Federal Register / Vol. 82, No. 212 / Friday, November 3, 2017 / Notices 51323 

1Section 2(a)(48) of the Act defines a BDC to be 

any closed-end investment company that operates 

for the purpose of making investments in securities 

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

Act and makes available significant managerial 

assistance with respect to the issuers of such 

securities. 

2 ‘‘Objectives and Strategies’’ means a Regulated 

Fund’s (defined below) investment objectives and 

strategies, as described in the Regulated Fund’s 

registration statement on Form N–2, other filings 

the Regulated Fund has made with the Commission 

under the Securities Act of 1933 (the ‘‘Securities 

Act’’), or under the Securities Exchange Act of 

1934, and the Regulated Fund’s reports to 

shareholders. 

3 ‘‘Regulated Fund’’ means the Company and any 

Future Regulated Fund. ‘‘Future Regulated Fund’’ 

means any closed-end management investment 

company (a) that is registered under the Act or has 

elected to be regulated as a BDC, (b) whose 

investment adviser is an Adviser, and (c) that 

intends to participate in the Co-Investment 

Program. The term ‘‘Adviser’’ means (a) the 

Company Adviser and (b) any future investment 

adviser that controls, is controlled by or is under 

common control with the Company Adviser or its 

successor and is registered as an investment adviser 

under the Advisers Act. The term ‘‘successor,’’ as 

applied to each Adviser, means an entity that 

results from a reorganization into another 

jurisdiction or chang in the type of business 

organization. 

4 ‘‘Affiliated Fund’’ means the Private Fund and 

any Future Affiliated Fund. ‘‘Future Affiliated 

Fund’’ means any entity (a) whose investment 

adviser is an Adviser, (b) that would be an 

investment company but for section 3(c)(1) or 

3(c)(7) of the Act, and (c) that intends to participate 

in the Co-Investment Program. 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Company Act Release No. 

32888; File No. 812–14738] 

Horizon Technology Finance 

Corporation, et al. 

October 30, 2017. 

AGENCY: Securities and Exchange 

Commission (‘‘Commission’’). 

ACTION: Notice. 

Notice of an application for an order 

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

Investment Company Act of 1940 (the 

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

permitting certain joint transactions 

otherwise prohibited by sections 17(d) 

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

under the Act. 

SUMMARY OF APPLICATION: Applicants 

request an order to permit a business 

development company (‘‘BDC’’) and 

certain closed-end investment 

companies to co-invest in portfolio 

companies with each other and with 

affiliated investment funds. 

APPLICANTS: Horizon Technology 

Finance Corporation (the ‘‘Company’’), 

Horizon Credit II LLC (‘‘Credit II’’), 

Horizon Life Science Debt Strategies 

Fund L.P. (the ‘‘Private Fund’’), and 

Horizon Technology Finance 

Management LLC (the ‘‘Company 

Adviser’’). 

FILING DATES: The application was filed 

on January 23, 2017, and amended on 

June 28, 2017 and September 13, 2017. 

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 November 24, 2017 and 

should be accompanied by proof of 

service on applicants, in the form of an 

affidavit or, for lawyers, a certificate of 

service. Pursuant to rule 0–5 under the 

Act, hearing requests should state the 

nature of the writer’s interest, any facts 

bearing upon the desirability of a 

hearing on the matter, the reason for the 

request, and the issues contested. 

Persons who wish to be notified of a 

hearing may request notification by 

writing to the Commission’s Secretary. 

ADDRESSES: Secretary, U.S. Securities 

and Exchange Commission, 100 F St. 

NE., Washington, DC 20549–1090. 

Applicants: 312 Farmington Avenue, 

Farmington, CT 06032. 

FOR FURTHER INFORMATION CONTACT: 

Courtney S. Thornton, Senior Counsel, 

at (202) 551–6812, or Robert H. Shapiro, 

Branch Chief, at (202) 551–6821 (Chief 

Counsel’s Office, Division of Investment 

Management). 

SUPPLEMENTARY INFORMATION: The 

following is a summary of the 

application. The complete application 

may be obtained via the Commission’s 

Web site by searching for the file 

number, or for an applicant using the 

Company name box, at http://

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

calling (202) 551–8090. 

