘approved * * * on July 

21, 2005 based upon a Schedule 13E–3 

filed with the Commission on March 31, 

2005 and as subsequently amended by 

the Company.’’ According to the 

application, a shareholder commenced 

litigation against the company in the 

Delaware Chancery Court in 2010 that 

ultimately resulted in that shareholder 

transferring its shares of the company’s 

common stock to 500 identical trusts 

before December 31, 2010, the last day 

of the company’s fiscal year. 

Under Section 12(g) of the Exchange 

Act and the Commission’s rules 

thereunder, an issuer is required to 

register a class of its equity securities if, 

at the end of the issuer’s fiscal year, the 

securities are ‘‘held of record’’ 3 by 500 

or more persons and the issuer has total 

assets exceeding $10 million.4

According to the application, BF 

Enterprises had total assets of $13.3 

million as of December 31, 2010. In 

addition, each of the 500 trust entities 

was identified as an owner of common 

stock on the records of security holders 

maintained by or on behalf of BF 

Enterprises. However, BF Enterprises 

contends that it should not be required 

to register its common stock under 

Section 12(g) and is seeking an 

exemptive order to that effect. 

Specifically, BF Enterprises asserts that 

exemptive relief would be consistent 

with the standards articulated in 

Section 12(h) because: (1) BF 

Enterprises has fewer than 85 total 

beneficial owners of its common stock, 

one of which has expressly stated that 

its shares are held indirectly through 

500 trust entities formed solely for the 

purpose of attempting to cause the 

company to register its common stock 

under Section 12(g) (the ‘‘BFE Trusts’’); 

(2) as of December 31, 2010, BF 

Enterprises had total assets of 

approximately $13.3 million and 2010 

annual net income of approximately 

$103,000; (3) BF Enterprises has a total 

of seven employees and its primary 

business comprises two parcels of real 

estate; and (4) there is no trading 

activity in, and an absence of any 

regular market for, BF Enterprises’ 

common stock. 

On May 12, 2011, the Commission 

issued a notice of the filing of the 

application to give any interested 

person an opportunity to ‘‘submit to the 

Commission in writing its views on any 

substantial facts bearing on the 


srobinson on DSK4SPTVN1PROD with NOTICES