UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549










FORM 10-K/A

(Amendment No. 1)










| | x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
| | - | ------------------------------------------------------------------------------------

FOR THE FISCAL YEAR ENDED DECEMBER 31,
2018

OR

| |  ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
| | - | ----------------------------------------------------------------------------------------



FOR THE TRANSITION PERIOD FROM
TO

COMMISSION FILE NUMBER: 814-01047










FS Investment Corporation III

(Exact name of registrant as specified
in its charter)










|Maryland                                                      | 90-0994912                         
|------------------------------------------------------------- | -----------------------------------
|(State or other jurisdiction ofincorporation or organization) | (I.R.S. EmployerIdentification No.)



|201 Rouse BoulevardPhiladelphia, Pennsylvania | 19112     
|--------------------------------------------- | ----------
|(Address of principal executive offices)      | (Zip Code)



Registrant’s telephone number,
including area code: (215) 495-1150










Securities registered pursuant to Section 12(b)
of the Act:

None

Securities registered pursuant to Section 12(g)
of the Act:

Common Stock, par value

$0.001 per share










Indicate by check mark if the registrant
is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes   ̈    No  x



Indicate by check mark if the registrant
is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ̈    No x



Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.    Yes  x    No   ̈



Indicate by check mark whether the registrant
has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted
and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files).    Yes   ̈    No   ̈



Indicate by check mark if disclosure of
delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated
by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  x



Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company.
See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company”
and “emerging growth company” in Rule 12b-2 of the Exchange Act.



|Large accelerated filer |  ̈                                              | Accelerated filer         |  ̈
|----------------------- | ---------------------------------------------- | ------------------------- | -
|Non-accelerated filer   | x(Do not check if a smaller reporting company) | Smaller reporting company |  ̈
|                        |                                                | Emerging growth company   | x



If an emerging growth company, indicate
by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the Exchange Act  x



Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes   ̈    No  x



There is no established market for the
registrant’s shares of common stock. The registrant closed the public offering of its shares of common stock in November
2017. The last offering price at which the registrant issued shares in its public offering was $8.64 per share. Since the registrant
closed its public offering, it has continued to issue shares pursuant to its distribution reinvestment plan. The most recent price
at which the registrant has issued shares pursuant to the distribution reinvestment plan was $7.75 per share.



There were  287,454,218 shares of the
registrant’s common stock outstanding as of April 23, 2019.



Documents Incorporated by Reference



None.


















Explanatory Note



FS Investment Corporation III, which may
also be referred to as the “Company,” “we,” “us” or “our,” is filing this Amendment
No. 1 (the “Amendment”) to its Annual Report on Form 10-K for the Company’s fiscal year ended December 31,
2018, as originally filed with the Securities and Exchange Commission (the “SEC”) on March 19, 2019 (the “Original
Report”). The purpose of this Amendment is to include Part III information, which was to be incorporated by reference from
the Company’s definitive proxy statement for the 2019 Annual Meeting of Stockholders. This information was previously omitted
from the Original Report in reliance on General Instruction G(3) to Form 10-K, which would permit the Part III information to be
incorporated in the Original Report by reference from the Company’s definitive proxy statement if such proxy statement is
filed no later than 120 days after the fiscal year-end. The Company is filing this Amendment to include Part III information in
the Annual Report on Form 10-K for the year ended December 31, 2018 because a definitive proxy statement containing such information
will not be filed by the Company within 120 days after the end of the fiscal year covered by the Original Report. This Amendment
also updates, amends and supplements Part IV, Item 15 of the Form 10-K to include the filing of new Exhibits 31.1 and 31.2, certifications
of our Chief Executive Officer and Chief Financial Officer, pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934,
as amended (the “Exchange Act”). In addition, the cover page has been updated and amended.



The Amendment does not affect any other
items in the Original Report, including the Company’s financial statements and the notes to the financial statements. Except
as otherwise indicated, the Amendment speaks as of the date of the Original Report and reflects only the changes discussed above.
Accordingly, this Amendment should be read in conjunction with the Original Report.











FS INVESTMENT CORPORATION III



FORM 10-K/A FOR THE FISCAL YEAR

ENDED DECEMBER 31, 2018



TABLE OF CONTENTS



|         |                                                                                                | Page
|-------- | ---------------------------------------------------------------------------------------------- | ----
|PART III |                                                                                                |     
|ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE                                         | 4   
|ITEM 11. | EXECUTIVE COMPENSATION                                                                         | 9   
|ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS | 10  
|ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE                      | 11  
|ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES                                                         | 15  
|         |                                                                                                |     
|PART IV  |                                                                                                |     
|ITEM 15. | EXHIBITS, FINANCIAL STATEMENT SCHEDULES                                                        | 17  
|         | SIGNATURES                                                                                     | 18  











PART III



| | Item 10. | Directors, Executive Officers and Corporate Governance.
| | -------- | -------------------------------------------------------



Board of Directors



The role of the Company’s board of
directors (the “Board”) is to provide general oversight of the Company’s business affairs and to exercise all
of the Company’s powers except those reserved for the stockholders. The responsibilities of the Board also include, among
other things, the oversight of the Company’s investment activities, the quarterly valuation of the Company’s assets,
oversight of the Company’s financing arrangements and corporate governance activities.



The Board is currently comprised of ten
directors, eight of whom are not “interested persons,” as defined in Section 2(a)(19) of the Investment Company
Act of 1940, as amended (the “1940 Act”), of the Company or FS/KKR Advisor, LLC, the Company’s investment adviser
(the “Advisor”), and are “independent” as defined by Rule 303A.00 in the NYSE Listed Company Manual. These
individuals are referred to as the Company’s independent directors (the “Independent Directors”). Section 2(a)(19)
of the 1940 Act defines an “interested person” to include, among other things, any person who has, or within the last
two years had, a material business or professional relationship with the Company. The members of the Board who are not Independent
Directors are referred to as interested directors (the “Interested Directors”).



Directors



Information regarding the Board is set
forth below. We have divided the directors into two groups—Interested Directors and Independent Directors. The address for
each director is c/o FS Investment Corporation III, 201 Rouse Boulevard, Philadelphia, Pennsylvania 19112. “Fund
Complex” means the Company, FS KKR Capital Corp. (“FSK”), FS Investment Corporation II (“FSIC II”),
FS Investment Corporation IV (“FSIC IV”) and Corporate Capital Trust II (“CCT II”).



|NAME                    |  | AGE |  | DIRECTOR SINCE |  | EXPIRATION OF TERM
|----------------------- |  | --- |  | -------------- |  | ------------------
|Interested Directors(1) |  |     |  |                |  |                   
|Michael C. Forman       |  | 58  |  | 2013           |  | 2019              
|Todd Builione           |  | 44  |  | 2018           |  | 2019              
|Independent Directors   |  |     |  |                |  |                   
|Barbara Adams           |  | 67  |  | 2018           |  | 2019              
|Frederick Arnold        |  | 64  |  | 2018           |  | 2019              
|Brian R. Ford           |  | 70  |  | 2013           |  | 2019              
|Richard Goldstein       |  | 58  |  | 2018           |  | 2019              
|Michael J. Hagan        |  | 56  |  | 2018           |  | 2019              
|Jeffrey K. Harrow       |  | 62  |  | 2014           |  | 2019              
|Jerel A. Hopkins        |  | 47  |  | 2018           |  | 2019              
|James H. Kropp          |  | 70  |  | 2018           |  | 2019              








| | (1) | “Interested person” of the Company as defined in Section 2(a)(19) of the 1940 Act. Messrs. Forman and
Builione are each an “interested person” because of their affiliation with the Advisor.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Interested Directors



Michael C.
Formanis chairman and chief executive officer of Franklin Square Holdings, L.P. (“FS
Investments”) and has been leading the company since founding it in 2007. He has served as the chairman and chief
executive officer of the Advisor since its inception. Mr. Forman also currently serves as chairman, president and/or chief
executive officer of certain of the other business development companies (“BDCs”) in the Fund Complex and the other
funds sponsored by FS Investments. Prior to founding FS Investments, Mr. Forman founded a private equity and real estate investment
firm. He started his career as an attorney in the Corporate and Securities Department at the Philadelphia based law firm of Klehr
Harrison Harvey Branzburg LLP (“Klehr Harrison”). In addition to his career as an attorney and investor, Mr. Forman
has been an active entrepreneur and has founded several companies, including companies engaged in the gaming, specialty finance
and asset management industries. Mr. Forman is a member of a number of civic and charitable boards, including The Franklin
Institute, Drexel University and the Philadelphia Center City District Foundation. He is also Chairman of Vetri Community Partnership.
Mr. Forman received his B.A., summa cum laude, from the University of Rhode Island, where he was elected Phi Beta Kappa, and
received his J.D. from Rutgers University.