Applicants’ Representations 

1. The Company was organized as a 

corporation under the General 

Corporation Law of the State of 

Delaware on March 16, 2010 for the 

purpose of acquiring, continuing and 

expanding the business of Compass 

Horizon Funding Company LLC, its 

Wholly Owned Subsidiary (as defined 

below). The Company elected to be 

treated as a BDC1 through a notification 

of election to be subject to Sections 55 

through 65 of the Act on Form N–54A. 

The Company’s investment objectives 

and strategies are to maximize the total 

return of the Company’s investment 

portfolio by generating current income 

from the debt investments the Company 

makes and capital appreciation from the 

warrants the Company receives when 

making such debt investments. The 

Company has a six-member board of 

directors (the ‘‘Board’’), of which four 

members are not ‘‘interested persons’’ of 

the Company within the meaning of 

section 2(a)(19) of the Act (the ‘‘NonInterested Directors’’). No NonInterested Director will have any direct 

or indirect financial interest in any CoInvestment Transaction or any interest 

in any portfolio company, other than 

indirectly through share ownership in a 

Regulated Fund (as defined below). 

2. Credit II is a special purpose 

Delaware limited liability company and 

a Wholly-Owned Investment Subsidiary 

of the Company. 

3. The Private Fund was formed as a 

Delaware limited partnership on July 

20, 2016 and would be an investment 

company but for the exclusion from the 

definition of investment company 

provided by section 3(c)(7) of the Act. 

The Private Fund is managed by the 

Company Adviser. The Private Fund’s 

investment objective is to maximize 

total returns for its limited partners by 

generating current income from debt 

investments and capital appreciation 

from equity participations associated 

with those investments. The Private 

Fund’s investment objective and 

investment policies are substantially 

similar to the Objectives and Strategies 

of the Company.2

4. The Company Adviser, a Delaware 

limited liability company and an 

investment adviser registered with the 

Commission under the Investment 

Advisers Act of 1940 (‘‘Advisers Act’’), 

serves as investment adviser to both the 

Company and the Private Fund. Under 

the investment advisory agreements of 

the Company and the Private Fund, the 

Company Adviser manages the portfolio 

of each entity in accordance with the 

investment objective and policies of 

each, makes investment decisions for 

each entity, places purchase and sale 

orders for portfolio transactions for each 

entity, and otherwise manages the dayto-day operations of each entity, subject, 

in the case of the Company, to the 

oversight of its Board. 

5. Applicants seek an order (‘‘Order’’) 

to permit one or more Regulated Funds 3

and/or one or more Affiliated Funds 4 to 

participate in the same investment 

opportunities through a proposed coinvestment program (the ‘‘CoInvestment Program’’) where such 

participation would otherwise be 

prohibited under section 57(a)(4) and 

rule 17d–1 by (a) co-investing with each 

other in securities issued by issuers in 

private placement transactions in which 

an Adviser negotiates terms in addition 


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51324 Federal Register / Vol. 82, No. 212 / Friday, November 3, 2017 / Notices 

5The term ‘‘private placement transactions’’ 

means transactions in which the offer and sale of 

securities by the issuer are exempt from registration 

under the Securities Act of 1933 (‘‘1933 Act’’). 6All existing entities that currently intend to rely 

upon the requested Order have been named as 

applicants. Any other existing or future entity that 

subsequently relies on the Order will comply with 

the terms and conditions of the application. 7The term ‘‘Wholly-Owned Investment 

Subsidiary’’ means an entity (i) that is whollyowned by a Regulated Fund (with the Regulated 

Fund at all times holding, beneficially and of 

record, 100% of the voting and economic interests); 

(ii) whose sole business purpose is to hold one or 

more investments and incur debt (which is or 

would be consolidated with other indebtedness of 

such Regulated Fund for financial reporting or 

compliance purposed under the Act) on behalf of 

the Regulated Fund; (iii) with respect to which the 

Regulated Fund’s Board has the sole authority to 

make all determinations with respect to the entity’s 

participation under the conditions of the 

application; and (iv) that would be an investment 

company but for sections 3(c)(1) or 3(c)(7) of the 

Act. 

