[Federal Register Volume 85, Number 149 (Monday, August 3, 2020)]
[Notices]
[Pages 46755-46759]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-16714]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 33959; 812-14997]
1WS Credit Income Fund, et al.
July 28, 2020.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice.
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Notice of application for an order under section 17(d) of the
Investment Company Act of 1940 (the ``Act'') and rule 17d-1 under the
Act permitting certain joint transactions otherwise prohibited by
section 17(d) of the Act and under rule 17d-1 under the Act.
Summary of Application: Applicants request an order to permit certain
closed-end management investment companies to co-invest in portfolio
companies with each other and with affiliated investment funds.
Applicants: 1WS Credit Income Fund (``1WS'' or the ``Existing
Regulated Fund''), 1WS Capital Advisors, LLC (``1WS Capital'' or the
``Existing 1WS Adviser''), the investment adviser to 1WS, on behalf of
itself and its successors,\1\ One William Street Capital Master Fund,
Ltd., OWS Credit Opportunity Master Fund, Ltd., OWS ABS Master Fund II,
LP, OWS COF I Master, L.P., OWS ABS IV, LP, OWS Global Fixed Income
Fund (USD-Hedged), Ltd., OWS Credit Opportunity Fund, L.P., One William
Street Capital Partners, L.P., One William Street Capital Partners II,
L.P., One William Street Capital Offshore Fund, Ltd., OWS Capital
Offshore Fund II, Ltd, One William Street Capital Intermediate Fund,
L.P., OWS Credit Opportunity Offshore Fund, Ltd., OWS Credit
Opportunity Offshore Fund II, Ltd, OWS Credit Opportunity Offshore Fund
III, Ltd, OWS Credit Opportunity Intermediate Fund, LP, OWS Credit
Opportunity I, LLC, OWS COF I, Ltd., OWS ABS Fund II, Ltd. and OWS ABS
Fund V, Ltd.
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\1\ The term ``successor,'' as applied to the Adviser, means an
entity that results from a reorganization into another jurisdiction
or change in the type of business organization.
Filing Dates: The application was filed on January 11, 2019, and
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amended on May 21, 2019, June 17, 2019, and May 29, 2020.
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 emailing the Commission's
Secretary at [email protected] and serving applicants with a
copy of the request by email. Hearing requests should be received by
the Commission by 5:30 p.m. on August 24, 2020, and should be
accompanied by proof of service on the 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
[[Page 46756]]
notification by emailing the Commission's Secretary at [email protected].
ADDRESSES: The Commission: [email protected]. Applicants: c/o
Kurt A. Locher, 1WS Capital Advisors, LLC, [email protected].
FOR FURTHER INFORMATION CONTACT: Asaf Barouk, Attorney Adviser, at
(202) 551-4029 or David Nicolardi, Branch Chief, at (202) 551-6825
(Division of Investment Management, Chief Counsel's Office).
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained via the
Commission's website 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. 1WS is a Delaware statutory trust, registered as a non-
diversified, closed-end management investment company that has elected
to operate as an interval fund pursuant to Rule 23c-3 under the Act.
1WS' Objectives and Strategies \2\ are to seek attractive risk-adjusted
total returns through generating income and capital appreciation. The
Board \3\ of 1WS is comprised of 3 trustees, 2 of whom are Non-
Interested Trustees.\4\
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\2\ ``Objectives and Strategies'' means a Regulated Fund's
investment objectives and strategies, as described in the Regulated
Fund's most current registration statement on Form N-2 or, as
applicable, other filings the Regulated Fund has made with the
Commission under the Securities Act of 1933 (the ``1933 Act''), or
under the Securities Exchange Act of 1934, as amended, and the
Regulated Fund's reports to shareholders.
\3\ The term ``Board'' refers to the board of directors or
trustees of any Regulated Fund.
\4\ The term ``Non-Interested Trustees'' refers to the trustees
of any Regulated Fund who are not ``interested persons'' within the
meaning of section 2(a)(19) of the Act.
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2. 1WS Capital is an investment adviser that is registered with the
Commission under the Investment Advisers Act of 1940 (the ``Advisers
Act''). 1WS Capital is controlled by its sole managing member, One
William Street Capital Management, L.P. 1WS Capital serves as
investment adviser to 1WS and manages 1WS' portfolio in accordance with
1WS' Objectives and Strategies.
3. An Existing Affiliated Fund is an entity whose investment
adviser is One William Street Capital Management, L.P., the managing
member of 1WS Adviser and that would be an investment company but for
section 3(c)(1) or 3(c)(7) of the Act.\5\
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\5\ ``1WS Adviser'' means the Existing 1WS Adviser, or its
managing member, One William Street Capital Management, L.P., and
any current or future investment adviser that (i) controls, is
controlled by, or is under common control with 1WS Capital, (ii) is
registered as an investment adviser under the Advisers Act, and
(iii) is not a Regulated Fund or a subsidiary of a Regulated Fund.