Mr. Forman
has extensive experience in corporate and securities law and has founded and served in a leadership role of various companies,
including the Advisor.



4







The Board believes
Mr. Forman’s experience and his positions as the Company’s and the Advisor’s chief executive officer make
him a significant asset to the Company.



Todd C. Builioneserves as the Company’s and the Advisor’s president, the president of the other BDCs in the Fund Complex and is
a member of the board of directors or board of trustees, as applicable, of the other BDCs in the Fund Complex. Mr. Builione
joined KKR in 2013 and is a member of KKR and president of KKR Credit and Markets. Mr. Builione also serves on KKR’s
Investment Management and Distribution Committee and its Risk and Operations Committee. Prior to joining KKR, Mr. Builione
spent nine years at Highbridge Capital Management, serving as president of the firm, chief executive officer of Highbridge’s
Hedge Fund business and a member of the Investment and Risk Committees. Mr. Builione began his career at the Goldman Sachs
Group, where he was predominantly focused on capital markets and mergers and acquisitions for financial institutions. He received
a B.S., summa cum laude, Merrill Presidential Scholar, from Cornell University and a J.D., cum laude, from Harvard Law School.
Mr. Builione serves on the board of directors of Marshall Wace, a liquid alternatives provider which formed a strategic partnership
with KKR in 2015. Mr. Builione also serves on the Advisory Council of Cornell University’s Dyson School of Applied Economics
and Management.



Mr. Builione
has extensive experience and familiarity with the markets in which the Company primarily invests, along with significant knowledge
and prior experience in the management of large businesses in the areas the Company operates in, and portfolio risk management
and analytics. The Board believes Mr. Builione’s experience and his positions as the Company’s and the Advisor’s
president make him a significant asset to the Company.



Independent Directors



Barbara Adams serves
on the board of directors of FSK, FSIC II and FSIC IV. Ms. Adams served as the executive vice president—legal affairs
and general counsel of the Philadelphia Housing Authority from August 2011 to April 2016, and as a trustee of each of the Philadelphia
Housing Authority Retirement Income Trust and the Philadelphia Housing Authority Defined Contribution Pension Plan from November
2011 to April 2016. She served as the general counsel of the Commonwealth of Pennsylvania (the “Commonwealth”) from
2005 until January 2011. As general counsel to the Commonwealth, Ms. Adams led a staff of more than 500 lawyers in representing
then Pennsylvania Governor Edward G. Rendell and more than 30 executive and independent agencies and commissions in litigation,
transactions, regulatory, legislative and criminal justice matters. Prior to her appointment as general counsel to the Commonwealth,
Ms. Adams was a partner at the law firm of Duane Morris LLP in Philadelphia, focusing her practice on taxable and tax-exempt public
finance, affordable housing development matters, state and local government law, energy law and campaign finance law. Ms. Adams
previously served as the policy committee co-chair on housing, in then Governor-elect Edward G. Rendell’s transition
team. She is a charter member of the Forum on Affordable Housing and Community Development Law of the American Bar Association,
a former member of the National Association of Bond Lawyers, and a member of the Pennsylvania Association of Bond Lawyers and of
the American, Pennsylvania and Philadelphia Bar Associations.



She is a past
member of the board and secretary of Philadelphia Neighborhood Enterprise, a nonprofit corporation affiliated with The Enterprise
Foundation, a past member of the board and treasurer of the Reading Terminal Market, and a past member of the respective boards
of the Pennsylvania Association of Bond Lawyers, the Philadelphia Association of Community Development Corporations and the People’s
Emergency Center in Philadelphia. Ms. Adams has served on a number of other charitable and public organizations,
including a term as commissioner of the Philadelphia Gas Commission, as an advisory board member on the Homeless Advocacy Project
of the Philadelphia Bar Association, as a commissioner and secretary of the Independent Charter Commission of the City of Philadelphia
and as an advisory board member of The Nuclear World Project. Ms. Adams previously served on the housing policy committees
of the respective transition teams of both then Pennsylvania Governor-elect Edward G. Rendell and then Pennsylvania Governor-elect
Tom Wolf. Ms. Adams is a graduate of Temple University School of Law and a graduate of Smith College.



The Board believes
that Ms. Adams’ extensive service in the private and public sectors provides her with experience that would be beneficial
to the Company.



Frederick
Arnoldserves on the board of directors of FSK, FSIC II and FSIC IV. Mr. Arnold served as an independent director of Corporate
Capital Trust, Inc. (“CCT”) from 2011 through CCT’s merger with and into FSK in 2018 (the “Merger”)
and as an independent trustee for CCT II from June 2015 to May 2016. Mr. Arnold serves as a member of the post-emergence board
of directors of Lehman Brothers Holdings Inc., a member of the board of directors of Navient Corporation and a member of the board
of directors of Syncora Holdings, Ltd. Mr. Arnold has held a series of senior financial positions, and most recently served
as chief financial officer of Convergex Group, LLC from July 2015 until May 2017. Previously, Mr. Arnold served as executive
vice president, chief financial officer and a member of the executive committee of Capmark Financial Group, Inc. from September
2009 to January 2011. He also served as executive vice president of finance for Masonite Corporation, a manufacturing company,
from February 2006 to September 2007. While at Willis Group from 2000 to 2003, Mr. Arnold served as chief financial and administrative
officer of Willis North America, as group chief administrative officer of Willis Group Holdings Ltd. and as executive vice president
of strategic development for Willis Group Holdings Ltd. He also served as a member of the Willis Group executive committee while
holding the latter two positions. Prior to these roles, Mr. Arnold spent 20 years as an investment banker primarily at Lehman
Brothers and Smith Barney, where he served as managing director and head of European corporate finance. During this time, his practice
focused on originating and executing mergers and acquisitions and equity financings across a wide variety of industries and geographies.
He also provides pro bono transactional advice to the New York City Investment Partnership. Mr. Arnold received a J.D. from
Yale University, M.A. from Oxford University and undergraduate degree, summa cum laude, from Amherst College.



5







The Board believes
that Mr. Arnold’s extensive leadership experience and financial expertise having been an international investment banker
and chief financial officer provides him with experience that would be beneficial to the Company.



Brian R. Ford
serves on the board of directors of FSK, FSIC II and FSIC IV. Mr. Ford retired as a partner of Ernst & Young LLP,
a multinational professional services firm, in July 2008, where he was employed since 1971. Mr. Ford currently serves on the
board of Clearway Energy, Inc. and AmeriGas Propane, Inc. Mr. Ford was previously the chief executive officer of Washington
Philadelphia Partners, LP, a real estate investment company, from July 2008 to April 2010. He also serves on the boards of Drexel
University and Drexel University College of Medicine since March 2004 and March 2009, respectively. Mr. Ford received his
B.S. in Economics from Rutgers University. He is a Certified Public Accountant.



Mr. Ford’s
extensive financial accounting experience and service on the boards of public companies, in the opinion of the Board, provides
him with insight which is beneficial to the Company.



