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Federal Register / Vol. 86, No. 119 / Thursday, June 24, 2021 / Notices 12. 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.13 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.14

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B. Follow-On Investments 13. Applicants state that from time to time the Regulated Funds and Affiliated Funds may have opportunities to make Follow-On Investments 15 in an issuer in which a Regulated Fund and one or more other Regulated Funds and/or Affiliated Funds previously have invested.
14. Applicants propose that FollowOn Investments would be divided into two categories depending on whether the prior investment was a CoInvestment Transaction or a PreBoarding Investment.16 If the Regulated 13 The Advisers 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 Directors with information concerning the Affiliated Funds and Regulated Funds order sizes to assist the Eligible Directors with their review of the applicable Regulated Funds investments for compliance with the Conditions.
Eligible Directors means, with respect to a Regulated Fund and a Potential Co-Investment Transaction, the members of the Regulated Funds Board eligible to vote on that Potential CoInvestment Transaction under section 57o of the Act.
14 The Board of the Regulated Fund will then either approve or disapprove of the investment opportunity in accordance with Condition 2, 6, 7, 8 or 9, as applicable.
15 Follow-On Investment means an additional investment in the same issuer, including, but not limited to, through the exercise of warrants, conversion privileges or other rights to purchase securities of the issuer.
16 Pre-Boarding Investments are investments in an issuer held by a Regulated Fund as well as one or more Affiliated Funds and/or one or more other
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Funds and Affiliated Funds have previously participated in a CoInvestment Transaction with respect to the issuer, then the terms and approval of the Follow-On Investment would be subject to the Standard Review FollowOns described in Condition 8. If the Regulated Funds and Affiliated Funds have not previously participated in a Co-Investment Transaction with respect to the issuer but hold a Pre-Boarding Investment, then the terms and approval of the Follow-On Investment would be subject to the Enhanced-Review FollowOns described in Condition 9. All Enhanced Review Follow-Ons require the approval of the Required Majority.
For a given issuer, the participating Regulated Funds and Affiliated Funds would need to comply with the requirements of Enhanced-Review Follow-Ons only for the first CoInvestment Transaction. Subsequent CoInvestment Transactions with respect to the issuer would be governed by the requirements of Standard Review Follow-Ons.
15. A Regulated Fund would be permitted to invest in Standard Review Follow-Ons either with the approval of the Required Majority under Condition 8c or without Board approval under Condition 8b if it is i a Pro Rata Follow-On Investment 17 or ii a NonNegotiated Follow-On Investment.18
Applicants believe that these Pro Rata and Non-Negotiated Follow-On Regulated Funds that were acquired prior to participating in any Co-Investment Transaction: i In transactions in which the only term negotiated by or on behalf of such funds was price in reliance on one of the JT No-Action Letters defined below;
or ii in transactions occurring at least 90 days apart and without coordination between the Regulated Fund and any Affiliated Fund or other Regulated Fund.
17 A Pro Rata Follow-On Investment is a Follow-On Investment i in which the participation of each Affiliated Fund and each Regulated Fund is proportionate to its outstanding investments in the issuer or security, as appropriate, immediately preceding the Follow-On Investment, and ii in the case of a Regulated Fund, a majority of the Board has approved the Regulated Funds participation in the pro rata Follow-On Investments 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 Follow-On Investments, in which case all subsequent Follow-On Investments will be submitted to the Regulated Funds Eligible Directors in accordance with Condition 8c.
18 A Non-Negotiated Follow-On Investment is a Follow-On Investment in which a Regulated Fund participates together with one or more Affiliated Funds and/or one or more other Regulated Funds i in which the only term negotiated by or on behalf of the funds is price and ii with respect to which, if the transaction were considered on its own, the funds would be entitled to rely on one of the JT NoAction Letters.
JT No-Action Letters means SMC Capital, Inc., SEC No-Action Letter pub. avail. Sept. 5, 1995 and Massachusetts Mutual Life Insurance Company, SEC No-Action Letter pub. avail. June 7, 2000.

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Investments do not present a significant opportunity for overreaching on the part of any Adviser and thus do not warrant the time or the attention of the Board.
Pro Rata Follow-On Investments and Non-Negotiated Follow-On Investments remain subject to the Boards periodic review in accordance with Condition 10.
C. Dispositions 16. Applicants propose that Dispositions 19 would be divided into two categories. If the Regulated Funds and Affiliated Funds holding investments in the issuer have previously participated in a CoInvestment Transaction with respect to the issuer, then the terms and approval of the Disposition would be subject to the Standard Review Dispositions described in Condition 6. If the Regulated Funds and Affiliated Funds have not previously participated in a Co-Investment Transaction with respect to the issuer but hold a Pre-Boarding Investment, then the terms and approval of the Disposition would be subject to the Enhanced Review Dispositions described in Condition 7. Subsequent Dispositions with respect to the same issuer would be governed by Condition 6 under the Standard Review Dispositions.20
17. 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 21 or ii the 19 Disposition means the sale, exchange or other disposition of an interest in a security of an issuer.
20 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 is 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.
21 A Pro Rata Disposition is a Disposition i in which the participation of each Affiliated Fund and each Regulated 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
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