As filed with the U.S. Securities and Exchange Commission on March 31, 2022
File No. 811-10223
UNITED STATES OF AMERICA
BEFORE THE
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
APPLICATION PURSUANT TO SECTIONS 6(C) AND 23(C)(3) OF THE
INVESTMENT COMPANY ACT OF 1940
(THE “ACT”) FOR AN ORDER GRANTING CERTAIN EXEMPTIONS FROM THE
PROVISIONS OF RULE 23C-3
THEREUNDER
EXPEDITED REVIEW REQUESTED UNDER 17 CFR 270.0-5(d)
In the Matter of the Application of:
Voya Senior Income Fund
7337 E. Doubletree Ranch Road, Suite 100
Scottsdale, AZ 85258
and
Voya Investments, LLC
7337 E. Doubletree Ranch Road, Suite 100
Scottsdale, AZ 85258
and
Voya Investment Management Co. LLC
230 Park Avenue
New York, NY, 10169
and
Voya Investments Distributor, LLC
7337 E. Doubletree Ranch Road, Suite 100
Scottsdale, AZ 85258
Please send all communications, notices and orders regarding this Application to:
Huey P. Falgout, Jr.
Voya Investments, LLC
7337 E. Doubletree Ranch Road, Suite 100
Scottsdale, AZ 85258
Page 1 of 65 sequentially numbered pages (including exhibits)
With copies to:
Elizabeth J. Reza
Ropes & Gray LLP
Prudential Tower
800 Boylston Street
Boston, MA 02199-3600
I. |
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II. |
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A. |
Voya Senior Income Fund | 3 | ||||
B. |
Voya Investments, LLC | 5 | ||||
C |
Voya Investment Management Co. LLC | 5 | ||||
D. |
Voya Investments Distributor, LLC | 6 | ||||
E. |
Other Requirements for a Rule 23c-3 Fund | 6 | ||||
III. |
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IV. |
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V. |
9 | |||||
A. |
Background | 9 | ||||
B. |
Monthly Repurchases | 11 | ||||
VI. |
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VII. |
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File No. 811-10223
Voya Senior Income Fund (the “Fund”) is a Delaware statutory trust organized on December 14, 2000 and is registered under the Investment Company Act of 1940, as amended (the “Act”), as a diversified, closed-end management investment company that operates as an interval fund. The Fund is advised by Voya Investments, LLC (“Voya Investments”) and sub-advised by Voya Investment Management Co. LLC (“Voya IM” and together with Voya Investments, the “Adviser”). Voya Investments Distributor, LLC (the “Distributor”) is the principal underwriter and distributor of the Fund’s shares. The Fund, the Adviser and the Distributor are referred to herein as the “Applicants.”
The Applicants hereby seek an order (the “Order”) from the U.S. Securities and Exchange Commission (the “Commission” or the “SEC”) pursuant to Sections 6(c) and 23(c)(3) of the Act for an exemption from certain provisions of Rule 23c-3 under the Act to permit the Fund to make repurchase offers to its common shareholders every month and to provide notification to its common shareholders of an upcoming repurchase offer no less than seven and no more than fourteen calendar days in advance of the repurchase request deadline.
2
The Order sought by this application (the “Application”) would supersede the order dated October 17, 2001, issued by the Commission to ING Pilgrim Investments, LLC and certain of its affiliates under Sections 6(c) and 23(c)(3) of the Act and Rule 23c-3 under the Act permitting the Fund to make repurchase offers to its common shareholders every month subject to certain conditions set forth in the order (the “Prior Order”),1 with the result that no person will continue to rely on the Prior Order if the Order is granted.
Applicants request that the Order also apply to any registered closed-end management investment company that has been previously organized or that may be organized in the future for which the Adviser, or any entity controlling, controlled by, or under common control with the Adviser, or any successor in interest to any such entity2, acts as an investment adviser, and which operates as an interval fund pursuant to Rule 23c-3 under the Act (each a “Future Fund” and, together with the Fund, the “Funds”). Any of the Funds relying on this relief in the future will do so in compliance with the terms and conditions of this Application. Applicants represent that each entity presently intending to rely on the requested relief is listed as an Applicant. Unless otherwise provided relief, the Fund will comply with all other provisions of Rule 23c-3. Terms as used in this Application that are defined in Rule 23c-3 have the same meaning as they are given in Rule 23c-3.
A. | Voya Senior Income Fund |
The Fund is a Delaware statutory trust organized on December 14, 2000 and is registered under the Act as a diversified, closed-end management investment company that operates as an interval fund pursuant to Rule 23c-3 under the Act. The Fund’s investment objective is to provide investors with a high level of monthly income. Common shares of the Fund are offered on a continuous basis at net asset value per share plus the applicable sales load, if any, and are not offered or traded in the secondary market and are not listed on any exchange or quoted on any quotation medium.
The Fund operates as an interval fund pursuant to Rule 23c-3 under the Act and offers its shareholders an exchange feature under which the shareholders of the Fund may, in connection with the Fund’s periodic repurchase offers, exchange their shares of the Fund for shares of the same class of registered open-end investment companies that are in the Fund’s group of investment companies (collectively, the “Other Funds”). Shares of any of the Funds operating pursuant to Rule 23c-3 that are exchanged for shares of Other Funds will be included as part of the repurchase offer amount for such Fund as specified in Rule 23c-3 under the Act. Any exchange option will continue to comply with Rule 11a-3 under the Act, as if the Fund were an open-end investment company subject to Rule 11a-3. In complying with Rule 11a-3 under the Act, the Fund will treat an early withdrawal charge as if it were a contingent deferred sales load (“CDSL”).3
1 In the Matter of ING Pilgrim Investments, LLC, et al., Rel. No. IC-25167 (Sep. 21, 2001) (notice), Rel. No. IC-25212 (order) (Oct. 17, 2001) (the “Prior Order”).
2 A successor in interest is limited to an entity that results from reorganization into another jurisdiction or a change in the type of business organization.
3 A CDSL, assessed by an open-end fund pursuant to Rule 6c-10 of the Act, is a distribution related charge payable to the distributor. Pursuant to the requested order, the early withdrawal charge will likewise be a distribution-related charge payable to the Distributor as distinguished from a repurchase fee which is payable to a Fund to reimburse a Fund for costs incurred in liquidating securities in the Fund’s portfolio.
3
As further discussed below, the Fund seeks an Order to make offers to repurchase a portion of its common shares at one-month intervals, rather than the “periodic intervals” (three, six or twelve months) specified by Rule 23c-3, and to notify common shareholders seven to fourteen calendar days in advance of the repurchase request deadlines, rather than the “no less than twenty-one and no more than forty-two days before each repurchase request deadline” specified by Rule 23c-3. In connection with making monthly repurchases with modified notice provisions, the Fund will be subject to conditions (as described herein) such that the aggregate percentage of common shares subject to repurchase in any three-month period will not exceed 25% of the Fund’s outstanding common shares and payment for such common shares will occur at least five business days before notification of the next repurchase offer.
The Fund’s Board of Trustees has adopted a fundamental policy of making monthly repurchase offers in reliance on the Prior Order.4 The Fund obtained the approval of a majority of the Fund’s outstanding voting securities to adopt a fundamental policy to permit monthly repurchase offers in connection with the Prior Order. The Fund will continue to disclose in its prospectus and annual reports its fundamental policy to make monthly offers to repurchase a portion of its common shares at net asset value, less deduction of a repurchase fee, if any, as permitted by Rule 23c-3(b)(1), and the imposition of early withdrawal charges as permitted pursuant to the Multi-Class Order (as defined below). The Fund’s fundamental policies with respect to repurchase offers, including the periodic repurchase offer interval, are changeable by majority vote of the holders of the Fund’s outstanding voting securities. Monthly repurchase offers shall be for an amount not less than 5% nor more than 25% of the common shares outstanding during any three month period in accordance with any exemptive relief granted by the Commission.5 The Fund’s fundamental policies also specify the means to determine the dates of the repurchase request deadlines and the maximum number of days between each repurchase request deadline and the repurchase pricing date as required by Rule 23c-3(b)(2)(i)(C) and (D) and in accordance with Rule 23c-3(a)(5).6 The Fund’s
4 In the case of a Future Fund that has not yet offered its shares to the public, the Future Fund will obtain the approval of its sole initial shareholder to adopt a fundamental policy to permit monthly repurchase offers. In the case of a Future Fund that seeks to adopt a fundamental policy of making monthly repurchase offers after selling shares to the public, the Future Fund will obtain the approval of a majority of the Fund’s outstanding voting securities to the adoption of such policy.
5 Applicants agree that, as a condition to the relief requested in this Application, the repurchase offer amount for the then-current monthly period, plus the repurchase offer amounts for the two monthly periods immediately preceding the then current monthly period, will not exceed 25% of its outstanding common shares, subject to any additional tendered common shares repurchased pursuant to Rule 23c-3(b)(5). The Fund may repurchase additional tendered common shares pursuant to Rule 23c-3(b)(5) only to the extent the percentage of additional common shares so repurchased does not exceed 2% in any three-month period.