8 In the case of a Regulated Fund that is a 

registered closed-end fund, the Board members that 

make up the Required Majority will be determined 

as if the Regulated Fund were a BDC subject to 

section 57(o). 

to price; 5 and (b) making additional 

investments in securities of such 

issuers, including through the exercise 

of warrants, conversion privileges, and 

other rights to purchase securities of the 

issuers (‘‘Follow-On Investments’’). ‘‘CoInvestment Transaction’’ means any 

transaction in which a Regulated Fund 

(or its Wholly-Owned Investment 

Subsidiary) participated together with 

one or more other Regulated Funds and/ 

or one or more Affiliated Funds in 

reliance on the requested Order. 

‘‘Potential Co-Investment Transaction’’ 

means any investment opportunity in 

which a Regulated Fund (or its WhollyOwned Investment Subsidiary) could 

not participate together with one or 

more Affiliated Funds and/or one or 

more other Regulated Funds without 

obtaining and relying on the Order.6

6. Applicants state that a Regulated 

Fund may, from time to time, form one 

or more Wholly-Owned Investment 

Subsidiaries.7 Such a subsidiary would 

be prohibited from investing in a CoInvestment Transaction with any 

Affiliated Fund or Regulated Fund 

because it would be a company 

controlled by its parent Regulated Fund 

for purposes of section 57(a)(4) and rule 

17d–1. Applicants request that each 

Wholly-Owned Investment Subsidiary 

be permitted to participate in CoInvestment Transactions in lieu of its 

parent Regulated Fund and that the 

Wholly-Owned Investment Subsidiary’s 

participation in any such transaction be 

treated, for purposes of the requested 

Order, as though the parent Regulated 

Fund were participating directly. 

Applicants represent that this treatment 

is justified because a Wholly-Owned 

Investment Subsidiary would have no 

purpose other than serving as a holding 

vehicle for the Regulated Fund’s 

investments and, therefore, no conflicts 

of interest could arise between the 

Regulated Fund and the Wholly-Owned 

Investment Subsidiary. The Regulated 

Fund’s Board would make all relevant 

determinations under the conditions 

with regard to a Wholly-Owned 

Investment Subsidiary’s participation in 

a Co-Investment Transaction, and the 

Regulated Fund’s Board would be 

informed of, and take into 

consideration, any proposed use of a 

Wholly-Owned Investment Subsidiary 

in the Regulated Fund’s place. If the 

Regulated Fund proposes to participate 

in the same Co-Investment Transaction 

with any of its Wholly-Owned 

Investment Subsidiaries, the Board will 

also be informed of, and take into 

consideration, the relative participation 

of the Regulated Fund and the WhollyOwned Investment Subsidiary. 

7. When considering Potential CoInvestment Transactions for any 

Regulated Fund, the applicable Adviser 

will consider only the Objectives and 

Strategies, investment policies, 

investment positions, capital available 

for investment (‘‘Available Capital’’), 

and other pertinent factors applicable to 

that Regulated Fund. The Board of each 

Regulated Fund, including the NonInterested Directors has (or will have 

prior to relying on the requested Order) 

determined that it is in the best interests 

of the Regulated Fund to participate in 

the Co-Investment Transaction. 

8. Other than pro rata dispositions 

and Follow-On Investments as provided 

in conditions 7 and 8, and after making 

the determinations required in 

conditions 1 and 2(a), the Adviser will 

present each Potential Co-Investment 

Transaction and the proposed allocation 

to the directors of the Board eligible to 

vote under section 57(o) of the Act 

(‘‘Eligible Directors’’), and the ‘‘required 

majority,’’ as defined in section 57(o) of 

the Act (‘‘Required Majority’’) 8 will 

approve each Co-Investment 

Transaction prior to any investment by 

the participating Regulated Fund. 

9. With respect to the pro rata 

dispositions and Follow-On Investments 

provided in conditions 7 and 8, a 

Regulated Fund may participate in a pro 

rata disposition or Follow-On 

Investment without obtaining prior 

approval of the Required Majority if, 

among other things: (i) The proposed 

participation of each Regulated Fund 

and Affiliated Fund in such disposition 

is proportionate to its outstanding 

investments in the issuer immediately 

preceding the disposition or Follow-On 

Investment, as the case may be; and (ii) 

the Board of the Regulated Fund has 

approved that Regulated Fund’s 

participation in pro rata dispositions 

and Follow-On Investments as being in 

the best interests of the Regulated Fund. 