Richard Goldstein
serves on the board of directors of FSK, FSIC II and FSIC IV. Mr. Goldstein is also a managing director of Liberty Associated
Partners, LP (“LAP”) since 2000 and Associated Partners, LP (“AP”) since 2006, both investment funds that
make private and public market investments in communications, media, Internet and energy companies. Prior to joining LAP and AP,
Mr. Goldstein was vice president of The Associated Group, Inc. (“AGI”), a multi-billion dollar publicly traded
owner and operator of communications-related businesses and assets. While at AGI, he assisted in establishing Teligent, Inc., of
which he was a director, and was responsible for operating AGI’s cellular telephone operations. Mr. Goldstein is currently
a member of the board of directors of Ubicquia LLC and has counseled many early stage companies. Mr. Goldstein received a
Bachelor of Science in Business and Economics from Carnegie Mellon University and received training at the Massachusetts Institute
of Technology in Management Information Systems.



Mr. Goldstein
has extensive experience as a senior executive and in negotiating investment transactions in a variety of industries. This experience
has provided Mr. Goldstein, in the opinion of the Board, with experience and insight which is beneficial to the Company.



Michael J. Haganserves on the
board of directors of FSK, FSIC II and FSIC IV. Mr. Hagan is a co-founder of Hawk Capital Partners, a private equity
firm, where he currently serves as managing partner, and has served in such capacity since December 2014. Prior to co-foundingHawk
Capital Partners, Mr. Hagan previously served as the President of LifeShield, Inc. (“LifeShield”) from June 2013
to May 2014, a leading wireless home security company which was acquired by and became a division of DirecTV in 2013. He previously
served as the chairman, president and chief executive officer of LifeShield from December 2009 to May 2013. In May 2017, he became
a director and majority owner of Lifeshield, which he then sold in February 2019 to ADT. Prior to his employment by LifeShield,
Mr. Hagan served as chairman of NutriSystem, Inc., or NutriSystem, from 2002 to November 2008, as chief executive officer
of NutriSystem from 2002 to May 2008 and as president of NutriSystem from July 2006 to September 2007. Prior to joining NutriSystem,
Mr. Hagan was the co-founder of Verticalnet Inc. (“Verticalnet”) and held a number of executive positions
at Verticalnet since its founding in 1995, including chairman of the board from 2002 to 2005, president and chief executive officer
from 2001 to 2002, executive vice president and chief operating officer from 2000 to 2001 and senior vice president prior to that
time. Mr. Hagan served on the board of directors of NutriSystem from February 2012 to March 2019. Mr. Hagan previously
served as a director of NutriSystem from 2002 to November 2008, Verticalnet from 1995 to January 2008 and Actua Corporation (formerly
known as ICG Group, Inc.) from June 2007 to February 2018. Mr. Hagan also served as a member of the board of trustees of American
Financial Realty Trust from 2003 to June 2007. Mr. Hagan holds a B.S. in Accounting from Saint Joseph’s University,
where he currently serves as a Trustee. He is also a Certified Public Accountant (inactive).



Mr. Hagan has significant experience
as an entrepreneur and senior executive at public and private organizations. Mr. Hagan also has extensive experience in corporate
finance, private equity, financial reporting and accounting and controls. This experience has provided Mr. Hagan, in the opinion
of the Board, with experience and insight which is beneficial to the Company.



6







Jeffrey K.
Harrowserves on the board of directors of FSK, FSIC II and FSIC IV. Mr. Harrow has been chairman of Sparks Marketing
Group, Inc. (“Sparks”) since 2001. Mr. Harrow is responsible for both operating divisions of Sparks, which includes
Sparks Custom Retail and Sparks Exhibits & Environments, with offices throughout the United States and China. Sparks’
clients include a number of Fortune 500 companies. Prior to joining Sparks, Mr. Harrow served as president and chief executive
officer of CMPExpress.com from 1999 to 2000. Mr. Harrow created the strategy that allowed CMPExpress.com to move from a Business-to-Consumer marketplace
into the Business-to-Business sector. In 2000, Mr. Harrow successfully negotiated the sale of CMPExpress.com to
Cyberian Outpost (NASDAQ ticker: COOL). From 1982 through 1998, Mr. Harrow was the president, chief executive officer and
a director of Travel One, a national travel management company. Mr. Harrow was responsible for growing the company from a
single office location to more than 100 offices in over 40 cities and to its rank as the 6th largest travel management company
in the United States. Under his sales strategy, annual revenues grew from $8 million to just under $1 billion. During
this time, Mr. Harrow purchased nine travel companies in strategic cities to complement Travel One’s organic growth.
In 1998, Mr. Harrow and his partners sold Travel One to American Express. Mr. Harrow’s past directorships include
service as a director of Cherry Hill National Bank, Hickory Travel Systems, Marlton Technologies and the Dean’s Board of
Advisors of The George Washington University School of Business. Mr. Harrow is a graduate of The George Washington University
School of Government and Business Administration, where he received his B.B.A. in 1979.



Mr. Harrow
has served in a senior executive capacity at various companies, as well as a member of various boards. His extensive service at
various companies has provided him, in the opinion of the Board, with experience and insight which is beneficial to the Company.



Jerel A. Hopkinsserves on the board of directors of FSK, FSIC II and FSIC IV. Mr. Hopkins has served as Vice President and Associate General
Counsel of Delaware Management Holdings, Inc., a diversified asset management firm and an affiliate of Macquarie, since November
2004. Prior to joining Delaware Management Holdings, Inc., Mr. Hopkins served as an attorney in the corporate and securities
department of the law firm Klehr Harrison from January 2000 to November 2004. Mr. Hopkins served as counsel in the division
of enforcement and litigation of the Pennsylvania Securities Commission from August 1997 to December 1999 and as lead counsel of
the internet fraud unit from January 1999 to December 1999. In addition, Mr. Hopkins served as special counsel on behalf of
the Pennsylvania Securities Commission to the North American Securities Administrators Association, Inc. from January 1999 to December
1999. Mr. Hopkins has also served on the board of trustees of the Philadelphia College of Osteopathic Medicine since February
2012. Mr. Hopkins received his B.S. from the Wharton School of the University of Pennsylvania and his J.D. from Villanova
University School of Law.



Mr. Hopkins
has significant experience in corporate and securities law matters and has served as a member of a number of boards. This experience
has provided Mr. Hopkins, in the opinion of the Board, with experience and insight which is beneficial to the Company.



James H. Kroppserves on the board of directors of FSK, FSIC II and FSIC IV. Mr. Kropp served as an independent director of CCT from
2011 until the Merger and as an independent trustee for CCT II since 2015. Mr. Kropp currently serves as Chief Investment
Officer of SLKW Investments LLC, successor to i3 Funds, LLC, a position he has held since 2009 and was Chief Financial Officer
of Microproperties LLC from 2012 to March 2019. Since 1998, Mr. Kropp has been a director and member of the Nominating/Corporate
Governance committee of PS Business Parks, Inc., a public real estate investment trust whose shares are listed on the NYSE. Mr. Kropp
became an Independent Trustee of NYSE-listed American Homes 4 Rent and Chairman of its Audit Committee at its founding in November
2012. Mr. Kropp received a B.B.A. Finance from St. Francis College and completed the MBA/CPA preparation program from New
York University. Mr. Kropp has, in the past, been licensed to serve in a variety of supervisory positions (including financial,
options and compliance principal) by the National Association of Securities Dealers. He is a member of the American Institute of
CPAs and a Board Leadership Fellow for the National Association of Corporate Directors.



The Board believes Mr. Kropp’s
direct experience with investments as a portfolio manager and registered investment adviser, together with his accounting, auditing
and finance expertise, is valuable to the Company.



Executive Officers



The following persons currently serve as
our executive officers in the following capacities:



|NAME               |  | AGE |  | POSITIONS HELD                       
|------------------ |  | --- |  | -------------------------------------
|Michael C. Forman  |  | 58  |  | Chief Executive Officer              
|Todd Builione      |  | 44  |  | President                            
|William Goebel     |  | 44  |  | Chief Financial Officer and Treasurer
|Daniel Pietrzak    |  | 44  |  | Chief Investment Officer             
|Stephen S. Sypherd |  | 42  |  | General Counsel and Secretary        
|James F. Volk      |  | 56  |  | Chief Compliance Officer             



The address for each executive officer
is c/o FS Investment Corporation III, 201 Rouse Boulevard, Philadelphia, Pennsylvania 19112. Each executive officer holds his office
until his successor is chosen and qualified, or until his earlier resignation or removal.