6 A Future Fund that relies on the exemptive relief requested hereby will have fundamental investment policies in compliance with Rule 23c-3(b)(2)(i), as modified by the requested Order, which will include the date of repurchase request deadlines or the means of determining the repurchase request deadlines and the maximum number of days between each repurchase request deadline and the next repurchase pricing date (as required by Rule 23c-3(b)(2)(i)(C) and (D) and in accordance with Rule 23c-3(a)(5)). A Future Fund’s repurchase pricing date normally will be the same date as the repurchase request deadline and pricing will be determined after close of business on that date. A Future Fund will disclose in its prospectus and annual reports its fundamental policy to make monthly offers to repurchase a portion of its common shares at net asset value, less deduction of a repurchase fee, if any, as permitted by Rule 23c-3(b)(1). A Future Fund’s fundamental policies with respect to repurchase offers, including the periodic offer interval, will be changeable only by majority vote of the holders of such Future Fund’s outstanding voting securities. Under a Future Fund’s fundamental policy, the repurchase offer amount will be determined by such Future Fund’s Board of Trustees prior to each repurchase offer and will not be less than 5% of its outstanding common shares on the repurchase request deadline. Applicants agree that, as a condition to the relief requested in this application, the repurchase offer amount for the then current monthly period, plus the repurchase offer amounts for the two monthly periods immediately preceding the then-current monthly period, will not exceed 25% of its outstanding common shares, subject to any additional tendered common shares repurchased pursuant to Rule 23c-3(b)(5). A Future Fund may repurchase additional tendered common shares pursuant to Rule 23c-3(b)(5) only to the extent the percentage of additional common shares so repurchased does not exceed 2% in any three-month period.
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repurchase pricing date normally will continue to be the same date as the repurchase request deadline and pricing will be determined after the close of business on that date.
The Fund offers five classes of common shares: Class A common shares (“Class A Shares”), Class C common shares (“Class C Shares”), Class I common shares (“Class I Shares”), Class T common shares (“Class T Shares”) and Class W common shares (“Class W Shares”). The Fund is relying on an exemptive order (“Multi-Class Order”) from the SEC that permits the Fund to issue multiple classes of shares and to impose asset-based distribution fees and early-withdrawal fees.7 From time to time the Fund may create additional classes of shares, the terms of which may differ from the Fund’s Class A, Class C, Class I, Class T and Class W Shares in the following respects: (i) the amount of fees permitted by a distribution and service plan as to such class; (ii) voting rights with respect to a distribution and service plan as to such class; (iii) different class designations; (iv) the impact of any class expenses directly attributable to a particular class of shares allocated on a class basis as described in the Multi-Class Order; (v) differences in any dividends and net asset values per share resulting from differences in fees under a distribution and service plan or in class expenses; (vi) any early withdrawal charge or other sales load structure; (vii) all shares will be offered to the public at net asset value plus any applicable sales charge; and (viii) any exchange or conversion features, in each case, as permitted under the Act.
B. | Voya Investments, LLC |
Voya Investments is a limited liability company organized under the laws of the state of Arizona. Voya Investments serves as investment adviser to the Fund. Voya Investments is registered with the Commission as an investment adviser under the Investment Advisers Act of 1940, as amended (the “Advisers Act”).
Voya Investments provides services to the Fund pursuant to an investment management agreement between the Fund and Voya Investments. Voya Investments has overall responsibility for the management of the Fund. Voya Investments oversees all investment advisory and portfolio management services and assists in managing and supervising all aspects of the general day-to-day business activities and operations of the Fund, including custodial, transfer agency, dividend disbursing, accounting, auditing, compliance and related services.
C. | Voya Investments Management Co. LLC |
7 In the Matter of ING Pilgrim Investments, LLC, et al., Rel. No. IC-24881 (Feb. 28, 2001) (notice), Rel. No. IC-24916 (Mar. 27, 2001) (order).
5
Voya IM is a limited liability company organized under the laws of the state of Delaware. Voya IM serves as sub-adviser to the Fund and is an indirect, wholly-owned subsidiary of Voya Financial, Inc. and is an affiliate of Voya Investments. Voya IM is registered with the Commission as an investment adviser under the Advisers Act.
Voya IM provides services to the Fund pursuant to a sub-advisory agreement between Voya Investments and Voya IM. Voya IM provides, subject to the supervision of the Board of Trustees of the Fund and Voya Investments, a continuous investment program for the Fund and determines the composition of the assets of the Fund, including determination of the purchase, retention, or sale of the securities, cash and other investments for the Fund, in accordance with the Fund’s investment objectives, policies and restrictions and applicable laws and regulations.
D. | Voya Investments Distributor, LLC |
The Distributor is a Delaware limited liability company and affiliate of the Adviser. The Distributor is a broker-dealer registered with the Commission and a member of FINRA.
The Distributor acts as the principal underwriter of Shares for the Fund pursuant to a distribution agreement with the Fund. As principal underwriter, the Distributor has agreed to use reasonable efforts to distribute the Shares, although it is not obligated to sell any particular amount of Shares.
Subject to the terms and conditions of the distribution agreement, the Fund may issue and sell Shares of the Fund from time to time through certain broker-dealers which have entered into dealer agreements with the Distributor.
E. | Other Requirements for a Rule 23c-3 Fund8 |
Rule 23c-3(b)(4) requires that common shareholders be provided with notification of each quarterly repurchase offer no less than twenty-one and no more than forty-two days before each repurchase request deadline. If the relief requested herein is obtained, however, the Fund will provide (and any Future Fund will provide) common shareholders with notification of each monthly repurchase offer no less than seven and no more than fourteen days before each repurchase request deadline. The Fund’s notification will include (and any Future Fund’s notification will include), all information required by Rule 23c-3(b)(4)(i). Applicants agree that, as a condition of the relief requested in this application, the Fund will make (and any Future Fund will make) payment for common shares repurchased in the previous month’s repurchase offer at least five business days before sending notification of the next repurchase offer. The Fund will file (and any Future Fund will file), copies of the notification with the Commission, together with Form N-23c-3, within three business days after sending the notification to common shareholders as required by Rule 23c-3(b)(4)(ii).
Pursuant to Rule 23c-3(b)(1), the Fund will repurchase (and any Future Fund will repurchase), common shares for cash at the net asset value determined on the repurchase pricing date and will pay the holders on or before the “repurchase payment deadline,”9 which will be no later than seven
8 The Fund is currently in compliance with the requirements described in this section in reliance on the Prior Order.
9 Rule 23c-3(a)(4).
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calendar days after the “repurchase pricing date,” unless the offer is suspended or postponed as provided in Rule 23c-3(b)(3). The Fund intends to make payment by the fifth business day or seventh calendar day (whichever period is shorter) following the repurchase pricing date. The Fund and a Future Fund may deduct a repurchase fee in an amount not to exceed 2% from the repurchase proceeds payable to tendering common shareholders, in compliance with Rule 23c-3(b)(1), and then only to the extent such repurchase fee is reasonably intended to compensate the Fund (and any Future Fund) for expenses directly related to the repurchase. Such a fee would be in addition to the early withdrawal charges the Fund (or any Future Fund relying on the Multi-Class Order or similar relief) may charge pursuant to the Multi-Class Order or similar relief. The Fund will not condition (and any Future Fund will not condition), a repurchase offer upon tender of any minimum amount of common shares.
The Fund will comply (and any Future Fund will comply), with the pro ration and other allocation requirements applicable if common shareholders tender more than the repurchase offer amount in accordance with Rule 23c-3(b) (5). The Fund will permit (and any Future Fund will permit), tenders to be withdrawn or modified at any time until the repurchase request deadline, but will not permit tenders to be withdrawn or modified thereafter in accordance with Rule 23c-3(b)(6). The Fund will compute (and any Future Fund will compute), the net asset value for its common shares in accordance with Rule 23c-3(b)(7). The Fund (and any Future Fund) will not suspend or postpone a repurchase offer except pursuant to the vote of a majority of its trustees, including a majority of its Disinterested Trustees (as defined below), and only under the limited circumstances specified by Rule 23c-3(b)(3)(i). At least a majority of the trustees of the Fund will be (and at least a majority of trustees of any Future Fund will be) persons who are not interested persons of the Fund (or a Future Fund, as applicable) within the meaning of Section 2(a)(19) of the Act (“Disinterested Trustees”), and the selection or nomination of those trustees is, in the case of the Fund, or will be, in the case of any Future Fund, committed to the discretion of the Disinterested Trustees in accordance with Rule 23c-3(b)(8)(i). The Fund (and any Future Fund) will comply with Rule 23c-3(b)(8)’s requirements with respect to its Disinterested Trustees and their legal counsel. Any senior security issued by the Fund (and any Future Fund) or other indebtedness of the Fund (and any Future Fund) will either mature by the next repurchase pricing date or provide for the Fund’s (or Future Fund’s, as applicable) ability to call, repay of redeem such senior security or other indebtedness by the repurchase pricing date, either in ‘whole or in part without penalty or premium, as necessary to permit the Fund (or Future Fund, as applicable) to complete the repurchase offer in such amounts, as the trustees have determined, in compliance with the asset coverage requirements of Section 18 of the Act and in accordance with Rule 23c-3(b)(9).