If the Board does not so approve, any 

such disposition or Follow-On 

Investment will be submitted to the 

Regulated Fund’s Eligible Directors. The 

Board of any Regulated Fund may at any 

time rescind, suspend or qualify its 

approval of pro rata dispositions and 

Follow-On Investments with the result 

that all dispositions and/or Follow-On 

Investments must be submitted to the 

Eligible Directors. 

10. Applicants also represent that if 

the Advisers, the principals of the 

Advisers (‘‘Principals’’), or any person 

controlling, controlled by, or under 

common control with an Adviser or the 

Principals, and the Affiliated Funds 

(collectively, the ‘‘Holders’’) own in the 

aggregate more than 25% of the 

outstanding voting shares of a Regulated 

Fund (the ‘‘Shares’’), then the Holders 

will vote such Shares as required under 

condition 14. Applicants believe this 

condition will ensure that the NonInterested Directors will act 

independently in evaluating the CoInvestment Program, because the ability 

of the Advisers or the Principals to 

influence the Non-Interested Directors 

by a suggestion, explicit or implied, that 

the Non-Interested Directors can be 

removed will be limited significantly. 

Applicants represent that the NonInterested Directors will evaluate and 

approve any such independent third 

party, taking into account its 

qualifications, reputation for 

independence, cost to the shareholders, 

and other factors that they deem 

relevant. 

Applicants’ Legal Analysis 

1. Section 57(a)(4) of the Act prohibits 

certain affiliated persons of a BDC from 

participating in joint transactions with 

the BDC or a company controlled by a 

BDC in contravention of rules as 

prescribed by the Commission. Under 

section 57(b)(2) of the Act, any person 

who is directly or indirectly controlling, 

controlled by, or under common control 

with a BDC is subject to section 57(a)(4). 

Applicants submit that each of the 

Regulated Funds and Affiliated Funds 

could be deemed to be a person related 

to each Regulated Fund in a manner 

described by section 57(b) by virtue of 

being under common control. Section 

57(i) of the Act provides that, until the 

Commission prescribes rules under 

section 57(a)(4), the Commission’s rules 

under section 17(d) of the Act 

applicable to registered closed-end 


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Federal Register / Vol. 82, No. 212 / Friday, November 3, 2017 / Notices 51325 

investment companies will be deemed 

to apply to transactions subject to 

section 57(a)(4). Because the 

Commission has not adopted any rules 

under section 57(a)(4), rule 17d–1 also 

applies to joint transactions with 

Regulated Funds that are BDCs. Section 

17(d) of the Act and rule 17d–1 under 

the Act are applicable to Regulated 

Funds that are registered closed-end 

investment companies. 

2. Section 17(d) of the Act and rule 

17d–1 under the Act prohibit affiliated 

persons of a registered investment 

company from participating in joint 

transactions with the company unless 

the Commission has granted an order 

permitting such transactions. In passing 

upon applications under rule 17d–1, the 

Commission considers whether the 

company’s participation in the joint 

transaction is consistent with the 

provisions, policies, and purposes of the 

Act and the extent to which such 

participation is on a basis different from 

or less advantageous than that of other 

participants. 

3. Applicants state that in the absence 

of the requested relief, the Regulated 

Funds would be, in some 

circumstances, limited in their ability to 

participate in attractive and appropriate 

investment opportunities. Applicants 

believe that the proposed terms and 

conditions will ensure that the CoInvestment Transactions are consistent 

with the protection of each Regulated 

Fund’s shareholders and with the 

purposes intended by the policies and 

provisions of the Act. Applicants state 

that the Regulated Funds’ participation 

in the Co-Investment Transactions will 

be consistent with the provisions, 

policies, and purposes of the Act and on 

a basis that is not different from or less 

advantageous than that of other 

participants. 

Applicants’ Condition 

Applicants agree that the Order will 

be subject to the following conditions: 

1. Each time an Adviser considers a 

Potential Co-Investment Transaction for 

an Affiliated Fund or another Regulated 

Fund that falls within a Regulated 

Fund’s then-current Objectives and 

Strategies, the Regulated Fund’s Adviser 

will make an independent 

determination of the appropriateness of 

the investment for the Regulated Fund 

in light of the Regulated Fund’s thencurrent circumstances. 

