On December 8, 2016, the staff of the Division of Corporation Finance provided additional guidance in the form of Compliance and Disclosure Interpretations (“C&DIs”) related to the types of securities that may be counted toward the Rule 144A $100 million threshold. For example, the C&DIs confirm that securities purchased and held on margin may be counted as “owned” for purposes of calculating whether the entity meets the $100 million threshold, provided that the securities are not subject to a repurchase agreement. (Question 138.05). Similarly, an entity may count securities that have been loaned to borrowers. (Question 138.06) However, the entity cannot count securities that it has borrowed, since these securities are not “owned.” (Question 138.07) An entity also cannot count short positions in securities for the same reason—these do not represent an ownership interest. (Question 138.08)
The Staff guidance also addressed aggregation with respect to fund families in the context of determining whether these entities are QIBs. The Staff has clarified that, when assessing QIB status for a family of funds, the investments held by funds that are not registered investment companies cannot be aggregated with the investments held by registered investment companies in the fund family. (Question 138.09)
Finally, the Staff addressed assessing equity ownership of limited partnerships for purposes of Rule 144(a)(1)(v). In this context, the Staff notes that the limited partners are the equity owners of a limited partnership. The general partner, unless that person is also a limited partner, need not be considered in determining whether a limited partnership is a QIB. (Question 138.10)
The C&DIs are accessible here:
https://media2.mofo.com/documents/12g.pdf
https://media2.mofo.com/documents/144a.pdf
https://media2.mofo.com/documents/f-forms.pdf
https://media2.mofo.com/documents/fpi.pdf
https://media2.mofo.com/documents/reg-s.pdf
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