In accordance with Rule 23c-3(b)(10), from the time the Fund (or any Future Fund) sends its notification to common shareholders of the repurchase offer, which shall be sent in compliance with the requirements of Rule 23c-3(b)(4) as modified by the requested Order, until the repurchase pricing date, a percentage of such fund’s assets equal to at least 100% of the repurchase offer amount will consist of: (1) assets that can be sold or disposed of in the ordinary course of business at approximately the price at which such fund has valued such investment, within a period equal to the period between the repurchase request deadline and the repurchase payment deadline, or (2) assets that mature by the next repurchase payment deadline; and in the event the Fund’s (or any Future Fund’s) assets fail to comply with this requirement, the Board of Trustees of such fund will cause such fund to take such action as it deems appropriate to ensure compliance. The Fund’s
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Board of Trustees will adopt (and any Future Fund’s Board of Trustees will adopt) written procedures reasonably designed, taking into account current market conditions and such fund’s investment objectives, to ensure that such fund’s portfolio assets are sufficiently liquid so that the Fund (and any Future Fund, as applicable) can comply with its fundamental policy on repurchases and with the liquidity requirements described above. The Fund’s Board of Trustees (and any Future Fund’s Board of Trustees) will review the overall composition of the portfolio and make and approve such changes to the procedures as it deems necessary. Applicants believe the Fund’s portfolio can be (and any Future Fund’s portfolio will be) managed to provide ample liquidity for its proposed monthly repurchase offers in accordance with the requirements of Rule 23c-3(b)(10).
The Fund and the Distributor will (and any Future Fund and any respective underwriter for such fund will) comply as if the Fund (and any Future Fund, as applicable) was an open-end investment company, with the provisions of Section 24(b) of the Act and the rules thereunder with respect to any advertisement, pamphlet, circular, form letter, or other sales literature addressed to, of intended for distribution to, prospective investors in accordance with Rule 23c-3(b)(11).
Section 23(c) of the Act provides, in relevant part, that no registered closed-end investment company shall purchase any securities of any class of which it is the issuer except: (a) on a securities exchange or other open market; (b) pursuant to tenders, after reasonable opportunity to submit tenders given to all holders of securities of the class to be purchased; or (c) under such other circumstances as the Commission may permit by rules and regulations or orders for the protection of investors in order to insure that such purchases are made in a manner or on a basis which does not unfairly discriminate against any holders of the class or classes of securities to be purchased. Repurchase offers made pursuant to the exception which permits closed-end funds to make repurchases pursuant to tender offers are considered issuer tender offers and thus, absent further relief, must comply with the requirements of the tender offer rules under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including Rules 13e-4 and 14e-1.
The Commission also may exempt closed-end issuer repurchases from the prohibitions in Section 23(c) pursuant to Section 23(c)(3). Rule 23c-3 provides such an exemption as it permits a registered closed-end investment company to make repurchase offers for its common stock at net asset value at periodic intervals pursuant to a fundamental policy of the investment company. “Periodic interval” is defined in Rule 23c-3(a)(1) as an interval of three, six or twelve months. Rule 23c-3(b)(4) requires that notification of each repurchase offer be sent to common shareholders no less than 21 calendar days and no more than 42 calendar days before the repurchase request deadline. Rule 23c-3(a)(3) provides that a repurchase offer amount may be between 5% and 25% of the common stock outstanding on the repurchase request deadline. At the time the Commission adopted Rule 23c-3, corresponding amendments to Rules 10b-610 and 13e-4 of the Exchange Act and Regulation 14E of the Exchange Act were also adopted, exempting repurchase offers pursuant to Rule 23c-3 from most of the provisions of those rules.11
10 Rule 102(b)(2) of Regulation M continues this exception.
11 Subsequently, the Commission also added paragraph (a)(1)(xi) to Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”), in order to permit closed-end funds relying on Rule 23c-3 to make continuous or delayed offerings.
8
Applicants request an order pursuant to Sections 6(c) and 23(c) of the Act exempting them from the definition of “periodic interval” under Rule 23c-3(a)(1) that would permit the Fund (and any Future Fund) to rely on the relief provided by Rule 23c-3 while making repurchase offers on a monthly basis. Applicants also request an exemption from the notice provisions of Rule 23c-3(b)(4) to permit the Fund (and any Future Fund) to send notification of an upcoming repurchase offer to common shareholders at least seven but no more than fourteen calendar days in advance of the repurchase request deadline.12
Pursuant to Section 6(c) of the Act, the Commission may, by order on application, conditionally or unconditionally, exempt any person, security or transaction, or any class or classes of persons, securities or transactions from any provision or provisions of the Act or from any rule or regulation under the Act, if and to the extent that the exemption is necessary or appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act.
Section 23(c) of the Act provides, in relevant part, that no registered closed-end investment company shall purchase securities of which it is the issuer, except: (a) on a securities exchange or other open market; (b) pursuant to tenders, after reasonable opportunity to submit tenders given to all holders of securities of the class to be purchased; or (c) under such other circumstances as the Commission may permit by rules and regulations or orders for the protection of investors.
Section 23(c)(3) of the Act provides that the Commission may issue an order that would permit a closed-end investment company to repurchase its shares in circumstances in which the repurchase is made in a manner or on a basis that does not unfairly discriminate against any holders of the class or classes of securities to be purchased.
A. | Background |
In its 1992 study entitled Protecting Investors: A Half Century of Investment Company Regulation (“Protecting Investors”), the Commission’s Division of Investment Management (the “Division”) recognized that the Act imposes a rigid classification system that dictates many important regulatory consequences.13 For example, the characterization of a management company as “open-end” or “closed-end” has historically been crucial to the determination of the degree of liquidity a fund’s shareholders will have, and thus the liquidity required of a fund’s investments.
Furthermore, except as noted below, there has been no middle ground between the two extremes. Open-end funds have offered complete liquidity to their shareholders and thus required virtually complete liquidity of the underlying investments, while closed-end funds have been subject to
12 Based on the requested relief the Fund (or any Future Fund) will be able to rely on the exemptions provided under Exchange Act and Securities Act rules for repurchase offers made in accordance with Rule 23c-3.
13 SEC Staff Report, Protecting Investors: A Half Century of Investment Company Regulation (May 1992) at 421.
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requirements that in fact restrict the liquidity they are permitted to offer their investors. Under this dual system of regulation, neither form has provided the best vehicle for offering portfolios that have substantial, but not complete, liquidity. In Protecting Investors, the Division determined that, given the changes in the securities market since 1940 — in particular the emergence of semi-liquid investment opportunities — it was appropriate to re-examine the classification system and its regulatory requirements.14
The one exception to the liquid/illiquid dichotomy has been the so called “prime-rate funds.” These funds, first introduced in 1988, invest primarily in loans and provide shareholders liquidity through periodic tender offers or, more recently, periodic repurchases under Rule 23c-3.
Protecting Investors recognized that the rigidity of the Act’s classification system had become a limitation on sponsors’ ability to offer innovative products that would take advantage of the vast array of semi-liquid portfolio securities currently existing. The report also noted the pioneering efforts of the prime rate funds and the market success they had experienced.15 The report thus concluded that it would be appropriate to provide the opportunity for investment companies to “chart new territory” between the two extremes of the open-end and closed-end forms, consistent with the goals of investor protection.16 The Division thus recommended giving the industry the ability to employ new redemption and repurchasing procedures, subject to Commission rulemaking and oversight.
In accordance with this recommendation, and shortly after Protecting Investors was published, the Commission proposed for comment a new rule designed to assist the industry in this endeavor.17 The Commission proposed Rule 23c-3, which began from the closed-end, illiquid perspective under Section 23(c), and provided flexibility to increase shareholder liquidity through periodic repurchase offers under simplified procedures. Rule 23c-3 was adopted in April 1993.18
The prime rate funds were cited in both Protecting Investors and the Proposing Release as the prototype for the interval concept.19 Nonetheless, while the prime rate funds broke the path for innovation in this area, developments since the origin of these funds make further innovation appropriate. Precedent exists for the granting of exemptive relief to permit funds other than “prime rate” interval funds to engage in repurchases on a monthly basis.20
14 Id. at 424.
15 Id. at 439-40.
16 Id. at 424.
17 Investment Co. Act Rel. No. 18869 (July 28, 1992) (the “Proposing Release”).
18 Investment Co. Act Rel. No. 19399 (April 7, 1993) (the “Adopting Release”). The Commission also had proposed Rule 22e-3, which began from the open-end, complete liquidity perspective under Section 22 of the Act, and permitted periodic or delayed, rather than constant liquidity. The Commission neither adopted nor withdrew proposed Rule 22e-3. To Applicants’ knowledge, the Commission has taken no further action with respect to Rule 22e-3.