The term ``Adviser'' means any 1WS Adviser.
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4. Applicants seek an order (``Order'') to permit one or more
Regulated Funds \6\ and/or one or more Affiliated Funds \7\ to
participate in the same investment opportunities through a proposed co-
investment program (the ``Co-Investment Program'') where such
participation would otherwise be prohibited under section 17(d) 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 to price (``Private Placement
Securities'') \8\ 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''). ``Co-Investment Transaction'' means any
transaction in which a Regulated Fund (or its Wholly-Owned Investment
Sub (as defined below) participates 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 Wholly-Owned
Investment Sub) 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.\9\
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\6\ ``Regulated Fund'' means the Existing Regulated Fund and any
Future Regulated Fund. ``Future Regulated Fund'' means any closed-
end management investment company (a) that is registered under the
Act, (b) whose investment adviser is 1WS Adviser or its managing
member, One William Street Capital Management, L.P., and (c) that
intends to participate in the Co-Investment Program.
\7\ ``Affiliated Funds'' means the Existing Affiliated Funds and
any Future Affiliated Fund. ``Future Affiliated Fund'' means any
entity (a) whose investment adviser is a 1WS 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.
\8\ The term ``private placement transactions'' means
transactions in which the offer and sale of securities by the issuer
are exempt from registration under the 1933 Act, as amended.
\9\ All 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.
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5. Applicants state that any of the Regulated Funds may, from time
to time, form a special purpose subsidiary (a ``Wholly-Owned Investment
Sub'').\10\ With respect to each Wholly-Owned Investment Sub, such a
subsidiary would be prohibited from investing in a Co-Investment
Transaction with any Affiliated Fund or Regulated Fund because it would
be a company controlled by its parent Regulated Fund for purposes of
rule 17d-1 of the Act. Applicants request that each Wholly-Owned
Investment Sub be permitted to participate in Co-Investment
Transactions in lieu of its parent Regulated Fund and that the Wholly-
Owned Investment Sub's participation in any such transaction be
treated, for purposes of the Order, as though the parent Regulated Fund
were participating directly.
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\10\ The term ``Wholly-Owned Investment Sub'' means an entity
(a) that is wholly-owned by a Regulated Fund (with the Regulated
Fund at all times holding, beneficially and of record, 100% of the
voting and economic interests); (b) whose sole business purpose is
to hold one or more investments on behalf of the Regulated Fund; (c)
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 (d) that
would be an investment company but for section 3(c)(1) or 3(c)(7) of
the Act. Any future subsidiaries of the Regulated Funds that
participate in Co-Investment Transactions will be Wholly-Owned
Investment Subs.
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6. Applicants represent that this treatment is justified because a
Wholly-Owned Investment Sub 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 Sub. The Regulated Fund's Board would make all
relevant determinations under the Conditions with regard to a Wholly-
Owned Investment Sub'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 Sub 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 Subs, the Board will also be informed of, and take into
consideration, the relative participation of the Regulated Fund and the
Wholly-Owned Investment Sub.\11\
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\11\ The participation of a Regulated Fund in a Potential Co-
Investment Transaction may only be approved by both a majority of
the trustees of the Board who have no financial interest in such
transaction, plan, or arrangement and a majority of such trustees of
the Board who are Non-Interested Trustees (a ``Required Majority'')
eligible to vote on that Co-Investment Transaction (the ``Eligible
Trustees'').
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7. When considering Potential Co-Investment Transactions for any
Regulated Fund, the applicable Adviser will consider only the
Objectives and Strategies, investment policies,
[[Page 46757]]
investment positions, capital available for investment (``Available
Capital''),\12\ and other pertinent factors applicable to that
Regulated Fund. The Board of each Regulated Fund, including the Non-
Interested Trustees, has determined that it is in the best interests of
the Regulated Fund to participate in Co-Investment Transactions.\13\
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\12\ The amount of each Regulated Fund's Available Capital will
be determined based on the amount of cash on hand, existing
commitments and reserves, if any, the targeted leverage level,
targeted asset class mix and other investment policies and
restrictions set from time to time by the Board of the applicable
Regulated Fund or imposed by applicable laws, rules, regulations or
interpretations.
\13\ The Regulated Funds, however, will not be obligated to
invest, or co-invest, when investment opportunities are referred to
them.
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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
Eligible Trustees, and the Required Majority 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 or Follow on Investment 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 Trustees. 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 Trustees.
10. No Non-Interested Trustee of a Regulated Fund will have a
financial interest in any Co-Investment Transaction, other than
indirectly through share ownership in one of the Regulated Funds.