7







Executive Officers Who are Not Directors



William Goebel has served as our
chief financial officer and treasurer since April 2018. Mr. Goebel also serves as chief
financial officer for the other BDCs in the Fund Complex and certain other funds sponsored by FS Investments. Prior to joining
FS Investments, Mr. Goebel held a senior manager audit position with Ernst & Young LLP in the firm’s asset
management practice from 2003 to January 2011, where he was responsible for the audits of regulated investment companies, private
investment partnerships, investment advisers and broker-dealers. Mr. Goebel began his career at a regional public accounting
firm, Tait, Weller and Baker LLP in 1997. Mr. Goebel received a B.S. in Economics from the Wharton School of the University
of Pennsylvania in 1997. He is a Certified Public Accountant and holds the CFA Institute’s Chartered Financial Analyst designation.
Mr. Goebel serves on the board of directors of Philadelphia Reads (and serves as treasurer and chairs the audit committee
of that board).



Daniel Pietrzakhas served as our
chief investment officer since April 2018. Mr. Pietrzak also currently serves as the
chief investment officer of the other BDCs in the Fund Complex. Mr. Pietrzak joinedKKR Credit Advisors (US), LLC (“KKR
Credit”) in 2016 and is a Member of KKR and the Co-Head of Private Credit.
Mr. Pietrzak is a portfolio manager for KKR Credit’s private credit funds and portfolios and a member of the Global
Private Credit Investment Committee, Europe Direct Lending Investment Committee and KKR Credit Portfolio Management Committee.
Prior to joining KKR, Mr. Pietrzak was a Managing Director and the Co-Head of Deutsche Bank’s Structured Finance
business across the Americas and Europe. Previously, Mr. Pietrzak was based in New York and held various roles in the structured
finance and credit businesses of Société Générale and CIBC World Markets. Mr. Pietrzak started
his career at PricewaterhouseCoopers in New York and is a Certified Public Accountant. Mr. Pietrzak holds an M.B.A. in Finance
from The Wharton School of the University of Pennsylvania and a B.S. in Accounting from Lehigh University.



Stephen S. Sypherd has served as
our secretary since June 2013 and as our general counsel since April 2018. He previously
served as the Company’s vice president and treasurer. Mr. Sypherd also currently serves as the general counsel, vice
president, treasurer and/or secretary of the other BDCs in the Fund Complex and the other funds sponsored by FS Investments. Mr. Sypherd
has also served in various senior officer capacities for FS Investments and its affiliated investment advisers, including as senior
vice president from December 2011 to August 2014, general counsel since January 2013 and managing director since August 2014. He
is responsible for legal and compliance matters across all entities and investment products of FS Investments. Prior to joining
FS Investments, Mr. Sypherd served for eight years as an attorney at Skadden, Arps, Slate, Meagher & Flom LLP, where
he practiced corporate and securities law. Mr. Sypherd received his B.A. in Economics from Villanova University and his J.D.
from the Georgetown University Law Center, where he was an executive editor of the Georgetown Law Journal. He serves on the board
of trustees of the University of the Arts (and on the audit and governance committees of that board).



James F. Volk has served as
our chief compliance officer since April 2015. Mr. Volk also serves as the chief compliance
officer of the other BDCs in the Fund Complex and the other funds sponsored by FS Investments. He is responsible for all compliance
and regulatory issues affecting us and the foregoing companies. Before joining FS Investments and its affiliated investment advisers
in October 2014, Mr. Volk was the chief compliance officer, chief accounting officer and head of traditional fund operations
at SEI’s Investment Manager Services market unit. Mr. Volk was also formerly the assistant chief accountant at the SEC’s
Division of Investment Management and a senior manager for PricewaterhouseCoopers. Mr. Volk graduated from the University
of Delaware with a B.S. in Accounting.



Section 16(a) Beneficial Ownership Reporting Compliance



Pursuant to Section 16(a) of the Exchange
Act, the Company’s directors and executive officers, and any persons holding more than 10% of the Company’s shares
of common stock (“Shares”), are required to report their beneficial ownership and any changes therein to the SEC and
the Company. Specific due dates for those reports have been established, and the Company is required to report herein any failure
to file such reports by those due dates. Based on the Company’s review of Forms 3, 4 and 5 filed by such persons and information
provided by the Company’s directors and officers, the Company believes that during the fiscal year ended December 31,
2018, all Section 16(a) filing requirements applicable to such persons were timely filed.



Code of Business Conduct and Ethics



The Company has adopted a code of business
conduct and ethics (as amended and restated, the “Code of Business Conduct and Ethics”) pursuant to Rule 17j-1 promulgated
under the 1940 Act, which applies to, among others, its officers, including its Chief Executive Officer and Chief Financial Officer,
as well as the members of the Board. The Company’s Code of Business Conduct and Ethics can be accessed on the Company’s
website at www.fsinvestments.com/support/articles/corporate-governance-fsiciii. In addition, the Code of Business Conduct
and Ethics is available on the EDGAR Database on the SEC’s Internet site at www.sec.gov. The Company intends to disclose
any amendments to or waivers of required provisions of the Code of Business Conduct and Ethics on Form 8-K, as required by the
Exchange Act and the rules and regulations promulgated thereunder.



8







Practice and Policies Regarding
Personal Trading and Hedging of Company Equity



The Company has
also established a policy designed to prohibit our officers, directors, and certain employees of the Advisor from purchasing or
selling shares of the Company while in possession of material nonpublic information, or otherwise using such information for their
personal benefit or in any manner that would violate applicable laws and regulations. The policy also prohibits all directors and
officers from engaging in hedging or monetization transactions or similar arrangements with respect to the Company’s securities
without prior approval of the Company’s chief compliance officer.



Audit Committee



The Board has established an Audit Committee
that operates pursuant to a charter and consists of three members, including a Chairman of the Audit Committee. The Audit Committee
members are Messrs. Ford (chairman), Kropp and Goldstein, each an Independent Director.
The Board has determined that Messrs. Ford and Kropp are “audit committee financial expert” as defined by Item 407(d)(5)(ii)
of Regulation S-K promulgated under the Exchange Act. The primary function of the Audit Committee is to oversee the integrity of
the Company’s accounting policies, financial reporting process and system of internal controls regarding finance and accounting
policies. The Audit Committee is responsible for selecting, engaging and discharging the Company’s independent accountants,
reviewing the plans, scope and results of the audit engagement with the Company’s independent accountants, approving professional
services provided by the Company’s independent accountants (including compensation therefor) and reviewing the independence
of the Company’s independent accountants. The Audit Committee charter can be accessed on the Company’s website at www.fsinvestments.com/support/articles/corporate-governance-fsiciii.



| | Item 11. | Executive Compensation.
| | -------- | -----------------------



Compensation Discussion and Analysis



The Company’s executive officers
do not receive any direct compensation from the Company. The Company does not currently have any employees and does not expect
to have any employees. As an externally managed BDC, services necessary for the Company’s business are provided by individuals
who are employees of the Advisor or its affiliates or by individuals who were contracted by the Company, the Advisor or their respective
affiliates to work on behalf of the Company, pursuant to the terms of the investment advisory and administrative services agreement
between the Company and the Advisor, dated April 9, 2018 (“the investment advisory and administrative services agreement”).
Each of the Company’s executive officers is an employee of the Advisor or its affiliates or an outside contractor, and the
day-to-day investment operations and administration of the Company’s portfolio are managed by the Advisor. In addition, the
Company will reimburse the Advisor for the Company’s allocable portion of expenses incurred by the Advisor in performing
its obligations under the investment advisory and administrative services agreement.