19 Protecting Investors at 439-40; Proposing Release at 27.
20 In the Matter of Lord Abbett Floating Rate High Income Fund, et al., Rel. No. IC-34308 (June 22, 2021) (notice), Rel. No. IC-34336 (July 19, 2021) (order) (“Lord Abbett”). In the Matter of Arca U.S. Treasury Fund, et al., Rel. No. IC-34026 (Sep. 24, 2020) (notice), Rel. No. IC-34055 (Oct. 20, 2020) (order) (“Arca”). In the Matter of Weiss Strategic Interval Fund, et al., Rel. No. IC-33101 (May 21, 2018) (notice), Rel. No. IC-33124 (June 18, 2018) (order) (“Weiss”). In the Matter of Blackstone / GSO Floating Rate Enhanced Income Fund, et al., Rel. No. IC-32866 (Oct. 23, 2017) (notice), Rel. No. IC-32902 (Nov. 20, 2017) (order) (“Blackstone”). In the Matter of Van Kampen Asset Management, et al., Rel. No. IC-27317 (May 12, 2006) (notice), Rel. No. IC-27390 (June 7, 2006) (order) (“Van Kampen”). In the Matter of CypressTree Asset Management Corporation Inc., et al., Rel. No. IC-23020 (Feb. 4, 1998) (notice), Rel. No. IC-23055 (Mar. 3, 1998) (order) (“CypressTree”). Prior Order supra at note 1.
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B. | Monthly Repurchases |
Applicants request an order pursuant to Sections 6(c) and 23(c) of the Act exempting them from Rule 23c-3(a)(1) solely to the extent necessary to permit the Fund (and any Future Fund) to make monthly repurchase offers. Applicants also request an exemption from the notice provisions of Rule 23c-3(b)(4) solely to the extent necessary to permit the Fund (and any Future Fund) to send notification of an upcoming repurchase offer to shareholders at least seven days but not more than fourteen days in advance of the repurchase request deadline. In Applicants’ view, this modification would enhance, rather than diminish, the investor benefits provided by Rule 23c-3 and is consistent with the public interest and investor protection. As long as the Fund (and any Future Fund), as supervised by its Board of Trustees, can make monthly repurchase offers pursuant to the modified notification requirements requested herein and otherwise comply with the remainder of Rule 23c-3, including its requirements with respect to liquidity — and Applicants believe the Fund (and any Future Fund) will be able to do so — there is no public interest nor investor protection concern that justifies prohibiting monthly repurchase offers.
In the rulemaking proceeding in which Rule 23c-3 was adopted, certain commenters requested that a provision for monthly repurchases be incorporated in the final Rule. At the time of adoption, the Commission declined to do so. The Commission was concerned that shorter repurchase intervals would not be compatible with the notification requirement in paragraph (b)(4) of the Rule because a fund would need to send out a notification for a repurchase offer before it had completed the previous offer.21 Applicants believe that this concern should not deter the Commission from granting the relief requested in this case. First, it is understandable that, in its initial efforts to “chart new territory,” the Commission was reluctant to provide too many options. Regulatory prudence might well have dictated adopting a more limited rule and considering more flexible proposals on a case-by-case basis. Second, it is significant that the reason given is one of logistics rather than substance. In fact, as discussed below, the logistical concern mentioned would not pertain to Applicants’ proposal.
Rule 23c-3(b)(4) requires that notification of each repurchase offer be sent to common shareholders no less than 21 days and no more than 42 days before the repurchase request deadline. In order to prevent any overlap between payment for a repurchase and notification of the next month’s repurchase offer or resulting investor confusion, Applicants request an exemption from the notice provisions of Rule 23c-3(b)(4) to the extent necessary to permit the Fund (and any Future Fund) to send notification of an upcoming repurchase offer to common shareholders at least seven calendar days, but not more than fourteen calendar days, in advance of the repurchase request deadline. Because the Fund prices (and any Future Fund will price) on the repurchase request deadline, and pay by the fifth business day or seventh calendar day (whichever period is shorter) following the repurchase pricing date (and, in any event, no later than seven calendar days after the repurchase pricing date), this timing ensures that common shareholders have received payment
21 See Adopting Release at 28-29.
11
in full for any repurchases before receiving notification of the next repurchase offer. The entire repurchase procedure is completed before the next notification is sent out, thus avoiding any overlap. Applicants believe that these procedures eliminate any possibility of investor confusion from monthly repurchases.
The Fund’s prospectus will continue to provide (and any Future Fund’s prospectus will provide) a clear explanation of the repurchase program. Moreover, shareholders in the Fund and any Future Fund that seeks shareholder approval to adopt or change a fundamental policy to permit monthly repurchase offers will receive full disclosure in the proxy materials sent to obtain the requisite shareholder approval. Applicants believe that the monthly repurchase opportunity has become as routine in the shareholder’s mind as daily redemptions, and that the significance of the notification has diminished. Thus, any remote possibility of investor confusion due to the proximity in time of the repurchase payment deadline to the sending of the next notification is adequately dealt with by disclosure.
Finally, the Fund’s procedures provide (and any Future Fund’s procedures will provide) that the Fund’s Board of Trustees are (and any Future Fund’s Board of Trustees will be) informed of the number of repurchase requests made in the previous repurchase offer — which repurchases have been completed — at the time such fund’s Board of Trustees determines the repurchase offer amount for the current month. This enables the Fund’s Board of Trustees (and any Future Fund’s Board of Trustees) to take that information, as well as relevant liquidity reports from the portfolio manager, into account in setting the repurchase offer amount.
Applicants believe that monthly rather than quarterly repurchases offer many benefits and therefore would be in the public interest and in the common shareholders’ interests and be consistent with the policies underlying Rule 23c-3. Rule 23c-3 currently permits periodic repurchase offers no more frequently than once every three months, but monthly repurchases would provide significant benefits to common shareholders because their investments will be more liquid than an investment in a fund conducting only quarterly repurchase offers. Investors also will be better able to manage their investments and plan transactions because they know that, if they decide to forego a repurchase offer, they only need to wait one (rather than three) months for the next offer. Applicants believe the requested relief allowing monthly repurchases provides the public marketplace and the Fund (and any Future Fund) common shareholders with more investment options. Finally, consistent with Section 23(c)(3), monthly repurchase offers will be made available to all common shareholders and thus, will not unfairly discriminate against any holders of the common shares to be purchased.
For all of these reasons, Applicants believe that the requested relief is “appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions” of the Act. Because the Fund will continue to describe (and any Future Fund will describe) its repurchase policy fully in its prospectus and annual report, shareholders and potential investors will have available all information about the Fund (and any Future Fund) and its differences from a traditional open-end fund and traditional closed-end fund. Finally, because the requested Order will increase the investment alternatives available to investors, the requested Order is appropriate in the public interest. Because the monthly repurchase offers will continue to be made available to all common shareholders and otherwise comply with the
12
requirements of Rule 23c-3 (except as it relates to the imposition of early withdrawal fees), the repurchase offers are not made in a manner or on a basis which unfairly discriminates against holders of the common shares to be purchased.
Applicants believe that there is precedent for the requested relief and that monthly repurchases are consistent with the policies underlying Rule 23c-3. The Commission has granted exemptive relief under Rule 23c-3 to permit other interval funds to make monthly repurchase offers under modified notice procedures.22 Under the Weiss and Blackstone orders, closed-end funds operating as interval funds sought to make monthly repurchase offers of not less than 5% of their outstanding common shares but not more than 25% in any three month period pursuant to modified notice procedures under Rule 23c-3. Under the Van Kampen order, a closed-end fund investing in senior secured floating rate loans sought to make monthly repurchase offers of not less than 5% of its outstanding common shares but not more than 25% in the trailing three month period pursuant to modified notice procedures under Rule 23c-3, and was granted relief that was similar to that which the Applicants seek here. Under the Prior Order, a closed-end fund investing in senior secured floating rate loans sought to make monthly repurchase offers of not less than 5% of its outstanding common shares but not more than 25% in the aggregate in any one quarter pursuant to modified notice procedures under Rule 23c-3, and was granted relief that was similar to that which the Applicants seek here. Under the CypressTree order, another closed-end fund investing in senior secured floating rate loans sought to make monthly repurchase offers of not more than 10% of its outstanding common shares. Applicants submit that the requested relief is appropriate under the applicable statutory standards.
Applicants agree that any order granting the requested relief will be subject to the following conditions:
a. | The Fund (and any Future Fund relying on this relief) will make a repurchase offer pursuant to Rule 23c-3(b) for a repurchase offer amount of not less than 5% in any one-month period. In addition, the repurchase offer amount for the then current monthly period, plus the repurchase offer amounts for the two monthly periods immediately preceding the then current monthly period, will not exceed 25% of the Fund’s (or Future Fund’s, as applicable) outstanding common shares. The Fund (and any Future Fund relying on this relief) may repurchase additional tendered common shares pursuant to Rule 23c-3(b)(5) only to the extent the percentage of additional common shares so repurchased does not exceed 2% in any three-month period. |
b. | Payment for repurchased common shares will occur at least five business days before notification of the next repurchase offer is sent to common shareholders of the Fund (or any Future Fund relying on this relief). |
22 See Weiss supra at note 20, See Blackstone supra at note 20, See Van Kampen supra at note 20, See Pilgrim Investments supra at note 1. See also CypressTree, supra at note 20.
