North Carolina Administrative Code › Title 18 - SECRETARY OF STATE › Chapter 06 - SECURITIES DIVISION › Subchapter A - RECODIFIED RULES › Section .1800 - MISCELLANEOUS PROVISIONS INVESTMENT ADVISERS › Section 06A .1805 - PERFORMANCE BASED COMPENSATION EXEMPTION

Current through Register Vol. 39, No. 2, July 15, 2024
(a) For
				  purposes of this Rule:
(1) "Affiliate" shall
				  have the same definition as in Section 2(a)(3) of the federal Investment
				  Company Act of 1940;
(2) "Client's
				  independent agent" means any person who agrees to act as an investment advisory
				  client's agent in connection with an advisory contract, but does not include:
(A) The investment adviser relying on this
				  Rule;
(B) An affiliated person of
				  the investment adviser or an affiliated person of an affiliated person 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, any compensation in connection with the advisory
				  contract from the investment adviser, an affiliated person of the investment
				  adviser, an affiliated person of an affiliated person of the investment adviser
				  or an interested person of the investment adviser; or
(E) A person with any material relationship
				  between himself (or an affiliated person of that person) and the investment
				  adviser (or an affiliated person of the investment adviser) that exists, or has
				  existed at any time during the past two years;
(3) "Company" means a corporation,
				  partnership, association, joint stock company, trust, or any organized group of
				  persons, whether incorporated or not; or any receiver, trustee in a case under
				  Title 11 of the United States Code, or similar official or any liquidating
				  agent for any of the foregoing, in his capacity as such. "Company" shall not
				  include:
(A) A company required to be
				  registered under the federal Investment Company Act of 1940 but which is not so
				  registered;
(B) A private
				  investment company (for purposes of this Subparagraph (B), a private investment
				  company is a company which would be defined as an investment company under
				  Section 3(a) of the federal Investment Company Act of 1940 but for the
				  exception from that definition provided by Section 3(c)(1) of that
				  act);
(C) An investment company
				  registered under the federal Investment Company Act of 1940; or
(D) A business development company as defined
				  in Section 202(a)(22) of the federal Investment Company Advisers Act of 1940,
				  unless each of the equity owners of any such company, other than the investment
				  adviser entering into the contract, is a natural person or company within the
				  meaning of Subparagraph (a)(3) of this Rule;
(4) "Interested person" means:
(A) Any parent, spouse, child, or brother or
				  sister of any natural person who is an affiliated person of the investment
				  adviser;
(B) Any person who
				  knowingly has any direct or indirect beneficial interest in, or who is
				  designated as trustee, executor, or guardian of any legal interest in, any
				  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 one 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) Any person or partner or employee of any
				  person who, at any time since the beginning of the last two years, has acted as
				  legal counsel for the investment adviser.