Code of Maryland Regulations › Title 02 - OFFICE OF THE ATTORNEY GENERAL › Subtitle 02 - DIVISION OF SECURITIES › Chapter 02.02.05 - Investment Adviser Regulations › Section 02.02.05.08 - Exemption from the Maryland Securities Act, Corporations and Associations Article, Section11-302(e)(1)(i) for Performance-Based Compensation

Current through Register Vol. 51, No. 14, July 12, 2024
A. Definitions. As used in this regulation:
(1) "Affiliate" has the meaning stated in § 2(a)(3) of the Investment Company Act of 1940.
(2) "Client's independent agent" means a person who agrees to act as an investment advisory client's agent in connection with the contract, but does not include:
(a) The investment adviser relying on this regulation;
(b) An affiliate of the investment adviser or an affiliate of an affiliate of the investment adviser, including an investment adviser representative;
(c) An interested person of the investment adviser;
(d) A person who receives, directly or indirectly, compensation in connection with the contract from the investment adviser, an affiliate of the investment adviser, an affiliate of the affiliate of the investment adviser, or an interested person of the investment adviser; or
(e) A person having the benefit of a material relationship between or among himself (or an affiliate of that person) and the investment adviser (or an affiliate of the investment adviser) that exists, or has existed at any time during the past 2 years.
(3) Company.
(a) Except for the companies listed in §A(3)(b) of this regulation, "company" means a corporation, partnership, association, joint stock company, trust, or any organized group of persons, whether incorporated or not, or a receiver, trustee in a case under Title 11 of the United States Code, or similar official or a liquidating agent for any of the above, in his capacity as such.
(b) Unless each of the equity owners of the companies listed below, other than the investment adviser entering into the contract, is a natural person as described in §B(1) of this regulation or is a company as defined in §A(3)(a) of this regulation, "company" does not include:
(i) A company required to be registered under the Investment Company Act of 1940 but that is not so registered;
(ii) A private investment company that, for purposes of this paragraph, means a company that would be defined as an investment company under § 3(a) of the Investment Company Act of 1940 but for the exception from that definition provided by § 3(c)(1) of that act;
(iii) An investment company registered under the Investment Company Act of 1940; or
(iv) A business development company, as defined in § 202(a)(22) of the Investment Advisers Act of 1940.
(4) "Interested person" means:
(a) A member of the immediate family of a natural person who is an affiliate of the investment adviser;
(b) A person who knowingly has a direct or indirect beneficial interest in, or who is designated as trustee, executor, or guardian of a legal interest in, a security issued by the investment adviser or by a controlling person of the investment adviser if that beneficial or legal interest exceeds:
(i) One-tenth of 1 percent of any class of outstanding securities of the investment adviser or a controlling person of the investment adviser; or
(ii) Five percent of the total assets of the person seeking to act as the client's independent agent; or
(c) A person or partner or employee of a person who, at any time during the past 2 years, has acted as legal counsel for the investment adviser.