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Federal Register / Vol. 86, No. 24 / Monday, February 8, 2021 / Notices
Dispositions with respect to the same issuer would be governed by Condition 6 under the Standard Review Dispositions.19
14. A Regulated Fund may participate in a Standard Review Disposition either with the approval of the Required Majority under Condition 6d or without Board approval under Condition 6c if i the Disposition is a Pro Rata Disposition 20 or ii the securities are Tradable Securities 21 and the Disposition meets the other requirements of Condition 6cii. Pro Rata Dispositions and Dispositions of a Tradable Security remain subject to the Boards periodic review in accordance with Condition 10.

registration rights and any other rights, so that none of them receives terms more favorable than any other.
However, the settlement date for an Affiliated Fund in a Co-Investment Transaction may occur up to ten business days after the settlement date for the Regulated Fund, and vice versa.
Nevertheless, in all cases, i the date on which the commitment of the Affiliated Funds and Regulated Funds is made will be the same even where the settlement date is not and ii the earliest settlement date and the latest settlement date of any Affiliated Fund or Regulated Fund participating in the transaction will occur within ten business days of each other.

D. Delayed Settlement 15. Applicants represent that under the terms and Conditions of the application, all Regulated Funds and Affiliated Funds participating in a CoInvestment Transaction will invest at the same time, for the same price and with the same terms, conditions, class,
E. Holders 16. Under Condition 15, if an Adviser, its principals, or any person controlling, controlled by, or under common control with the Adviser or its 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 15.

19 However, with respect to an issuer, if a Regulated Funds first Co-Investment Transaction is an Enhanced Review Disposition, and the Regulated Fund does not dispose of its entire position in the Enhanced Review Disposition, then before such Regulated Fund may complete its first Standard Review Follow-On in such issuer, the Eligible Directors must review the proposed Follow-On Investment not only on a stand-alone basis but also in relation to the total economic exposure in such issuer i.e., in combination with the portion of the Pre-Boarding Investment not disposed of in the Enhanced Review Disposition, and the other terms of the investments. This additional review would be required because such findings would not have been required in connection with the prior Enhanced Review Disposition, but they would have been required had the first Co-Investment Transaction been an Enhanced Review Follow-On.
20 A Pro Rata Disposition is a Disposition i in which the participation of each Regulated Fund and each Affiliated Fund is proportionate to its outstanding investment in the security subject to Disposition immediately preceding the Disposition;
and ii in the case of a Regulated Fund, a majority of the Board has approved the Regulated Funds participation in pro rata Dispositions as being in the best interests of the Regulated Fund. The Regulated Funds Board may refuse to approve, or at any time rescind, suspend or qualify, its approval of Pro Rata Dispositions, in which case all subsequent Dispositions will be submitted to the Regulated Funds Eligible Directors.
21 Tradable Security means a security that meets the following criteria at the time of Disposition: i It trades on a national securities exchange or designated offshore securities market as defined in rule 902b under the Securities Act;
ii it is not subject to restrictive agreements with the issuer or other security holders; and iii it trades with sufficient volume and liquidity findings as to which are documented by the Advisers to any Regulated Funds holding investments in the issuer and retained for the life of the Regulated Fund to allow each Regulated Fund to dispose of its entire position remaining after the proposed Disposition within a short period of time not exceeding 30 days at approximately the value as defined by section 2a41 of the Act at which the Regulated Fund has valued the investment.

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Applicants Legal Analysis 1. Section 17d of the Act and rule 17d1 under the Act prohibit participation by a registered investment company and an affiliated person in any joint enterprise or other joint arrangement or profit-sharing plan, as defined in the rule, without prior approval by the Commission by order upon application. Section 17d of the Act and rule 17d1 under the Act are applicable to Regulated Funds that are registered closed-end investment companies.
2. Similarly, with regard to BDCs, section 57a4 of the Act generally prohibits certain persons specified in section 57b from participating in joint transactions with the BDC or a company controlled by the BDC in contravention of rules as prescribed by the Commission. Section 57i of the Act provides that, until the Commission prescribes rules under section 57a4, the Commissions rules under section 17d of the Act applicable to registered closed-end investment companies will be deemed to apply to transactions subject to section 57a4. Because the Commission has not adopted any rules under section 57a4, rule 17d1 also applies to joint transactions with Regulated Funds that are BDCs.
3. Co-Investment Transactions are prohibited by either or both of rule 17d 1 and section 57a4 without a prior exemptive order of the Commission to
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the extent that the Affiliated Funds and the Regulated Funds participating in such transactions fall within the category of persons described by rule 17d1 and/or section 57b, as modified by rule 57b1 thereunder, as applicable, vis-a-vis each participating Regulated Fund. Muzinich BDC Adviser will control Muzinich BDC and any other Adviser will be, controlling, controlled by or under common control with Muzinich BDC Adviser. Each of the participating Regulated Funds and Affiliated Funds may be deemed to be affiliated persons vis-a-vis a Regulated Fund within the meaning of section 2a3 by reason of common control because i an Adviser, that is either an Existing Adviser or an entity that controls, is controlled by, or under common control with an Existing Adviser, will be the investment adviser and sub-adviser, if any to each of the Regulated Funds and the Affiliated Funds and, in the case of Muzinich Propretary Accounts which do not have an investment adviser, such Muzinich Proprietary Accounts will nonetheless be controlling, controlled by or under common control with an Adviser; ii Muzinich BDC Adviser is the Adviser to, and may be deemed to control, Muzinich BDC; and an Adviser will be the investment adviser and sub-adviser to, and may be deemed to control, any Future Regulated Fund; iii each BDC
Downstream Fund will be deemed to be controlled by its BDC parent and/or its BDC parents Adviser; and iv the Advisers are under common control.
Thus, each Regulated Fund and each Affiliated Fund may be deemed to be a person related to a Regulated Fund or BDC Downstream Fund in a manner described by section 57b or section 17d in the case of Regulated Funds that are registered under the Act; and therefore would be prohibited by section 57a4 or section 17d in the case of Regulated Funds that are registered under the Act and rule 17d 1 from participating in Co-Investment Transactions. Further, because the BDC
Downstream Funds and Wholly-Owned Investment Subs will be controlled by the Regulated Funds, the BDC
Downstream Funds and Wholly-Owned Investment Subs are subject to section 57a4 or section 17d in the case of Wholly-Owned Investment Subs controlled by Regulated Funds that are registered under the Act and thus would also be subject to the provisions of rule 17d1. In addition, the Muzinich Proprietary Accounts are entities that are or will be controlling, controlled by or under common control with Muzinich BDC Adviser. Thus, the
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