Theinvestment advisory and administrative services agreement provides that the Advisor
(and its officers, managers, partners, members (and their members, including the owners of their members), agents, employees, controlling
persons and any other person or entity affiliated with, or acting on behalf of, the Advisor) shall be entitled to indemnification
(including reasonable attorneys’ fees and amounts reasonably paid in settlement) for any liability or loss suffered by the
Advisor, and the Advisor shall be held harmless for any loss or liability suffered by the Company, arising out of the performance
of any of its duties or obligations under theinvestment advisory and administrative services agreement or
otherwise as the Company’s investment adviser or administrator; provided, however, that the Advisor cannot be indemnified
for any liability arising out of willful misfeasance, bad faith, or negligence in the performance of the Advisor’s duties
or by reason of the reckless disregard of the Advisor’s duties and obligations under theinvestment advisory and administrative
services agreement.



Director Compensation



The Company does not pay compensation to
its directors who also serve in an executive officer capacity for the Company or the Advisor. Directors who do not also serve in
an executive officer capacity for the Company or the Advisor are entitled to receive annual cash retainer fees, fees for participating
in quarterly Board and Board committee meetings and certain other Board and Board committee meetings and annual fees for serving
as a committee chairperson. These directors are Ms. Adams and Messrs. Arnold, Ford,
Goldstein, Hopkins, Hagan, Harrow and Kropp. Mr. Hagan also receives an annual retainer for his service as lead independent
director.



Amounts payable under the director fees
arrangement are currently determined and paid quarterly in arrears as set forth below. The Board is currently considering revisions
to the director fee arrangement to reflect that the same directors serve on the Board and the Boards of Directors of FSK, FSIC
II and FSIC IV.



|                                              |  | Amount |        
|--------------------------------------------- |  | ------ | -------
|Annual Board Retainer                         |  | $      | 100,000
|Annual Lead Independent Director Retainer     |  | $      | 25,000 
|Board Meeting Fees                            |  | $      | 2,500  
|Annual Committee Chair Retainers              |  |        |        
|Audit Committee                               |  | $      | 20,000 
|Valuation Committee                           |  | $      | 20,000 
|Nominating and Corporate Governance Committee |  | $      | 15,000 
|Committee Meeting Fees                        |  | $      | 1,000  



The Company also reimburses each of the
above directors for all reasonable and authorized business expenses in accordance with its policies as in effect from time to time,
including reimbursement of reasonable out-of-pocket expenses incurred in connection with attending each in-person Board meeting
and each in-person Board committee meeting not held concurrently with a Board meeting.



9







The table below sets forth the compensation
received by each of the Company’s directors for service during the fiscal year ended December 31, 2018:



|Name of Director          |  | Fees Earned or Paid
    in Cash by the Company |         |  | Total Compensation from the Company |  
|------------------------- |  | ---------------------------------------------- | ------- |  | ----------------------------------- | -
|Barbara Adams(1)          |  |                                                | —       |  |                                     |  
|Frederick Arnold(1)       |  |                                                | —       |  |                                     |  
|Todd Builione             |  |                                                | —       |  |                                     |  
|Michael C. Forman         |  |                                                | —       |  |                                     |  
|Brian R. Ford             |  | $                                              | 160,000 |  |                                     | $
|Richard Goldstein(1)      |  |                                                | —       |  |                                     |  
|Michael J. Hagan(1)       |  |                                                | —       |  |                                     |  
|Jeffrey K. Harrow         |  | $                                              | 181,500 |  |                                     | $
|Jerel A. Hopkins(1)       |  |                                                | —       |  |                                     |  
|James H. Kropp(1)         |  |                                                | —       |  |                                     |  
|                          |  |                                                |         |  |                                     |  
|Former Directors:         |  |                                                |         |  |                                     |  
|David J. Adelman(2)       |  |                                                | —       |  |                                     |  
|James W. Brown(3)         |  | $                                              | 136,000 |  |                                     | $
|Michael J. Heller(2)      |  | $                                              | 53,500  |  |                                     | $
|Daniel J. Hilferty III(3) |  | $                                              | 131,000 |  |                                     | $
|Steven D. Irwin(3)        |  | $                                              | 145,000 |  |                                     | $
|Robert N.C. Nix, III(3)   |  | $                                              | 140,000 |  |                                     | $
|Peter G. Stanley(3)       |  | $                                              | 144,000 |  |                                     | $
|Joseph P. Ujobai(4)       |  | $                                              | —       |  |                                     | $








| | (1) | Messrs. Arnold, Goldstein, Hagan, Hopkins, Kropp and Ms. Adams joined the Board
on December 3, 2018.
| | --- | ----------------------------------------------------------------------------------------------------

| | (2) | Messrs. Adelman and Heller each resigned from the Board, effective as of April 9, 2018.
| | --- | ---------------------------------------------------------------------------------------

| | (3) | Messrs. Brown, Hilferty, Irwin, Nix and Stanley each resigned from the Board, effective as of December 3, 2018.
| | --- | ---------------------------------------------------------------------------------------------------------------

| | (4) | Mr. Ujobai joined the Board on December 3, 2018 and resigned from the Board,
effective as of March 14, 2019.
| | --- | ------------------------------------------------------------------------------------------------------------



| | Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
| | -------- | -----------------------------------------------------------------------------------------------



Security Ownership of Management and Certain Beneficial Owners



The following table sets forth, as of April 23,
2019, the beneficial ownership of each current director, the Company’s executive officers, each person known to the Company
to beneficially own 5% or more of the outstanding Shares, and all of the Company’s executive officers and directors as a
group.



Beneficial ownership is determined in accordance
with Rule 13d-3 promulgated under the Exchange Act, and includes voting or investment power with respect to the Shares. There are
no Shares subject to options that are currently exercisable or exercisable within 60 days of April 23, 2019.



10







|                                                             |  | Shares Beneficially Owned as of April 23, 2019 |        
|------------------------------------------------------------ |  | ---------------------------------------------- | -------
|Name and Address of Beneficial Owner(1)                      |  | Number of Shares                               |        
|Interested Directors:                                        |  |                                                |        
|Michael C. Forman(3)                                         |  |                                                | 81,160 
|Todd Builione                                                |  |                                                | —      
|                                                             |  |                                                |        
|Independent Directors:                                       |  |                                                |        
|Barbara Adams                                                |  |                                                | 6,833  
|Frederick Arnold                                             |  |                                                | —      
|Brian R. Ford                                                |  |                                                | 3,333  
|Richard Goldstein                                            |  |                                                | 19,719 
|Michael J. Hagan                                             |  |                                                | —      
|Jeffrey K. Harrow                                            |  |                                                | 16,726 
|Jerel A. Hopkins                                             |  |                                                | 11,390 
|James H. Kropp                                               |  |                                                | —      
|                                                             |  |                                                |        
|Executive Officers:                                          |  |                                                |        
|William Goebel                                               |  |                                                | 5,414  
|Daniel Pietrzak                                              |  |                                                | —      
|Stephen S. Sypherd(4)                                        |  |                                                | 4,907  
|James F. Volk                                                |  |                                                | —      
|                                                             |  |                                                |        
|All Directors and Executive Officers as a group (14 persons) |  |                                                | 149,482








| | * | Less than one percent.
| | - | ----------------------

| | (1) | The address of each of the beneficial owners set forth above is c/o FS Investment Corporation III, 201 Rouse Boulevard, Philadelphia,
Pennsylvania 19112.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | Based on a total of 287,454,218 Shares issued and outstanding on April 23, 2019.
| | --- | --------------------------------------------------------------------------------

| | (3) | Shares held by MCFDA SCV LLC, which is a wholly-owned special purpose financing vehicle
of which The 2011 Forman Investment Trust is a member and Mr. Forman is the manager.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (4) | All Shares held in a joint account with spouse.
| | --- | -----------------------------------------------



| | Item 13. | Certain Relationships and Related Transactions, and Director Independence.
| | -------- | --------------------------------------------------------------------------



Certain Relationships and Related Party Transactions (dollar
amounts in thousands, excluding per share amounts, unless otherwise noted)



The Company has procedures in place for
the review, approval and monitoring of transactions involving the Company and certain persons related to the Company. For example,
the Company’s Code of Business Conduct and Ethics generally prohibits any employee, officer or director from engaging in
any transaction where there is a conflict between such individual’s personal interest and the interests of the Company. Waivers
to the Code of Business Conduct and Ethics for any executive officer or member of the Board must be approved by the Board and are
publicly disclosed as required by applicable law and regulations. In addition, the Audit Committee is required to review and approve
all transactions with related persons (as defined in Item 404 of Regulation S-K promulgated under the Exchange Act). Prior
to the occurrence of a liquidity event (which could include (1) a listing of the Company’s Shares on a national securities
exchange, (2) the sale of all or substantially all of the Company’s assets either on a complete portfolio basis or individually
followed by a liquidation or (3) a merger or another transaction approved by the Board in which the Company’s stockholders
likely will receive cash or shares of a publicly-traded company), all future transactions with affiliates of the Company will be
on terms no less favorable than could be obtained from an unaffiliated third party and must be approved by a majority of the Board,
including a majority of the Independent Directors.