13
For the reasons stated above, Applicants submit that the exemptions requested are necessary or appropriate in the public interest and are consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act, and thus meet the standards of Section 6(c). Applicants further submit that the relief requested pursuant to Section 23(c)(3) will be consistent with the protection of investors and will ensure that any purchases are made in a manner or on a basis which does not unfairly discriminate against any holders of the class of securities to be purchased. Finally, Applicants submit that the relief requested is consistent with that previously provided by the Commission in the Weiss, Blackstone, Van Kampen, Prior Order and CypressTree orders.
Applicants desire that the Commission issue the requested Order pursuant to Rule 0-5 under the Act without conducting a hearing.
As required by Rule 0-2(c)(1) under the Act, each Applicant hereby states that all of the requirements for execution and filing of this Application have been complied with in accordance with the operating agreements of the Applicants, as applicable, and the persons signing and filing this document are authorized to do so on behalf of the Applicants. The resolutions of the Fund’s Board of Trustees are attached as Exhibit A to this Application in accordance with the requirements of Rule 0-2(c)(1) under the Act, and the verifications required by Rule 0-2(d) under the Act, are attached as Exhibits B to this Application, respectively. In accordance with the requirements for a request for expedited review of this Application, marked copies of two recent applications seeking the same relief as Applicants that are substantially identical as required by Rule 0-5(e) of the Act are attached as Exhibits C and D.
Pursuant to Rule 0-2(f) under the Act, the Applicant’s address is 7337 E. Doubletree Ranch Road, Suite 100, Scottsdale, AZ 85258 and that all written communications regarding this Application should be directed to the individuals and addresses indicated on the first page of this Application.
[Signature page follows.]
14
SIGNATURES
VOYA SENIOR INCOME FUND |
By: /s/ Paul A. Caldarelli |
Name: Paul A. Caldarelli |
Title: Assistant Secretary |
Dated: March 30, 2022 |
VOYA INVESTMENTS, LLC |
By: /s/ Todd Modic |
Name: Todd Modic |
Title: Senior Vice President |
Dated: March 30, 2022 |
VOYA INVESTMENT MANAGEMENT CO. LLC |
By: /s/ Marie E. Picard |
Name: Marie E. Picard |
Title: Senior Vice President and Assistant Secretary |
Dated: March 30, 2022 |
VOYA INVESTMENTS DISTRIBUTOR, LLC |
By: /s/ Andrew K. Schlueter |
Name: Andrew K. Schlueter |
Title: Vice President |
Dated: March 30, 2022 |
15
EXHIBIT A
Resolutions of the Board of Trustees of
Voya Senior Income Fund
RESOLVED, that the appropriate officers of Voya Senior Income Fund (the “Fund”) be and they hereby are, and each of them acting individually hereby is, authorized to prepare, execute and file with the Securities and Exchange Commission (the “SEC”) on behalf of the Fund an application for an exemptive order pursuant to Sections 6(c) and 23(c)(3) under the Investment Company Act of 1940, as amended (the “1940 Act”) to allow the Fund to conduct monthly repurchase offers, such application to be in form and substance satisfactory to counsel for the Fund, and subject to review by counsel to the Trustees who are not “interested persons” as defined in the 1940 Act, the execution and filing of any such application, or amendment to such application, to be conclusive evidence of its authorization hereby; and further
RESOLVED, that the appropriate officers of the Fund be, and they hereby are, authorized to prepare execute and file with the SEC any amendments to such exemptive application requested by the SEC or as they believe necessary or appropriate; and further
RESOLVED, that the appropriate officers of the Fund be, and they hereby are, authorized to take all such further action and to execute and deliver all such further instruments and documents, in the name of and on behalf of the Fund, on the advice and assistance of Fund counsel, and to pay all such expenses as shall be necessary, proper, or advisable, in order to fully carry out the intent, and accomplish the purposes of, the foregoing; and further
RESOLVED, that the appropriate officers of the Fund be, and they hereby are, authorized and directed, for and on the Fund’s behalf, to take or cause to be taken, any and all action, to execute and deliver any and all certificates, instructions, requests, or other instruments, and to do any and all things that in their judgment, on the advice and assistance of Fund counsel, as may be necessary or advisable to effect each of the resolutions adopted to carry out the purposes and intent thereof, and as may be necessary or advisable for the conduct of the Fund’s business.
16
EXHIBIT B
VERIFICATION OF
VOYA SENIOR INCOME FUND
The undersigned states that he has duly executed the attached Application dated March 30, 2022, for and on behalf of Voya Senior Income Fund in his capacity as Assistant Secretary of such entity and that all actions by the holders and other bodies necessary to authorize the undersigned to execute and file such instrument have been taken. The undersigned further states that he is familiar with such instrument, and the contents thereof, and that the facts therein set forth are true to the best of his knowledge, information and belief.
VOYA SENIOR INCOME FUND |
By: /s/ Paul A. Caldarelli |
Name: Paul A. Caldarelli |
Title: Assistant Secretary |
Dated: March 30, 2022 |
17
VERIFICATION OF
VOYA INVESTMENTS, LLC
The undersigned states that he has duly executed the attached Application dated March 30, 2022, for and on behalf of Voya Investments, LLC in his capacity as Senior Vice President of such entity and that all actions by the holders and other bodies necessary to authorize the undersigned to execute and file such instrument have been taken. The undersigned further states that he is familiar with such instrument, and the contents thereof, and that the facts therein set forth are true to the best of his knowledge, information and belief.
VOYA INVESTMENTS, LLC |
By: /s/ Todd Modic |
Name: Todd Modic |
Title: Senior Vice President |
Dated: March 30, 2022 |
18
VERIFICATION OF
VOYA INVESTMENT MANAGEMENT CO. LLC
The undersigned states that she has duly executed the attached Application dated March 30, 2022, for and on behalf of Voya Investment Management Co. LLC in her capacity as Senior Vice President and Assistant Secretary of such entity and that all actions by the holders and other bodies necessary to authorize the undersigned to execute and file such instrument have been taken. The undersigned further states that she is familiar with such instrument, and the contents thereof, and that the facts therein set forth are true to the best of her knowledge, information and belief.
VOYA INVESTMENT MANAGEMENT CO. LLC |
By: /s/ Marie E. Picard |
Name: Marie E. Picard |
Title: Senior Vice President and Assistant Secretary |
Dated: March 30, 2022 |
19
VERIFICATION OF
VOYA INVESTMENTS DISTRIBUTOR, LLC
The undersigned states that he has duly executed the attached Application dated March 30, 2022, for and on behalf of Voya Investments Distributor, LLC in his capacity as Vice President of Voya Investment Distributor, LLC and that all actions by the holders and other bodies necessary to authorize the undersigned to execute and file such instrument have been taken. The undersigned further states that he is familiar with such instrument, and the contents thereof, and that the facts therein set forth are true to the best of his knowledge, information and belief.
VOYA INVESTMENTS DISTRIBUTOR, LLC |
By: /s/ Andrew K. Schlueter |
Name: Andrew K. Schlueter |
Title: Vice President |
Dated: March 30, 2022 |
20
As filed with the U.S. Securities and Exchange Commission on February 23March 31, 20212022
File No. 812811-1509710223
UNITED STATES OF AMERICA
BEFORE THE
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
APPLICATION PURSUANT TO SECTIONS 6(C) AND 23(C)(3) OF THE
INVESTMENT COMPANY ACT OF 1940
(THE “ACT”) FOR AN ORDER GRANTING CERTAIN EXEMPTIONS FROM THE
PROVISIONS OF RULE 23C-3
THEREUNDER
EXPEDITED REVIEW REQUESTED UNDER 17 CFR 270.0-5(d)
In the Matter of the Application of:
Lord Abbett Floating Rate HighVoya Senior Income Fund
7337 E. Doubletree Ranch Road, Suite 100
Scottsdale, AZ
85258
90 Hudson Street
Jersey City, New Jersey 07302-3973
and
Voya Investments, LLC
7337 E. Doubletree Ranch Road, Suite 100
Scottsdale, AZ 85258
and
Lord,
Abbett &Voya Investment Management Co.
LLC
90 Hudson Street230 Park
Avenue
Jersey City, New Jersey 07302-3973
New York, NY, 10169
and
Lord AbbettVoya
Investments Distributor,
LLC
7337 E. Doubletree Ranch Road, Suite 100
Scottsdale, AZ 85258
90 Hudson Street
Jersey City,
New Jersey 07302-3973
Please send all communications, notices and orders regarding this Application to:
Page 1of
191 of 65 sequentially numbered pages (including
exhibits)
Page 21 of 65, including exhibits
John T.
Fitzgerald, Vice President and Assistant Secretary
90 Hudson Street
Jersey City, New Jersey 07302-3973
Huey P. Falgout, Jr.
Voya Investments, LLC
7337 E. Doubletree Ranch Road, Suite 100
Scottsdale, AZ 85258
With copies to:
Bryan Chegwidden, Esq.