11. If the Adviser, the Principals,\14\ or any person controlling,
controlled by, or under common control with the Adviser or the
Principals, and the Affiliated Funds (collectively, the ``Holders'')
own in the aggregate more than 25 percent 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 that
this Condition will ensure that the Non-Interested Trustees will act
independently in evaluating the Co-Investment Program, because the
ability of the Adviser or the Principals to influence the Non-
Interested Trustees by a suggestion, explicit or implied, that the Non-
Interested Trustees can be removed will be limited significantly. The
Non-Interested Trustees shall evaluate and approve any such independent
party, taking into account its qualifications, reputation for
independence, cost to the shareholders, and other factors that they
deem relevant.
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\14\ Certain employees and principals of 1WS Adviser
(collectively, the ``Principals'').
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Applicants' Legal Analysis
1. 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.
2. Applicants state that in the absence of the requested relief, in
some circumstances, the Regulated Funds would be limited in their
ability to participate in attractive and appropriate investment
opportunities. Applicants believe that the proposed terms and
conditions set forth in the application ensure that the proposed Co-
Investment 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 believe that the
participation of the Regulated Funds in Co-Investment Transactions done
in accordance with the Conditions would be consistent with the
provisions, policies, and purposes of the Act and would be done in a
manner that was not different from, or less advantageous than, the
other participants.
Applicants' Conditions
Applicants agree that the Order granting the requested relief shall
be subject to the following Conditions:
1. Each time a 1WS 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 such Regulated Fund in light of
the Regulated Fund's then-current 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 Co-
Investment 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 Trustees of each participating Regulated Fund
with information concerning each participating party's Available
Capital to assist the Eligible Trustees 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 Trustees 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 Funds' participation in the
Potential Co-Investment Transaction, a Required Majority concludes
that:
(i) The terms of the Potential Co-Investment Transaction, including
the consideration to be paid, are reasonable and fair to the Regulated
Fund and its shareholders and do not involve overreaching in respect of
the Regulated
[[Page 46758]]
Fund or its shareholders on the part of any person concerned;
(ii) the Potential Co-Investment Transaction is consistent with:
(A) The interests of the shareholders of the Regulated Fund; 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 other Regulated Funds or Affiliated Funds;
provided that, if any other Regulated Fund or Affiliated Fund, 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 Trustees 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 an Affiliated
Fund or a 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
Funds in accordance with the amount of each party's investment; and
(iv) the proposed investment by the Regulated Fund will not benefit
the Adviser, the Affiliated Funds or the 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) 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 then-current 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 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,\15\ a Regulated Fund will not invest in reliance on the
Order in any issuer in which another Regulated Fund, Affiliated Fund,
or any affiliated person of another Regulated Fund or Affiliated Fund
is an existing investor.
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\15\ This exception applies only to Follow-On Investments by a
Regulated Fund in issuers in which that Regulated Fund already holds
investments.
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6. A Regulated Fund will not participate in any Potential Co-
Investment 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 Co-Investment Transaction, the applicable Adviser 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 Trustees, 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 any Regulated Fund desires to make
a Follow-On Investment in a portfolio company whose securities were
acquired in a Co-Investment Transaction, the applicable Adviser will:
(i) Notify each Regulated Fund that participated in the Co-
Investment Transaction of the proposed transaction 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
[[Page 46759]]
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 Trustees, 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 the
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
maximum amount proposed to be invested by each.
(d) The acquisition of Follow-On Investments as permitted by this
Condition will be considered a Co-Investment Transaction for all
purposes and subject to the other Conditions set forth in the
application.
9. The Non-Interested Trustees 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 other Regulated Funds or Affiliated Funds that the
Regulated Fund considered but declined to participate in, so that the
Non-Interested Trustees 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 Trustees
will consider at least annually the continued appropriateness for the
Regulated Fund of participating in new and existing Co-Investment
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
business development company (as defined in section 2(a)(48) of the
Act) 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 Trustee 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 Co-Investment 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 the 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.
13. Any transaction fee \16\ (including break-up or commitment fees
but excluding broker's fees contemplated by section 17(e) 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 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 agreement between
the Adviser and the Regulated Fund or Affiliated Fund.
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\16\ Applicants are not requesting and the staff is not
providing any relief for transaction fees received in connection
with any Co-Investment Transaction.
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14. If the Holders own in the aggregate more than 25 percent of the
Shares of a Regulated Fund, then the Holders will vote such Shares (i)
as directed by an independent third party, or (ii) in the same
percentages as the Regulated Fund's other shareholders (not including
the Holders) 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 law 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) under the Act, will prepare an annual report for its
Board that evaluates (and documents the basis of that evaluation) the
Regulated Fund's compliance with the terms and conditions of the
application and the procedures established to achieve such compliance.
For the Commission, by the Division of Investment Management,
under delegated authority.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-16714 Filed 7-31-20; 8:45 am]
BILLING CODE 8011-01-P