2. (a) If the Adviser deems a Regulated 

Fund’s participation in any Potential 

Co-Investment Transaction to be 

appropriate for the Regulated Fund, it 

will then determine an appropriate level 

of investment for the Regulated Fund. 

(b) If the aggregate amount 

recommended by the applicable Adviser 

to be invested by the applicable 

Regulated Fund in the Potential CoInvestment Transaction, together with 

the amount proposed to be invested by 

the other participating Regulated Funds 

and Affiliated Funds, collectively, in the 

same transaction, exceeds the amount of 

the investment opportunity, the 

investment opportunity will be 

allocated among them pro rata based on 

each participant’s Available Capital, up 

to the amount proposed to be invested 

by each. The applicable Adviser will 

provide the Eligible Directors of each 

participating Regulated Fund with 

information concerning each 

participating party’s Available Capital to 

assist the Eligible Directors with their 

review of the Regulated Fund’s 

investments for compliance with these 

allocation procedures. 

(c) After making the determinations 

required in conditions 1 and 2(a), the 

applicable Adviser will distribute 

written information concerning the 

Potential Co-Investment Transaction 

(including the amount proposed to be 

invested by each participating Regulated 

Fund and Affiliated Fund) to the 

Eligible Directors of each participating 

Regulated Fund for their consideration. 

A Regulated Fund will co-invest with 

one or more other Regulated Funds and/ 

or one or more Affiliated Funds only if, 

prior to the Regulated Fund’s 

participation in the Potential CoInvestment Transaction, a Required 

Majority concludes that: 

(i) The terms of the Potential CoInvestment Transaction, including the 

consideration to be paid, are reasonable 

and fair to the Regulated Fund and its 

stockholders and do not involve 

overreaching in respect of the Regulated 

Fund or its stockholders on the part of 

any person concerned; 

(ii) the Potential Co-Investment 

Transaction is consistent with: 

(A) The interests of the Regulated 

Fund’s stockholders; and 

(B) the Regulated Fund’s then-current 

Objectives and Strategies; 

(iii) the investment by any other 

Regulated Funds or Affiliated Funds 

would not disadvantage the Regulated 

Fund, and participation by the 

Regulated Fund would not be on a basis 

different from or less advantageous than 

that of any other Regulated Funds or 

Affiliated Funds; provided that if any 

other Regulated Funds or Affiliated 

Funds, but not the Regulated Fund 

itself, gains the right to nominate a 

director for election to a portfolio 

company’s board of directors or the 

right to have a board observer or any 

similar right to participate in the 

governance or management of the 

portfolio company, such event shall not 

be interpreted to prohibit the Required 

Majority from reaching the conclusions 

required by this condition (2)(c)(iii), if: 

(A) The Eligible Directors will have 

the right to ratify the selection of such 

director or board observer, if any; 

(B) the applicable Adviser agrees to, 

and does, provide periodic reports to 

the Regulated Fund’s Board with respect 

to the actions of such director or the 

information received by such board 

observer or obtained through the 

exercise of any similar right to 

participate in the governance or 

management of the portfolio company; 

and 

(C) any fees or other compensation 

that any Affiliated Fund or any 

Regulated Fund or any affiliated person 

of any Affiliated Fund or any Regulated 

Fund receives in connection with the 

right of the Affiliated Fund or Regulated 

Fund to nominate a director or appoint 

a board observer or otherwise to 

participate in the governance or 

management of the portfolio company 

will be shared proportionately among 

the participating Affiliated Funds (who 

each may, in turn, share its portion with 

its affiliated persons) and the 

participating Regulated Fund in 

accordance with the amount of each 

party’s investment; and 

(iv) the proposed investment by the 

Regulated Fund will not benefit the 

Advisers, any Affiliated Funds or other 

Regulated Funds or any affiliated person 

of any of them (other than the parties to 

the Co-Investment Transaction), except 

(A) to the extent permitted by condition 

13, (B) to the extent permitted by 

section 17(e) or 57(k) of the Act, as 

applicable, (C) indirectly, as a result of 

an interest in the securities issued by 

one of the parties to the Co-Investment 

Transaction, or (D) in the case of fees or 

other compensation described in 

condition 2(c)(iii)(C). 

