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Federal Register / Vol. 86, No. 24 / Monday, February 8, 2021 / Notices
total economic exposure and other terms and makes the determinations set forth in Condition 2c. In addition, the Follow-On Investment may only be completed in reliance on the Order if the Required Majority of each participating Regulated Fund determines that the making and holding of the Pre-Boarding Investments were not prohibited by section 57 as modified by rule 57b1 or rule 17d1, as applicable. The basis for the Boards findings will be recorded in its minutes.
c Additional Requirements. The Follow-On Investment may only be completed in reliance on the Order if:
i Original Investments. All of the Affiliated Funds and Regulated Funds investments in the issuer are PreBoarding Investments;
ii Advice of counsel. Independent counsel to the Board advises that the making and holding of the investments in the Pre-Boarding Investments were not prohibited by section 57 as modified by rule 57b1 or rule 17d1, as applicable;
iii Multiple Classes of Securities. All Regulated Funds and Affiliated Funds that hold Pre-Boarding Investments in the issuer immediately before the time of completion of the Co-Investment Transaction hold the same security or securities of the issuer. For the purpose of determining whether the Regulated Funds and Affiliated Funds hold the same security or securities, they may disregard any security held by some but not all of them if, prior to relying on the Order, the Required Majority is presented with all information necessary to make a finding, and finds, that: x Any Regulated Funds or Affiliated Funds holding of a different class of securities including for this purpose a security with a different maturity date is immaterial in amount, including immaterial relative to the size of the issuer; and y the Board records the basis for any such finding in its minutes. In addition, securities that differ only in respect of issuance date, currency, or denominations may be treated as the same security; and iv No control. The Affiliated Funds, the other Regulated Funds and their affiliated persons within the meaning of section 2a3C of the Act, individually or in the aggregate, do not control the issuer of the securities within the meaning of section 2a9 of the Act.
d Allocation. If, with respect to any such Follow-On Investment:
i The amount of the opportunity proposed to be made available to any Regulated Fund is not based on the Regulated Funds and the Affiliated Funds outstanding investments in the
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issuer or the security at issue, as appropriate, immediately preceding the Follow-On Investment; and ii the aggregate amount recommended by the Advisers to be invested in the Follow-On Investment by the participating Regulated Funds and any participating Affiliated Funds, collectively, exceeds the amount of the investment opportunity, then the Follow-On Investment opportunity will be allocated among them pro rata based on the size of the Internal Orders, as described in section III.A.1.b. of the application.
e Other Conditions. 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.
10. Board Reporting, Compliance and Annual Re-Approval.
a Each Adviser to a Regulated Fund will present to the Board of each Regulated Fund, on a quarterly basis, and at such other times as the Board may request, i a record of all investments in Potential Co-Investment Transactions made by any of the other Regulated Funds or any of the Affiliated Funds during the preceding quarter that fell within the Regulated Funds thencurrent Objectives and Strategies and Board-Established Criteria that were not made available to the Regulated Fund, and an explanation of why such investment opportunities were not made available to the Regulated Fund; ii a record of all Follow-On Investments in and Dispositions of investments in any issuer in which the Regulated Fund holds any investments by any Affiliated Fund or other Regulated Fund during the prior quarter; and iii all information concerning Potential CoInvestment Transactions and CoInvestment Transactions, including investments made by other Regulated Funds, or Affiliated Funds that the Regulated Fund considered but declined to participate in, so that the Independent Directors, may determine whether all Potential Co-Investment Transactions and Co-Investment Transactions during the preceding quarter, including those investments that the Regulated Fund considered but declined to participate in, comply with the Conditions.
b All information presented to the Regulated Funds 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.
c Each Regulated Funds chief compliance officer, as defined in rule
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38a-1a4, will prepare an annual report for its Board each year that evaluates and documents the basis of that evaluation the Regulated Funds compliance with the terms and Conditions of the application and the procedures established to achieve such compliance. In the case of a BDC
Downstream Fund that does not have a chief compliance officer, the chief compliance officer of the BDC that controls the BDC Downstream Fund will prepare the report for the relevant Independent Party.
d The Independent Directors including the non-interested members of each Independent Party will consider at least annually whether continued participation in new and existing Co-Investment Transactions is in the Regulated Funds best interests.
11. Record Keeping. Each Regulated Fund will maintain the records required by section 57f3 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 57f.
12. Director Independence. No Independent Director including the non-interested members of any Independent Party of a Regulated Fund will also be a director, general partner, managing member or principal, or otherwise be an affiliated person as defined in the Act of any Affiliated Fund.
13. Expenses. 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 Securities Act will, to the extent not payable by the Advisers under their respective advisory agreements with the Regulated Funds and the Affiliated Funds, be shared by the Regulated Funds and the participating Affiliated Funds in proportion to the relative amounts of the securities held or being acquired or disposed of, as the case may be.
14. Transaction Fees.29 Any transaction fee including break-up, structuring, monitoring or commitment fees but excluding brokerage or underwriting compensation permitted by section 17e or 57k received in connection with any Co-Investment Transaction will be distributed to the participants on a pro rata basis based on the amounts they invested or committed, as the case may be, in such 29 Applicants are not requesting and the Commission is not providing any relief for transaction fees received in connection with any Co-Investment Transaction.

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