Elizabeth J. Reza
Ropes & Gray LLP
1211 Avenue of the Americas
New York, New
York 10036-8704
Prudential Tower
800 Boylston Street
Boston, MA 02199-3600
TABLE OF CONTENTS
I. |
THE PROPOSAL | |||||
II. |
STATEMENT OF FACTS | 3 | ||||
A. |
3 | |||||
B. |
||||||
C |
Voya Investment Management Co. LLC | 6 | ||||
|
7 | |||||
D. |
||||||
|
Other Requirements for a Rule 23c-3 Fund | 7 | ||||
E. |
||||||
III. |
EXEMPTIONS REQUESTED | 9 | ||||
IV. |
COMMISSION AUTHORITY | 10 | ||||
V. |
DISCUSSION | 10 | ||||
A. |
Background | 10 | ||||
B. |
Monthly Repurchases | 12 | ||||
VI. |
APPLICANTS’ CONDITIONS | 14 | ||||
VII. |
CONCLUSION |
File No. 812811-1509710223
I. THE PROPOSAL
2
Page 22 of 65, including exhibits
Lord Abbett
Floating Rate HighVoya Senior Income Fund (the
“Fund”)1 is a newly organized Delaware statutory trust organized on December 14, 2000 and is registered under the
Investment Company Act of 1940, as amended (the “Act”), as a non-diversifieddiversified, closed-end management investment company that will be
operatedoperates as an interval fund. The Fund
is externally advised by Lord, Abbett &Voya
Investments, LLC (“Voya Investments”) and sub-advised by Voya Investment Management Co. LLC
(“Voya IM” and together with Voya Investments,
the “Adviser”). Lord
AbbettVoya Investments Distributor, LLC (the “Distributor”) is the principal underwriter
and distributor of the Fund’s shares. The Fund, the Adviser and the Distributor are referred to herein as the “Applicants.”
The Applicants hereby seek an order (the “Order”) from the U.S. Securities and Exchange Commission (the “Commission” or the “SEC”) pursuant to Sections 6(c) and 23(c)(3) of the Act for an exemption from certain provisions of Rule 23c-3 under the Act to permit the Fund to make repurchase offers to its common shareholders every month and to provide notification to its common shareholders of an upcoming repurchase offer no less than seven and no more than fourteen calendar days in advance of the repurchase request deadline.
The Order sought by this application (the “Application”) would supersede the order dated October 17, 2001, issued by the Commission to ING Pilgrim Investments, LLC and certain of its affiliates under Sections 6(c) and 23(c)(3) of the Act and Rule 23c-3 under the Act permitting the Fund to make repurchase offers to its common shareholders every month subject to certain conditions set forth in the order (the “Prior Order”),1 with the result that no person will continue to rely on the Prior Order if the Order is granted.
Applicants request that the Order
also apply to any registered closed-end management investment company that has been previously organized or that may be organized in the future for which the Adviser, or any entity controlling, controlled by, or under common control with the
Adviser, or any successor in interest to any such entity,2, acts as an investment adviser, and which operates as an interval
fund pursuant to Rule 23c-3 under the Act (each a “Future Fund” and, together with the Fund, the “Funds”). Any of the Funds relying on this relief in
the future will do so in compliance with the terms and conditions of this application (the
“Application”). Applicants represent that each entity presently intending to rely on
the requested relief is listed as an Applicant. Unless otherwise provided relief, the Fund will comply with all other provisions of Rule 23c-3. Terms as used in this Application that are defined in Rule 23c-3 have the same meaning as they are given
in Rule 23c-3.
II. STATEMENT OF FACTS
A. |
|
1 At a meeting of
the Fund’s Board of Trustees on April 1-2, 2020, the Fund’s name was changed from Lord Abbett Enhanced Floating Rate Fund to Lord Abbett Floating Rate High Income Fund.
1 In the Matter of ING Pilgrim Investments, LLC, et al., Rel. No. IC-25167 (Sep. 21, 2001) (notice), Rel. No. IC-25212 (order) (Oct. 17, 2001) (the “Prior Order”).
2 A successor in interest is limited to an entity that results from reorganization into another jurisdiction or a change in the type of business organization.
3
Page 23 of 65, including exhibits
The Fund is a
newly organized Delaware statutory trust organized on December 14, 2000 and is registered under the Act as a
non-diversifieddiversified
, closed-end management investment company that will be operatedoperates as an interval fund pursuant to Rule 23c-3 under the Act. The
Fund’s investment objective is to
seekprovide
investors with a high level of currentmonthly income. Common shares of the Fund are offered on a continuous
basis at net asset value per share plus the applicable sales load, if any, and are not offered or traded in the secondary market and are not listed on any exchange or quoted on any quotation medium.
The Fund will be operatedoperates as an interval fund pursuant to Rule 23c-3 under the Act
and may
offeroffers its shareholders an exchange feature
under which the shareholders of the Fund may, in connection with the Fund’s periodic repurchase offers, exchange their shares of the Fund for shares of the same class of (i) registered open-end investment companies or (ii) other registered closed-end investment companies that comply with Rule 23c-3 under the Act and continuously offer their shares at net asset
value, that are in the Fund’s group of investment companies (collectively, the “Other Funds”). Shares of any of the Funds operating pursuant to Rule 23c-3 that are exchanged
for shares of Other Funds will be included as part of the repurchase offer amount for such Fund as specified in Rule 23c-3 under the Act. Any exchange option will
continue to comply with Rule 11a-3 under the Act, as if the
Fund were an open-end investment company subject to Rule 11a-3. In complying with Rule 11a-3 under the Act, the Fund will treat an early withdrawal charge as if it were a contingent deferred sales load (“CDSL”).3
As further discussed below, the Fund seeks an Order to make offers to repurchase a portion of its common shares at one-month intervals, rather than the “periodic intervals” (three, six or twelve months) specified by Rule 23c-3, and to notify common shareholders seven to fourteen calendar days in advance of the repurchase request deadlines, rather than the “no less than twenty-one and no more than forty-two days before each repurchase request deadline” specified by Rule 23c-3. In connection with making monthly repurchases with modified notice provisions, the Fund will be subject to conditions (as described herein) such that the aggregate percentage of common shares subject to repurchase in any three-month period will not exceed 25% of the Fund’s outstanding common shares and payment for such common shares will occur at least five business days before notification of the next repurchase offer.
The Fund’s Board of
Trustees has adopted a fundamental policy of making quarterly repurchase offers. To the extent the Fund receives the requested Order, the Fund’s Board of Trustees
may, in the future, determine to adopt a fundamental policy of making monthly repurchase offers. Prior
to relying in reliance on the requestedPrior Order,
the.4 The
Fund will
obtainobtained the
3 A CDSL, assessed by an open-end fund pursuant to Rule 6c-10 of the Act, is a distribution related charge payable to the distributor. Pursuant to the requested order, the early withdrawal charge will likewise be a distribution-related charge payable to the Distributor as distinguished from a repurchase fee which is payable to a Fund to reimburse a Fund for costs incurred in liquidating securities in the Fund’s portfolio.
4 In the case of a Future Fund that has not yet offered its shares to the public, the Future Fund will obtain the approval of its sole initial shareholder to adopt a fundamental policy to permit monthly repurchase offers. In the case of a Future Fund that seeks to adopt a fundamental policy of making monthly repurchase offers after selling shares to the public, the Future Fund will obtain the approval of a majority of the Fund’s outstanding voting securities to the adoption of such policy.
4
Page 24 of 65, including exhibits
approval of a majority of the Fund’s outstanding voting securities to adopt a fundamental
policy to permit monthly repurchase offers. 4 If the Fund relies on the
requestedin connection with the Prior Order, the. The Fund will continue to
disclose in its prospectus and annual reports its fundamental policy to make monthly offers to repurchase a portion of its common shares at net asset value, less deduction of a repurchase fee, if any, as permitted by Rule 23c-3(b)(1), and the
imposition of early withdrawal charges as permitted pursuant to the Multi-Class Order (as defined below). The Fund’s fundamental policies with respect to repurchase offers, including the periodic repurchase offer interval, will beare changeable by majority vote of the holders of the Fund’s outstanding voting securities. Monthly repurchase offers shall be for an amount not less than 5% nor more than 25% of the common shares outstanding
during any three month period in accordance with any exemptive relief granted by the Commission.5 The Fund’s fundamental policies will also specify the means to determine the dates of the repurchase request deadlines and the maximum number of
days between each repurchase request deadline and the repurchase pricing date as required by Rule 23c-3(b)(2)(i)(C) and (D) and in accordance with Rule 23c-3(a)(5).6 The Fund’s
repurchase pricing date normally will continue to be the
same date as the repurchase request deadline and pricing will be determined after the close of business on that date.
The Fund intends to offer
threeoffers five classes of common shares upon commencement of operations: Class A common shares (“Class A Shares”), Class C common shares (“Class C Shares”), Class
I common shares (“Class I Shares”)
and, Class UT common shares (“Class
UT
4 In the case of a Future Fund that has not yet offered its shares to the public, the Future Fund will obtain the approval of its sole initial shareholder to adopt a
fundamental policy to permit monthly repurchase offers. In the case of a Future Fund that seeks to adopt a fundamental policy of making monthly repurchase offers after selling shares to the public, the Future Fund will obtain the approval of a
majority of the Fund’s outstanding voting securities to the adoption of such policy.