3. Each Regulated Fund has the right 

to decline to participate in any Potential 

Co-Investment Transaction or to invest 

less than the amount proposed. 

4. The applicable Adviser will present 

to the Board of each Regulated Fund, on 

a quarterly basis, a record of all 

investments in Potential Co-Investment 

Transactions made by any of the other 

Regulated Funds or Affiliated Funds 

during the preceding quarter that fell 

within the Regulated Fund’s thencurrent Objectives and Strategies that 

were not made available to the 

Regulated Fund, and an explanation of 

why the investment opportunities were 

not offered to the Regulated Fund. All 

information presented to the Board 

pursuant to this condition will be kept 


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51326 Federal Register / Vol. 82, No. 212 / Friday, November 3, 2017 / Notices 

9This exception applies only to Follow-On 

Investments by a Regulated Fund in issuers in 

which the Regulated Fund already holds 

investments. 

for the life of the Regulated Fund and 

at least two years thereafter, and will be 

subject to examination by the 

Commission and its staff. 

5. Except for Follow-On Investments 

made in accordance with condition 8 9, 

a Regulated Fund will not invest in 

reliance on the Order in any issuer in 

which another Regulated Fund, an 

Affiliated Fund or any affiliated person 

of another Regulated Fund or Affiliated 

Fund is an existing investor. 

6. A Regulated Fund will not 

participate in any Potential CoInvestment Transaction unless the 

terms, conditions, price, class of 

securities to be purchased, settlement 

date, and registration rights will be the 

same for each participating Regulated 

Fund and Affiliated Fund. The grant to 

an Affiliated Fund or another Regulated 

Fund, but not the Regulated Fund, of 

the right to nominate a director for 

election to a portfolio company’s board 

of directors, the right to have an 

observer on the board of directors or 

similar rights to participate in the 

governance or management of the 

portfolio company will not be 

interpreted so as to violate this 

condition 6, if conditions 2(c)(iii)(A), (B) 

and (C) are met. 

7. (a) If any Affiliated Fund or any 

Regulated Fund elects to sell, exchange 

or otherwise dispose of an interest in a 

security that was acquired in a CoInvestment Transaction, the applicable 

Advisers will: 

(i) Notify each Regulated Fund that 

participated in the Co-Investment 

Transaction of the proposed disposition 

at the earliest practical time; and 

(ii) formulate a recommendation as to 

participation by each Regulated Fund in 

the disposition. 

(b) Each Regulated Fund will have the 

right to participate in such disposition 

on a proportionate basis, at the same 

price and on the same terms and 

conditions as those applicable to the 

participating Affiliated Funds and 

Regulated Funds. 

(c) A Regulated Fund may participate 

in such disposition without obtaining 

prior approval of the Required Majority 

if: (i) The proposed participation of each 

Regulated Fund and each Affiliated 

Fund in such disposition is 

proportionate to its outstanding 

investments in the issuer immediately 

preceding the disposition; (ii) the Board 

of the Regulated Fund has approved as 

being in the best interests of the 

Regulated Fund the ability to participate 

in such dispositions on a pro rata basis 

(as described in greater detail in the 

application); and (iii) the Board of the 

Regulated Fund is provided on a 

quarterly basis with a list of all 

dispositions made in accordance with 

this condition. In all other cases, the 

Adviser will provide its written 

recommendation as to the Regulated 

Fund’s participation to the Eligible 

Directors, and the Regulated Fund will 

participate in such disposition solely to 

the extent that a Required Majority 

determines that it is in the Regulated 

Fund’s best interests. 

(d) Each Affiliated Fund and each 

Regulated Fund will bear its own 

expenses in connection with any such 

disposition. 

8. (a) If any Affiliated Fund or 

Regulated Fund desires to make a 

Follow-On Investment in a portfolio 

company whose securities were 

acquired in a Co-Investment 

Transaction, the applicable Advisers 

will: 

(i) Notify each Regulated Fund that 

participated in the co-investment 

transaction of the proposed Follow-On 

Investment at the earliest practical time; 

and 

(ii) formulate a recommendation as to 

the proposed participation, including 

the amount of the proposed Follow-On 

Investment, by each Regulated Fund. 