Compensation of the Investment Adviser and
Dealer Manager



The
Company is externally managed by the Advisor pursuant to the investment advisory and administrative services agreement. On April 9,
2018, GSO / Blackstone Debt Funds Management LLC (“GDFM”) resigned as the investment sub-adviser to the Company and
terminated the investment sub-advisory agreement (the “investment sub-advisory agreement”) betweenFSIC III
Advisor, LLC (“FSIC III Advisor”) and GDFM, effective April 9, 2018. In connection with GDFM’s resignation
as the investment sub-adviser to the Company, on April 9, 2018, the Company entered into the investment advisory and administrative
services agreement, which replaced an amended and restated investment advisory and administrative services agreement, dated August 6,
2014 (the “FSIC III Advisor investment advisory and administrative services agreement”), by and between the Company
and FSIC III Advisor.



Pursuant to the investment advisory and
administrative services agreement, the Advisor is entitled to a base management fee calculated at an annual rate of 1.50% of the
average weekly value of the Company’s gross assets (gross assets equal the total assets of the Company as set forth on the
Company’s consolidated balance sheets) and an incentive fee based on the Company’s performance. The base management
fee is payable quarterly in arrears. All or any part of the base management fee not taken as to any quarter shall be deferred without
interest and may be taken in such other quarter as the adviser shall determine.



11







Pursuant to the FSIC III Advisor investment
advisory and administrative services agreement, which was in effect until April 9, 2018, FSIC III Advisor was entitled to
an annual base management fee equal to 2.0% of the average weekly value of the Company’s gross assets (gross assets equal
the total assets of the Company as set forth on the Company’s consolidated balance sheets) and an incentive fee based on
the Company’s performance. Effective February 3, 2017, FSIC III Advisor contractually had agreed to permanently waive
0.25% of the base management fee to which it was entitled under the FSIC III Advisor investment advisory and administrative services
agreement, so that the fee received equaled 1.75% of the average weekly value of the Company’s gross assets. Pursuant to
the investment sub-advisory agreement, GDFM was entitled to receive 50% of all management and incentive fees payable to FSIC III
Advisor under the FSIC III Advisor investment advisory and administrative services agreement with respect to each year.



Pursuant to the terms of the investment
advisory and administrative services agreement, the incentive fee on capital gains is determined and payable in arrears as of the
end of each calendar year (or upon termination of the investment advisory and administrative services agreement). This fee equals
20.0% of the Company’s incentive fee capital gains, which equals the Company’s realized capital gains on a cumulative
basis from inception, calculated as of the end of each calendar year, computed net of all realized capital losses and unrealized
capital depreciation on a cumulative basis, less the aggregate amount of any capital gain incentive fees previously paid by the
Company. On a quarterly basis, the Company accrues for the capital gains incentive fee by calculating such fees as if it were due
and payable as of the end of such period. The Company includes unrealized gains in the calculation of the capital gains incentive
fee expense and related accrued capital gains incentive fee. This accrual reflects the incentive fees that would be payable to
the Advisor if the Company’s entire portfolio was liquidated at its fair value as of the balance sheet date even though the
Advisor is not entitled to an incentive fee with respect to unrealized gains unless and until such gains are actually realized.



Pursuant to the terms of the investment
advisory and administrative services agreement, the Advisor may also be entitled to receive a subordinated incentive fee on income.
The subordinated incentive fee on income under the investment advisory and administrative services agreement, which is calculated
and payable quarterly in arrears, equals 20.0% of the Company’s “pre-incentive fee net investment income” for
the immediately preceding quarter and is subject to a hurdle rate, expressed as a rate of return on adjusted capital equal to 1.75%
per quarter (1.875% under the FSIC III Advisor investment advisory and administrative services agreement), or an annualized
hurdle rate of 7.0% (7.5% under the FSIC III Advisor investment advisory and administrative services agreement). For purposes of
this fee, “adjusted capital” means cumulative gross proceeds generated from sales of the Company’s common stock
(including proceeds from its distribution reinvestment plan) reduced for distributions paid to stockholders from proceeds of non-liquidating
dispositions of the Company’s investments and amounts paid for share repurchases pursuant to the Company’s share repurchase
program. As a result, the Advisor will not earn this incentive fee for any quarter until the Company’s pre-incentive fee
net investment income for such quarter exceeds the hurdle rate of 1.75% (1.875% under the FSIC III Advisor investment advisory
and administrative services agreement). Once the Company’s pre-incentive fee net investment income in any quarter exceeds
the hurdle rate, the Advisor will be entitled to a “catch-up” fee equal to the amount of the pre-incentive fee net
investment income in excess of the hurdle rate, until the Company’s pre-incentive fee net investment income for such quarter
equals 2.1875%, or 8.75% annually (2.34375%, or 9.375% annually under the FSIC III Advisor investment advisory and administrative
services agreement), of the Company’s adjusted capital. Thereafter, the Advisor will be entitled to receive 20.0% of pre-incentive
fee net investment income.



Pursuant to the investment advisory and
administrative services agreement, the Advisor oversees the Company’s day-to-day operations, including the provision of general
ledger accounting, fund accounting, legal services, investor relations, certain government and regulatory affairs activities and
other administrative services. The Advisor also performs, or oversees the performance of, the Company’s corporate operations
and required administrative services, which includes being responsible for the financial records that the Company is required to
maintain and preparing reports for the Company’s stockholders and reports filed with the SEC. In addition, the Advisor assists
the Company in calculating its net asset value, overseeing the preparation and filing of tax returns and the printing and dissemination
of reports to the Company’s stockholders, and generally overseeing the payment of the Company’s expenses and the performance
of administrative and professional services rendered to the Company by others.



Pursuant to the investment advisory and
administrative services agreement, the Company reimburses the Advisor for expenses necessary to perform services related to its
administration and operations, including the Advisor’s allocable portion of the compensation and related expenses of certain
personnel of FS Investments and KKR Credit providing administrative services to the Company on behalf of the Advisor. The Company
reimburses the Advisor no less than monthly for expenses necessary to perform services related to the Company’s administration
and operations. The amount of this reimbursement is set at the lesser of (1) the Advisor’s actual costs incurred in
providing such services and (2) the amount that the Company estimates it would be required to pay alternative service providers
for comparable services in the same geographic location. The Advisor allocates the cost of such services to the Company based on
factors such as total assets, revenues, time allocations and/or other reasonable metrics. The Company’s board of directors
reviews the methodology employed in determining how the expenses are allocated to the Company and the proposed allocation of administrative
expenses among the Company and certain affiliates of the Advisor. The Company’s board of directors then assesses the reasonableness
of such reimbursements for expenses allocated to it based on the breadth, depth and quality of such services as compared to the
estimated cost to the Company of obtaining similar services from third-party service providers known to be available. In addition,
the Company’s board of directors considers whether any single third-party service provider would be capable of providing
all such services at comparable cost and quality. Finally, the Company’s board of directors compares the total amount paid
to the Advisor for such services as a percentage of the Company’s net assets to the same ratio as reported by other
comparable BDCs. The administrative services provisions of the FSIC III Advisor investment advisory and administrative services
agreement were substantially similar to the administrative services provisions of the investment advisory and administrative services
agreement.