5 Applicants agree that, as a condition to the relief requested in this Application, the repurchase offer amount for the then-current monthly period, plus the repurchase offer amounts for the two monthly periods immediately preceding the then current monthly period, will not exceed 25% of its outstanding common shares, subject to any additional tendered common shares repurchased pursuant to Rule 23c-3(b)(5). The Fund may repurchase additional tendered common shares pursuant to Rule 23c-3(b)(5) only to the extent the percentage of additional common shares so repurchased does not exceed 2% in any three-month period.
6 A Future Fund that relies on the exemptive relief requested hereby will have fundamental investment policies in compliance with Rule 23c-3(b)(2)(i), as modified by the requested Order, which will include the date of repurchase request deadlines or the means of determining the repurchase request deadlines and the maximum number of days between each repurchase request deadline and the next repurchase pricing date (as required by Rule 23c- 3(b)(2)(i)(C) and (D) and in accordance with Rule 23c-3(a)(5)). A Future Fund’s repurchase pricing date normally will be the same date as the repurchase request deadline and pricing will be determined after close of business on that date. A Future Fund will disclose in its prospectus and annual reports its fundamental policy to make monthly offers to repurchase a portion of its common shares at net asset value, less deduction of a repurchase fee, if any, as permitted by Rule 23c-3(b)(1). A Future Fund’s fundamental policies with respect to repurchase offers, including the periodic offer interval, will be changeable only by majority vote of the holders of such Future Fund’s outstanding voting securities. Under a Future Fund’s fundamental policy, the repurchase offer amount will be determined by such Future Fund’s Board of Trustees prior to each repurchase offer and will not be less than 5% of its outstanding common shares on the repurchase request deadline. Applicants agree that, as a condition to the relief requested in this application, the repurchase offer amount for the then current monthly period, plus the repurchase offer amounts for the two monthly periods immediately preceding the then-current monthly period, will not exceed 25% of its outstanding common shares, subject to any additional tendered common shares repurchased pursuant to Rule 23c-3(b)(5). A Future Fund may repurchase additional tendered common shares pursuant to Rule 23c-3(b)(5) only to the extent the percentage of additional common shares so repurchased does not exceed 2% in any three-month period.
5
Page 25 of 65, including exhibits
Shares”)
and Class W common shares (“Class W Shares”). The Fund is relying on an exemptive order (“Multi-Class Order”) from the SEC that permits the Fund to issue multiple classes of
shares and to impose asset-based distribution fees and early-withdrawal fees.7 From time to time the Fund may create additional classes of shares, the terms of which may differ from the
Fund’s Class A, Class C, Class I, Class T and Class UW Shares in the following respects: (i) the amount of fees permitted by a distribution and service plan as to such class; (ii) voting rights with respect to a distribution and service plan as to such
class; (iii) different class designations; (iv) the impact of any class expenses directly attributable to a particular class of shares allocated on a class basis as described in the Multi-Class Order; (v) differences in any dividends
and net asset values per share resulting from differences in fees under a distribution and service plan or in class expenses; (vi) any early withdrawal charge or other sales load structure; (vii) all shares will be offered to the public at
net asset value plus any applicable sales charge; and (viii) any exchange or conversion features, in each case, as permitted under the Act.
B. |
|
Founded in 1929, the AdviserVoya Investments is a limited liability company organized under the laws
of the state of Delaware. The
AdviserArizona. Voya Investments serves as
investment adviser to the Fund. The
AdviserVoya Investments is registered with the
Commission as an investment adviser under the Investment Advisers Act of 1940, as amended (the “Advisers Act”).
The Adviser will
provideVoya Investments provides services to the
Fund pursuant to an investment
advisorymanagement
agreement between the Fund and the Adviser. Under theVoya Investments. Voya Investments has overall responsibility for the management of the Fund. Voya Investments oversees
all investment advisory and portfolio management services
and assists in managing and supervising all aspects of the general day-to-day business activities and operations of the Fund, including custodial, transfer agency, dividend disbursing, accounting, auditing, compliance and related
services.
C. Voya Investments Management Co. LLC
Voya IM is a limited liability company organized under the laws of the state of Delaware. Voya IM serves as sub-adviser to the Fund and is an indirect, wholly-owned subsidiary of Voya Financial, Inc. and is an affiliate of Voya Investments. Voya IM is registered with the Commission as an investment adviser under the Advisers Act.
Voya IM provides services to the Fund pursuant to a sub-advisory
agreement between Voya Investments and Voya IM. Voya IM provides, subject to the supervision
and direction of
the Fund’s Board of Trustees,
of the Adviser will manage the Fund’s
portfolioFund and Voya Investments, a continuous investment program for the Fund and determines the
composition of the assets of the Fund, including determination of the purchase, retention, or sale of the securities, cash and other investments for the Fund, in accordance with the Fund’s
investment objective and policies, make investment decisions for the Fund, place orders to purchase and sell
7 In the Matter
of Lord Abbett Credit Opportunities
FundING Pilgrim Investments, LLC, et
al., Rel. No. IC- 33513 (June 19,
201924881 (Feb. 28, 2001) (notice), Rel. No.
IC- 33558 (July 16,
201924916 (Mar. 27, 2001) (order).
6
Page 26 of 65, including exhibits
securities, and
employ professional portfolio managers and securities analysts who provide research services to the
Fund.objectives, policies and restrictions and applicable laws and regulations.
|
The Distributor is a New YorkDelaware limited liability company and subsidiaryaffiliate
of the Adviser. The Distributor is a broker-dealer registered with the Commission and a member of FINRA.
The Distributor will actacts as the distributorprincipal
underwriter of Shares for the Fund on a best efforts basis, subject to various conditions, pursuant to the terms of
thea distribution agreement with the Fund. TheAs principal
underwriter, the Distributor has agreed to use reasonable
efforts to distribute the Shares, although it is not obligated to sell any specificparticular amount of Shares of the Fund.
Shares will also be offered through other brokers or dealers
that willSubject to the terms and conditions of the distribution agreement, the Fund may issue and sell Shares of the Fund from time to time through certain
broker-dealers which have entered into sellingdealer agreements with the Distributor. The Distributor may reallocate the full amount of the sales load to the brokers or dealers that offer shares of the Fund. The actual front-end sales load paid by investors
may vary among and within selling agents.
Other Requirements for a Rule 23c-3 Fund8 |
Rule
23c-3(b)(4) requires that common shareholders be provided with notification of each quarterly repurchase offer no less than twenty-one and no more than forty-two days before each repurchase request deadline. If the relief requested herein is
obtained, however, the Fund, upon commencing monthly repurchase offers, will provide (and any Future Fund
will provide) common shareholders with notification of each monthly repurchase offer no less than seven and no more than fourteen days before each repurchase request deadline. The Fund’s notification will include (and any Future Fund’s
notification will include), all information required by Rule 23c-3(b)(4)(i). Applicants agree that, as a condition of the relief requested in this application, the
Fund, upon commencing monthly repurchase offers, will make (and any Future Fund will make) payment for
common shares repurchased in the previous month’s repurchase offer at least five business days before sending notification of the next repurchase offer. The
Fund, upon commencing monthly repurchase offers, will file (and any Future Fund will file), copies of
the notification with the Commission, together with Form N-23c-3, within three business days after sending the notification to common shareholders as required by Rule 23c-3(b)(4)(ii).
Pursuant to Rule 23c-3(b)(1), the Fund, upon commencing
monthly repurchase offers, will repurchase (and any Future Fund will repurchase), common shares for cash at the net asset value determined on the repurchase pricing date and will pay the
holders on or before the “repurchase
8 The Fund is currently in compliance with the requirements described in this section in reliance on the Prior Order.
7
Page 27 of 65, including exhibits
payment deadline,”89 which will be no later than seven calendar days after the “repurchase pricing date,” unless the offer is suspended or postponed as provided in Rule
23c-3(b)(3). Upon commencing monthly repurchase offers,
theThe Fund intends to make payment by the fifth
business day or seventh calendar day (whichever period is shorter) following the repurchase pricing date. The Fund and a Future Fund may deduct a repurchase fee in an amount not to exceed 2% from the repurchase proceeds payable to tendering common
shareholders, in compliance with Rule 23c-3(b)(1), and then only to the extent such repurchase fee is reasonably intended to compensate the Fund (and any Future Fund) for expenses directly related to the repurchase. Such a fee would be in addition
to the early withdrawal charges the Fund (or any Future Fund relying on the Multi-Class Order or similar relief) may charge pursuant to the Multi-Class Order or similar relief. The Fund, upon commencing monthly repurchase offers, will not condition (and any Future Fund will not condition), a
repurchase offer upon tender of any minimum amount of common shares.