(b) A Regulated Fund may participate 

in such Follow-On Investment without 

obtaining prior approval of the Required 

Majority if: (i) The proposed 

participation of each Regulated Fund 

and each Affiliated Fund in such 

investment is proportionate to its 

outstanding investments in the issuer 

immediately preceding the Follow-On 

Investment; and (ii) the Board of the 

Regulated Fund has approved as being 

in the best interests of the Regulated 

Fund the ability to participate in 

Follow-On Investments on a pro rata 

basis (as described in greater detail in 

the application). In all other cases, the 

Adviser will provide its written 

recommendation as to the Regulated 

Fund’s participation to the Eligible 

Directors, and the Regulated Fund will 

participate in such Follow-On 

Investment solely to the extent that a 

Required Majority determines that it is 

in the Regulated Fund’s best interests. 

(c) If, with respect to any Follow-On 

Investment: 

(i) The amount of the opportunity is 

not based on the Regulated Funds’ and 

the Affiliated Funds’ outstanding 

investments immediately preceding the 

Follow-On Investment; and 

(ii) the aggregate amount 

recommended by the applicable Adviser 

to be invested by the applicable 

Regulated Fund in the Follow-On 

Investment, together with the amount 

proposed to be invested by other 

participating Regulated Funds and 

Affiliated Funds, collectively, in the 

same transaction, exceeds the amount of 

the investment opportunity, then the 

investment opportunity will be 

allocated among them pro rata based on 

each participant’s Available Capital, up 

to the amount proposed to be invested 

by each. 

(d) The acquisition of Follow-On 

Investments as permitted by this 

condition will be considered a CoInvestment Transaction for all purposes 

and subject to the other conditions set 

forth in the application. 

9. The Non-Interested Directors of 

each Regulated Fund will be provided 

quarterly for review all information 

concerning Potential Co-Investment 

Transactions and Co-Investment 

Transactions, including investments 

made by any other Regulated Funds or 

Affiliated Funds that the Regulated 

Fund considered but declined to 

participate in, so that the Non-Interested 

Directors may determine whether all 

investments made during the preceding 

quarter, including those investments 

that the Regulated Fund considered but 

declined to participate in, comply with 

the conditions of the Order. In addition, 

the Non-Interested Directors will 

consider at least annually the continued 

appropriateness for the Regulated Fund 

of participating in new and existing CoInvestment Transactions. 

10. Each Regulated Fund will 

maintain the records required by section 

57(f)(3) of the Act as if each of the 

Regulated Funds were a BDC and each 

of the investments permitted under 

these conditions were approved by the 

Required Majority under section 57(f) of 

the Act. 

11. No Non-Interested Director of a 

Regulated Fund will also be a director, 

general partner, managing member or 

principal, or otherwise an ‘‘affiliated 

person’’ (as defined in the Act) of an 

Affiliated Fund. 

12. The expenses, if any, associated 

with acquiring, holding or disposing of 

any securities acquired in a CoInvestment Transaction (including, 

without limitation, the expenses of the 

distribution of any such securities 

registered for sale under the 1933 Act) 

will, to the extent not payable by the 

Advisers under their respective 

investment advisory agreements with 

Affiliated Funds and the Regulated 

Funds, be shared by the Regulated 

Funds and the Affiliated Funds in 

proportion to the relative amounts of the 

securities held or to be acquired or 

disposed of, as the case may be. 


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Federal Register / Vol. 82, No. 212 / Friday, November 3, 2017 / Notices 51327 

10The Applicants are not requesting, and the staff 

is not providing, any relief for transaction fees 

received in connection with any Co-Investment 

Transaction. 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 714 

(January 28, 2014), 79 FR 6256 (February 3, 2014) 

(SR–BX–2014–004). 

4 15 U.S.C. 78f(b). 

5 15 U.S.C. 78f(b)(5). 

6See Securities Exchange Act Release No. 714 

(January 28, 2014), 79 FR 6256 (February 3, 2014) 

(SR–BX–2014–004). 

