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Federal Register / Vol. 86, No. 20 / Tuesday, February 2, 2021 / Notices
operate through whollyor majorityowned subsidiaries. Currently, there are no Hamilton Lane Proprietary Accounts or subsidiaries that exist and currently intend to participate in the coinvestment program.
5. Applicants state that a Regulated Fund may, from time to time, form one or more Wholly-Owned Investment Subs.6 Such a subsidiary may be prohibited from investing in a CoInvestment Transaction with a Regulated Fund other than its parent or any Affiliated Fund because it would be a company controlled by its parent Regulated Fund for purposes of section 57a4 and rule 17d1. Applicants request that each Wholly-Owned Investment Sub be permitted to participate in Co-Investment Transactions in lieu of the Regulated Fund that owns it and that the WhollyOwned Investment Subs participation in any such transaction be treated, for purposes of the Order, as though the parent Regulated Fund were participating directly.
Applicants Representations
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A. Allocation Process 6. Applicants state that the Advisers are presented with a substantial number of investment opportunities each year on behalf of their clients, and that the Advisers must determine how to allocate those opportunities in a manner that, over time, is fair and equitable to all of their clients. Such investment opportunities may be Potential CoInvestment Transactions.
7. Applicants represent that the Adviser has established processes for allocating initial investment opportunities, opportunities for subsequent investment in an issuer and dispositions of securities holdings reasonably designed to treat all clients fairly and equitably. Further, Applicants represent that these processes will be extended and modified in a manner 6 Wholly-Owned Investment Sub means an entity i that is wholly-owned by a Regulated Fund with such 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 on behalf of such Regulated Fund and, in the case of a SBIC Subsidiary defined below, maintain a license under the SBA Act defined below and issue debentures guaranteed by the SBA defined below; iii with respect to which such Regulated Funds Board has the sole authority to make all determinations with respect to the entitys participation under the Conditions; and iv that would be an investment company but for section 3c1 or 3c7 of the Act. SBIC Subsidiary means a Wholly-Owned Investment Sub that is licensed by the Small Business Administration the SBA to operate under the Small Business Investment Act of 1958, as amended, the SBA
Act as a small business investment company.

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reasonably designed to ensure that the additional transactions permitted under the Order will both i be fair and equitable to the Regulated Funds and Affiliated Funds and ii comply with the Conditions. In particular, consistent with Condition 1, if a Potential CoInvestment Transaction falls within the then-current Objectives and Strategies 7
and any Board-Established Criteria 8 of a Regulated Fund, the policies and procedures will require that the Adviser to such Regulated Fund receives sufficient information to allow such Advisers investment committee to make its independent determination and recommendations under the Conditions.
8. The Adviser to each applicable Regulated Fund will then make an independent determination of the appropriateness of the investment for the Regulated Fund in light of the Regulated Funds then-current circumstances. If the Adviser to a Regulated Fund deems the Regulated Funds participation in such Potential Co-Investment Transaction to be appropriate, then it will formulate a recommendation regarding the proposed order amount for the Regulated Fund.
9. Applicants state that, for each Regulated Fund and Affiliated Fund whose Adviser recommends participating in a Potential CoInvestment Transaction, the Adviser will submit a proposed order amount to 7 Objectives and Strategies means with respect to any Regulated Fund, its investment objectives and strategies, as described in its most current registration statement on Form N2, other current filings with the Commission under the Securities Act of 1933 the Securities Act or under the Securities Exchange Act of 1934, as amended, and its most current report to stockholders.
8 Board-Established Criteria means criteria that the Board of a Regulated Fund may establish from time to time to describe the characteristics of Potential Co-Investment Transactions regarding which the Adviser to the Regulated Fund should be notified under Condition 1. The Board-Established Criteria will be consistent with the Regulated Funds Objectives and Strategies. If no BoardEstablished Criteria are in effect, then the Regulated Funds Adviser will be notified of all Potential CoInvestment Transactions that fall within the Regulated Funds then-current Objectives and Strategies. Board-Established Criteria will be objective and testable, meaning that they will be based on observable information, such as industry/
sector of the issuer, minimum EBITDA of the issuer, asset class of the investment opportunity or required commitment size, and not on characteristics that involve a discretionary assessment. The Adviser to the Regulated Fund may from time to time recommend criteria for the Boards consideration, but Board-Established Criteria will only become effective if approved by a majority of the Independent Trustees. The Independent Trustees of a Regulated Fund may at any time rescind, suspend or qualify its approval of any Board-Established Criteria, though applicants anticipate that, under normal circumstances, the Board would not modify these criteria more often than quarterly.

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an internal investment committee which the Adviser will establish to handle the allocation of investment opportunities in Potential Co-Investment Transactions. Applicants state further that, at this stage, each proposed order amount may be reviewed and adjusted, in accordance with the Advisers written allocation policies and procedures, by the Advisers investment committee.9 The order of a Regulated Fund or Affiliated Fund resulting from this process is referred to as its Internal Order. The Internal Order will be submitted for approval by the Required Majority of any participating Regulated Funds in accordance with the Conditions.10
10. If the aggregate Internal Orders for a Potential Co-Investment Transaction do not exceed the size of the investment opportunity immediately prior to the submission of the orders to the underwriter, broker, dealer or issuer, as applicable the External Submission, then each Internal Order will be fulfilled as placed. If, on the other hand, the aggregate Internal Orders for a Potential Co-Investment Transaction exceed the size of the investment opportunity immediately prior to the External Submission, then the allocation of the opportunity will be made pro rata on the basis of the size of the Internal Orders.11 If, subsequent to such External Submission, the size of the opportunity is increased or decreased, or if the terms of such opportunity, or the facts and circumstances applicable to the Regulated Funds or the Affiliated Funds consideration of the opportunity, change, the participants will be permitted to submit revised Internal Orders in accordance with written allocation policies and procedures that the Advisers will establish, implement and maintain. The Board of the 9 The reason for any such adjustment to a proposed order amount will be documented in writing and preserved in the records of the Advisers.
10 Required Majority means a required majority, as defined in section 57o of the Act. 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 57o.
11 Each Adviser will maintain records of all proposed order amounts, Internal Orders and External Submissions in conjunction with Potential Co-Investment Transactions. Each applicable Adviser will provide the Eligible Trustees with information concerning the Affiliated Funds and Regulated Funds order sizes to assist the Eligible Trustees with their review of the applicable Regulated Funds investments for compliance with the Conditions. Eligible Trustees means, with respect to a Regulated Fund and a Potential CoInvestment Transaction, the members of the Regulated Funds Board eligible to vote on that Potential Co-Investment Transaction under section 57o of the Act.

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