12







Under the FSIC III Advisor investment advisory
and administrative services agreement, the Company, either directly or through reimbursement to FSIC III Advisor or its affiliates,
was responsible for its organization and offering costs in an amount up to 1.5% of gross proceeds raised in the Company’s
continuous public offering. Organization and offering costs primarily included legal, accounting, printing and other expenses relating
to the Company’s continuous public offering, including costs associated with technology integration between the Company’s
systems and those of its selected broker-dealers, marketing expenses, salaries and direct expenses of FSIC III Advisor’s
personnel, employees of its affiliates and others while engaged in registering and marketing the Company’s common stock,
which included the development of marketing materials and presentations, training and educational meetings, and generally coordinating
the marketing process for the Company.



Prior to satisfaction of the minimum offering
requirement and for a period of time thereafter, FS Investments funded certain of the Company’s organization and offering
costs. Following this period, the Company has paid certain of its organization and offering costs directly and reimbursed FSIC
III Advisor for offering costs incurred by FSIC III Advisor on the Company’s behalf, including marketing expenses, salaries
and other direct expenses of FSIC III Advisor’s personnel and employees of its affiliates while engaged in registering and
marketing the Company’s shares of common stock. Organization and offering costs funded directly by FS Investments were recorded
by the Company as a contribution to capital. The offering costs were offset against capital in excess of par value on the consolidated
financial statements and the organization costs were charged to expense as incurred by the Company. All other offering costs, including
costs incurred directly by the Company, amounts reimbursed to FSIC III Advisor for ongoing offering costs and any reimbursements
paid to FS Investments for organization and offering costs previously funded, were recorded as a reduction of capital. Commencing
January 1, 2016, offering costs incurred by the Company were deferred and amortized to expense over twelve months. Following
the closing of the Company’s continuous public offering to new investors in November 2017, all deferred offering costs
were expensed



The following table describes the fees
and expenses the Company accrued under the FSIC III Advisor investment advisory and administrative services agreement and the investment
advisory and administrative services agreement, as applicable, during the years ended December 31, 2018 and 2017:



|Related Party                      |  | Source Agreement                                                                                                                             |  | Description                             |  | 2018 |        |  | 2017 |  
|---------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------- |  | ---- | ------ |  | ---- | -
|FSFSIC III Advisor and the Advisor |  | FSIC III Advisor Investment Advisory and Administrative Services Agreement and the Investment Advisory and Administrative Services Agreement |  | Base Management Fee(1)                  |  | $    | 57,954 |  |      | $
|FSFSIC III Advisor and the Advisor |  | FSIC III Advisor Investment Advisory and Administrative Services Agreement and the Investment Advisory and Administrative Services Agreement |  | Subordinated Incentive Fee on Income(2) |  | $    | 35,156 |  |      | $
|FSFSIC III Advisor and the Advisor |  | FSIC III Advisor Investment Advisory and Administrative Services Agreement and the Investment Advisory and Administrative Services Agreement |  | Administrative Services Expenses(3)     |  | $    | 3,026  |  |      | $
|FSIC III Advisor                   |  | FSIC III Advisor Investment Advisory and Administrative Services Agreement                                                                   |  | Offering Costs(4)                       |  |      | —      |  |      | $








| | (1) | FSIC III Advisor contractually agreed, effective February 3, 2017, to permanently waive 0.25% of its base management fee
to which it was entitled under the FSIC III Advisor investment advisory and administrative services agreement so that the fee received
equaled 1.75% of the average value of the Company’s weekly gross assets. As a result, the amounts shown for the years
ended December 31, 2018 and 2017 are net of waivers of $2,594 and $8,754, respectively. During the years ended
December 31, 2018 and 2017, $61,669 and $68,760, respectively, in base management fees were paid to the Advisor and/or FSIC III
Advisor. As of December 31, 2018, $13,300 in net base management fees were payable to the Advisor.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | During the years ended December 31, 2018 and 2017, $40,118 and $38,601, respectively, of subordinated incentive fees
on income were paid to the Advisor and/or FSIC III Advisor. As of December 31, 2018, a subordinated incentive fee on income
of $9,525 was payable to the Advisor.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



13







| | (3) | During the years ended December 31, 2018 and 2017, $2,509 and $2,414, respectively, of the accrued administrative
services expenses related to the allocation of costs of administrative personnel for services rendered to the Company by FSIC III
Advisor and the Advisor, and the remainder related to other reimbursable expenses. The Company paid $2,878 and $2,922 in administrative
services expenses to FSIC III Advisor and the Advisor during the years ended December 31, 2018 and 2017, respectively.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (4) | During the years ended December 31, 2018 and 2017, the Company incurred offering costs of  $0 and $2,477,
respectively, of which $0 and $1,303, respectively, generally related to the reimbursement of marketing expenses, salaries and
direct expenses of FSIC III Advisor’s and the Advisor’s employees and employees of its affiliates while engaged in
registering and marketing the Company’s shares of common stock.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Potential Conflicts of Interest



The members of the senior management and
investment teams of the Advisor serve or may serve as officers, directors or principals of entities that operate in the same or
a related line of business as the Company does, or of investment vehicles managed by the same personnel. For example, the Advisor
is the investment adviser to the other funds in the Fund Complex, and the officers, managers and other personnel of the Advisor
may serve in similar or other capacities for the investment advisers to future investment vehicles affiliated with FS Investments
or KKR Credit. In serving in these multiple and other capacities, they may have obligations to other clients or investors in those
entities, the fulfillment of which may not be in the Company’s best interests or in the best interest of the Company’s
stockholders. The Company’s investment objectives may overlap with the investment objectives of such investment funds, accounts
or other investment vehicles.



Exemptive Relief



As a BDC, the Company is subject to certain
regulatory restrictions in making its investments. For example, BDCs generally are not permitted to co-invest with certain affiliated
entities in transactions originated by the BDC or its affiliates in the absence of an exemptive order from the SEC. However, BDCs
are permitted to, and may, simultaneously co-invest in transactions where price is the only negotiated term.



In an order dated June 4, 2013 (the
“FS Order”), the SEC granted exemptive relief permitting the Company, subject to the satisfaction of certain conditions,
to co-invest in certain privately negotiated investment transactions with certain affiliates of FSIC III Advisor, including FS
Energy and Power Fund, FSK, FSIC II, FSIC IV and any future BDCs that are advised by FSIC III Advisor or its affiliated investment
advisers. However, in connection with the investment advisory relationship with the Advisor, and in an effort to mitigate potential
future conflicts of interest, the Company’s board of directors authorized and directed that the Company (i) withdraw
from the FS Order, except with respect to any transaction in which the Company participated in reliance on the FS Order prior to
April 9, 2018, and (ii) rely on an exemptive relief order, dated April 3, 2018, that permits the Company, subject to
the satisfaction of certain conditions, to co-invest in certain privately negotiated investment transactions, including investments
originated and directly negotiated by the Advisor or KKR Credit, with certain affiliates of the Advisor.



FS Benefit Trust



FS Benefit Trust (“FS Trust”)
was formed as a Delaware statutory trust for the purpose of awarding equity incentive compensation to employees of FS Investments
and its affiliates. During the year ended December 31, 2017, FS Trust purchased $216 of the Company’s shares at
a purchase price per share of $8.64, which price is equal to the institutional offering price in effect on the date of purchase.
During the year ended December 31, 2018, FS Trust did not purchase any of the Company’s shares.



Director Independence



A majority of the members of the Board
are not “interested persons,” as defined in Section 2(a)(19) of the 1940 Act, of the Company or the Advisor, and
are “independent” as defined by Rule 303A.00 in the NYSE Listed Company Manual. Section 2(a)(19) of the 1940 Act
defines an “interested person” to include, among other things, any person who has, or within the last two years had,
a material business or professional relationship with the Company.