13. Any transaction fee 10 (including 

break-up or commitment fees but 

excluding broker’s fees contemplated 

section 17(e) or 57(k) of the Act, as 

applicable) received in connection with 

a Co-Investment Transaction will be 

distributed to the participating 

Regulated Funds and Affiliated Funds 

on a pro rata basis based on the amounts 

they invested or committed, as the case 

may be, in such Co-Investment 

Transaction. If any transaction fee is to 

be held by an Adviser pending 

consummation of the Co-Investment 

Transaction, the fee will be deposited 

into an account maintained by such 

Adviser at a bank or banks having the 

qualifications prescribed in section 

26(a)(1) of the Act, and the account will 

earn a competitive rate of interest that 

will also be divided pro rata among the 

participating Regulated Funds and 

Affiliated Funds based on the amounts 

they invest in such Co-Investment 

Transaction. None of the Affiliated 

Funds, the Advisers, the other 

Regulated Funds, or any affiliated 

person of the Regulated Funds or 

Affiliated Funds will receive additional 

compensation or remuneration of any 

kind as a result of or in connection with 

a Co-Investment Transaction (other than 

(a) in the case of the Regulated Funds 

and the Affiliated Funds, the pro rata 

transaction fees described above and 

fees or other compensation described in 

condition 2(c)(iii)(C); and (b) in the case 

of an Adviser, investment advisory fees 

paid in accordance with the investment 

advisory agreements between such 

Adviser and the Regulated Fund or 

Affiliated Fund). 

14. If the Holders own in the aggregate 

more than 25% of the Shares of a 

Regulated Fund, then the Holders will 

vote such Shares as directed by an 

independent third party when voting on 

(1) the election of directors; (2) the 

removal of one or more directors; or (3) 

any other matter under either the Act or 

applicable State laws affecting the 

Board’s composition, size or manner of 

election. 

15. Each Regulated Fund’s chief 

compliance officer, as defined in rule 

38a–1(a)(4), will prepare an annual 

report for the Board of such Regulated 

Fund that evaluates (and documents the 

basis of that evaluation) the Regulated 

Fund’s compliance with the terms and 

conditions of the application and 

procedures established to achieve such 

compliance. 

For the Commission, by the Division of 

Investment Management, under delegated 

authority. 

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2017–23920 Filed 11–2–17; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–81978; File No. SR–BX– 

2017–049] 

Self-Regulatory Organizations; Nasdaq 

BX, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Remove References to 

Nasdaq Options Services 

October 30, 2017. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that on October 

26, 2017, Nasdaq BX, Inc. (‘‘BX’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission (‘‘SEC’’ or 

‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III, below, which Items have been 

prepared by the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to remove 

references to Nasdaq Options Services. 

The text of the proposed rule change 

is available on the Exchange’s Web site 

at http://nasdaqbx.cchwallstreet.com/, 

at the principal office of the Exchange, 

and at the Commission’s Public 

Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

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

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The purpose of this filing is to remove 

references to ‘‘Nasdaq Options Services’’ 

and replace those references with 

‘‘Nasdaq Execution Services’’ where the 

entity is not otherwise noted. The 

Exchange previously filed a proposed 

rule change which replaced Nasdaq 

Options Services with Nasdaq 

Execution Services.3 Some references to 

Nasdaq Options Services were not 

removed from the Exchange’s Rulebook. 

At this time, the Exchange proposes to 

remove those references in the Rulebook 

and replace with references to ‘‘Nasdaq 

Execution Services,’’ where applicable. 

No other changes are being proposed 

in this filing. The Exchange represents 

that these changes are concerned solely 

with the administration of the Exchange 

and do not affect the meaning, 

administration, or enforcement of any 

rules of the Exchange or the rights, 

obligations, or privileges of Exchange 

members or their associated persons in 

any way. Accordingly, this filing is 

being submitted under Rule 19b–4(f)(3). 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act,4 in general, and furthers the 

objectives of Section 6(b)(5) of the Act,5

in particular, in that it is designed to 

promote just and equitable principles of 

trade, to remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system, and, in general to protect 

investors and the public interest by 

avoiding confusion with the routing 

entity. The Exchange proposes to 

remove references to ‘‘Nasdaq Options 

Services’’ and replace those references 

with ‘‘Nasdaq Execution Services’’ 

where the entity is not otherwise noted. 

The Exchange previously filed a 

proposed rule change which replaced 

Nasdaq Options Services with Nasdaq 

Execution Services.6 This proposed 

change is non-substantive. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 


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