The Board is currently comprised of ten
directors, eight of whom are Independent Directors. The Board has determined that the following directors are Independent Directors:
Messrs. Arnold, Kropp, Ford, Goldstein, Hagan, Harrow, Hopkins and Ms. Adams.
Based upon information requested from each director concerning his background, employment and affiliations, the Board has affirmatively
determined that none of the Independent Directors has, or within the last two years had, a material business or professional relationship
with the Company, other than in his capacity as a member of the Board or any Board committee or as a stockholder.



14







| | Item 14. | Principal Accountant Fees and Services.
| | -------- | ---------------------------------------



On
March 22, 2019, the Company notified RSM US LLP that RSM US LLP had been dismissed as the Company’s independent public
accounting firm. The Audit Committee approved the dismissal of RSM US LLP. The reports of RSM US LLP on the audited consolidated
financial statements of the Company for the years ended December 31, 2018 and 2017 and did not contain an adverse opinion
or a disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principle. During the
years ended December 31, 2018 and 2017, and the subsequent interim period through March 22, 2019, there were: (i) no
disagreements within the meaning of Item 304(a)(1)(iv) of Regulation S-K and the related instructions between
the Company and RSM US LLP on any matters of accounting principles or practices, financial statement disclosure, or auditing scope
or procedure which, if not resolved to RSM US LLP’s satisfaction, would have caused RSM US LLP to make reference thereto
in their reports; and (ii) no “reportable events” within the meaning of Item 304(a)(1)(v) of Regulation S-K.



On
March 26, 2019, the Company appointed Deloitte & Touche LLP to act as the Company’s independent registered
public accounting firm for the fiscal year ended December 31, 2019. The appointment of Deloitte & Touche LLP was
previously recommended by the Audit Committee. During the years ended December 31, 2018 and 2017, and the subsequent interim
period through March 26, 2019, neither the Company nor anyone on its behalf has consulted with Deloitte & Touche
LLP regarding: (i) the application of accounting principles to a specific transaction, either completed or proposed, or the
type of audit opinion that might be rendered on the Company’s financial statements, and neither a written report nor oral
advice was provided to the Company that Deloitte & Touche LLP concluded was an important factor considered by the Company
in reaching a decision as to any accounting, auditing, or financial reporting issue; (ii) any matter that was the subject
of a disagreement within the meaning of Item 304(a)(1)(iv) of Regulation S-Kand the related instructions; or (iii) any
reportable event within the meaning of Item 304(a)(1)(v) of Regulation S-K. A representative of Deloitte &
Touche LLP is expected to be available to answer questions during the Annual Meeting and will have an opportunity to make a statement
if he or she desires to do.



Fees to Auditors



Set forth in the table below are audit
fees, audit-related fees, tax fees and all other fees billed to the Company by RSM US LLP for professional services performed for
the Company’s fiscal years ended December 31, 2018 and 2017:



|Fiscal Year |  | Audit Fees |         |  | Audit-Related Fees(1) |   |        | Tax Fees |  |  | All Other Fees(2) | 
|----------- |  | ---------- | ------- |  | --------------------- | - | ------ | -------- |  |  | ----------------- | 
|2018        |  | $          | 392,200 |  |                       | $ | —      |          |  |  | —                 | 
|2017        |  | $          | 392,500 |  |                       | $ | 42,601 |          |  |  | —                 | 








| | (1) | “Audit-Related Fees” are those fees billed to the Company by RSM US LLP for services provided by RSM US LLP or
fees billed for expenses relating to the review by RSM US LLP of the Company’s registration statements filed with the SEC
pursuant to the Securities Act of 1933, as amended.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | “All Other Fees” are those fees, if any, billed to the Company by RSM US LLP in connection with permitted non-audit
services.
| | --- | -----------------------------------------------------------------------------------------------------------------------------



15







Pre-Approval Policies and Procedures



The Company’s Audit Committee reviews,
negotiates and approves in advance the scope of work, any related engagement letter and the fees to be charged by the Company’s
independent registered public accounting firm for audit services and permitted non-audit services for the Company and for permitted
non-audit services for the Advisor and any affiliates thereof that provide services to the Company if such non-audit services have
a direct impact on the operations or financial reporting of the Company. Any requests for audit, audit-related, tax and other services
that have not received general pre-approval must be submitted to the Audit Committee for specific pre-approval in accordance with
its pre-approval policy, irrespective of the amount of fees associated with such services, and cannot commence until such approval
has been granted. Normally, pre-approval is considered at regularly scheduled meetings of the Audit Committee. However, the Audit
Committee may delegate pre-approval authority to one or more of its members. The member or members to whom such authority is delegated
must report any pre-approval decisions to the Audit Committee at its next scheduled meeting. The Audit Committee does not delegate
its responsibilities to pre-approve services performed by RSM US LLP to management. All of the audit and permitted non-audit services
described above for which RSM US LLP billed the Company for the fiscal years ended December 31, 2018 and 2017 were pre-approved
by the Audit Committee.



16







PART IV



| | Item 15. | Exhibits, Financial Statement Schedules.
| | -------- | ----------------------------------------



Exhibits



The following exhibits are filed as part
of this Amendment:



|31.1* | Certification of Chief Executive Officer pursuant to Rule 13a-14 under the Securities Exchange Act of 1934, as amended.
|----- | -----------------------------------------------------------------------------------------------------------------------
|      |                                                                                                                        
|31.2* | Certification of Chief Financial Officer pursuant to Rule 13a-14 under the Securities Exchange Act of 1934, as amended.








| | * | Filed herewith.
| | - | ---------------



17







SIGNATURES



Pursuant to the requirements of Section 13
or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this annual report to be signed on its behalf by
the undersigned, thereunto duly authorized.



|Date: April 24, 2019 |  | /s/ MICHAEL C. FORMAN  
|-------------------- |  | -----------------------
|                     |  | Michael C. Forman      
|                     |  | Chief Executive Officer



Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities
and on the dates indicated.



|Date: April 24, 2019 |  | /s/ MICHAEL C. FORMAN                       
|-------------------- |  | --------------------------------------------
|                     |  | Michael C. Forman                           
|                     |  | Chief Executive Officer and                 
|                     |  | Director                                    
|                     |  |                                             
|Date: April 24, 2019 |  | /s/ WILLIAM GOEBEL                          
|                     |  | William Goebel                              
|                     |  | Chief Financial Officer                     
|                     |  | (Principal Accounting and Financial Officer)
|                     |  |                                             
|Date: April 24, 2019 |  | /s/ BARBARA ADAMS                           
|                     |  | Barbara Adams                               
|                     |  | Director                                    
|                     |  |                                             
|Date: April 24, 2019 |  | /s/ FREDERICK ARNOLD                        
|                     |  | Frederick Arnold                            
|                     |  | President and Director                      
|                     |  |                                             
|Date: April 24, 2019 |  | /s/ BRIAN R. FORD                           
|                     |  | Brian R. Ford                               
|                     |  | Director                                    
|                     |  |                                             
|Date: April 24, 2019 |  | /s/ TODD BUILIONE                           
|                     |  | Todd Builione                               
|                     |  | Director                                    
|                     |  |                                             
|Date: April 24, 2019 |  | /s/ RICHARD GOLDSTEIN                       
|                     |  | Richard Goldstein                           
|                     |  | Director                                    
|                     |  |                                             
|Date: April 24, 2019 |  | /s/ MICHAEL J. HAGAN                        
|                     |  | Michael J. Hagan                            
|                     |  | Director                                    
|                     |  |                                             
|Date: April 24, 2019 |  | /s/ JEFFREY K. HARROW                       
|                     |  | Jeffrey K. Harrow                           
|                     |  | Director                                    
|                     |  |                                             
|Date: April 24, 2019 |  | /s/ JEREL A. HOPKINS                        
|                     |  | Jerel A. Hopkins                            
|                     |  | Director                                    
|                     |  |                                             
|Date: April 24, 2019 |  | /s/ JAMES H. KROPP                          
|                     |  | James H. Kropp                              
|                     |  | Director                                    



18