The Fund, upon commencing monthly repurchase offers, will comply (and any Future Fund will comply), with the pro ration and
other allocation requirements applicable if common shareholders tender more than the repurchase offer amount in accordance with Rule 23c-3(b) (5). The Fund,
upon commencing monthly repurchase offers, will permit (and any Future Fund will permit), tenders to be withdrawn or modified at any time until the repurchase request deadline, but will not
permit tenders to be withdrawn or modified thereafter in accordance with Rule 23c-3(b)(6). The Fund, upon commencing monthly repurchase offers, will compute (and any Future Fund will compute), the net asset value for its common shares in accordance with Rule 23c-3(b)(7). The Fund (and any Future Fund) will not suspend or postpone a repurchase offer
except pursuant to the vote of a majority of its trustees, including a majority of its Disinterested Trustees (as defined below), and only under the limited circumstances specified by Rule 23c-3(b)(3)(i). At least a majority of the trustees of the
Fund will be (and at least a majority of trustees of any Future Fund will be) persons who are not interested persons of the Fund (or a Future Fund, as applicable) within the meaning of Section 2(a)(19) of the Act (“Disinterested
Trustees”), and the selection or nomination of those trustees is, in the case of the Fund, or will be, in the case of any Future Fund, committed to the discretion of the Disinterested Trustees in accordance with Rule 23c-3(b)(8)(i). The Fund
(and any Future Fund) will comply with Rule 23c-3(b)(8)’s requirements with respect to its Disinterested Trustees and their legal counsel. Any senior security issued by the Fund (and any Future Fund) or other indebtedness of the Fund (and any
Future Fund) will either mature by the next repurchase pricing date or provide for the Fund’s (or Future Fund’s, as applicable) ability to call, repay of redeem such senior security or other indebtedness by the repurchase pricing date,
either in ‘whole or in part without penalty or premium, as necessary to permit the Fund (or Future Fund, as applicable) to complete the repurchase offer in such amounts, as the trustees have determined, in compliance with the asset coverage
requirements of Section 18 of the Act and in accordance with Rule 23c-3(b)(9).
In accordance with Rule 23c-3(b)(10), from the time the Fund (or any Future Fund) sends its notification to common shareholders of the repurchase offer, which shall be sent in compliance with the requirements of Rule 23c-3(b)(4) as modified by the requested Order, until the repurchase pricing date, a percentage of such fund’s assets equal to at least 100% of the
89 Rule 23c-3(a)(4).
8
Page 28 of 65, including exhibits
repurchase offer amount will consist of: (1) assets that can be sold or disposed of in the ordinary course of business at approximately the price at which such fund has valued such investment, within a period equal to the period between the repurchase request deadline and the repurchase payment deadline, or (2) assets that mature by the next repurchase payment deadline; and in the event the Fund’s (or any Future Fund’s) assets fail to comply with this requirement, the Board of Trustees of such fund will cause such fund to take such action as it deems appropriate to ensure compliance. The Fund’s Board of Trustees will adopt (and any Future Fund’s Board of Trustees will adopt) written procedures reasonably designed, taking into account current market conditions and such fund’s investment objectives, to ensure that such fund’s portfolio assets are sufficiently liquid so that the Fund (and any Future Fund, as applicable) can comply with its fundamental policy on repurchases and with the liquidity requirements described above. The Fund’s Board of Trustees (and any Future Fund’s Board of Trustees) will review the overall composition of the portfolio and make and approve such changes to the procedures as it deems necessary. Applicants believe the Fund’s portfolio can be (and any Future Fund’s portfolio will be) managed to provide ample liquidity for its proposed monthly repurchase offers in accordance with the requirements of Rule 23c-3(b)(10).
The Fund and the Distributor will (and any Future Fund and any respective underwriter for such fund will) comply as if the Fund (and any Future Fund, as applicable) was an open-end investment company, with the provisions of Section 24(b) of the Act and the rules thereunder with respect to any advertisement, pamphlet, circular, form letter, or other sales literature addressed to, of intended for distribution to, prospective investors in accordance with Rule 23c-3(b)(11).
III. EXEMPTIONS REQUESTED
Section 23(c) of the Act provides, in relevant part, that no registered closed-end investment company shall purchase any securities of any class of which it is the issuer except: (a) on a securities exchange or other open market; (b) pursuant to tenders, after reasonable opportunity to submit tenders given to all holders of securities of the class to be purchased; or (c) under such other circumstances as the Commission may permit by rules and regulations or orders for the protection of investors in order to insure that such purchases are made in a manner or on a basis which does not unfairly discriminate against any holders of the class or classes of securities to be purchased. Repurchase offers made pursuant to the exception which permits closed-end funds to make repurchases pursuant to tender offers are considered issuer tender offers and thus, absent further relief, must comply with the requirements of the tender offer rules under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including Rules 13e-4 and 14e-1.
The Commission also may exempt closed-end issuer repurchases from the prohibitions in Section 23(c) pursuant to Section 23(c)(3). Rule 23c-3 provides such an exemption as it permits a registered closed-end investment company to make repurchase offers for its common stock at net asset value at periodic intervals pursuant to a fundamental policy of the investment company. “Periodic interval” is defined in Rule 23c-3(a)(1) as an interval of three, six or twelve months. Rule 23c-3(b)(4) requires that notification of each repurchase offer be sent to common shareholders no less than 21 calendar days and no more than 42 calendar days before the repurchase request deadline. Rule 23c-3(a)(3) provides that a repurchase offer amount may be
9
Page 29 of 65, including exhibits
between 5% and 25% of the common stock outstanding on the repurchase request deadline. At the
time the Commission adopted Rule 23c-3, corresponding amendments to Rules 10b-6910 and 13e-4 of the Exchange Act and Regulation 14E of the Exchange
Act were also adopted, exempting repurchase offers pursuant to Rule 23c-3 from most of the provisions of those rules.1011
Applicants request an order pursuant to Sections 6(c) and 23(c) of the Act exempting them from the definition of “periodic interval”
under Rule 23c-3(a)(1) that would permit the Fund (and any Future Fund) to rely on the relief provided by Rule 23c-3 while making repurchase offers on a monthly basis. Applicants also request an exemption from the notice provisions of Rule
23c-3(b)(4) to permit the Fund (and any Future Fund) to send notification of an upcoming repurchase offer to common shareholders at least seven but no more than fourteen calendar days in advance of the repurchase request deadline.1112
IV. COMMISSION AUTHORITY
Pursuant to Section 6(c) of the Act, the Commission may, by order on application, conditionally or unconditionally, exempt any person, security or transaction, or any class or classes of persons, securities or transactions from any provision or provisions of the Act or from any rule or regulation under the Act, if and to the extent that the exemption is necessary or appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act.
Section 23(c) of the Act provides, in relevant part, that no registered closed-end investment company shall purchase securities of which it is the issuer, except: (a) on a securities exchange or other open market; (b) pursuant to tenders, after reasonable opportunity to submit tenders given to all holders of securities of the class to be purchased; or (c) under such other circumstances as the Commission may permit by rules and regulations or orders for the protection of investors.
Section 23(c)(3) of the Act provides that the Commission may issue an order that would permit a closed-end investment company to repurchase its shares in circumstances in which the repurchase is made in a manner or on a basis that does not unfairly discriminate against any holders of the class or classes of securities to be purchased.
V. DISCUSSION
A. | Background |
910 Rule 102(b)(2) of Regulation M continues this exception.
1011 Subsequently, the Commission also added paragraph (a)(1)(xi) to Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”), in order to permit closed-end funds relying on Rule 23c-3 to
make continuous or delayed offerings.
1112 Based on the requested relief the Fund (or any Future Fund) will be able to rely on the exemptions provided under Exchange Act and Securities Act rules for repurchase offers made in accordance with Rule 23c-3.
10
Page 30 of 65, including exhibits
In its 1992 study entitled Protecting Investors: A Half Century of Investment Company Regulation
(“Protecting Investors”), the Commission’s Division of Investment Management (the “Division”) recognized that the Act imposes a rigid classification system that dictates many important regulatory consequences.1213
For example, the characterization of a management company as “open-end” or “closed-end” has historically been crucial to the determination of the degree of liquidity a
fund’s shareholders will have, and thus the liquidity required of a fund’s investments.
Furthermore, except as noted below, there has been no middle ground between the two extremes. Open-end funds have offered complete liquidity
to their shareholders and thus required virtually complete liquidity of the underlying investments, while closed-end funds have been subject to requirements that in fact restrict the liquidity they are permitted to offer their investors. Under this
dual system of regulation, neither form has provided the best vehicle for offering portfolios that have substantial, but not complete, liquidity. In Protecting Investors, the Division determined that, given the changes in the securities market since
1940 — in particular the emergence of semi-liquid investment opportunities — it was appropriate to re-examine the classification system and its regulatory requirements.1314
The one exception to the liquid/illiquid dichotomy has been the so called “prime-rate funds.” These funds, first introduced in 1988, invest primarily in loans and provide shareholders liquidity through periodic tender offers or, more recently, periodic repurchases under Rule 23c-3.
Protecting Investors recognized that the rigidity of the Act’s classification system had become a limitation on sponsors’ ability to
offer innovative products that would take advantage of the vast array of semi-liquid portfolio securities currently existing. The report also noted the pioneering efforts of the prime rate funds and the market success they had experienced.1415
The report thus concluded that it would be appropriate to provide the opportunity for investment companies to “chart new territory” between the two extremes of the open-end and
closed-end forms, consistent with the goals of investor protection.1516 The Division thus recommended giving the industry the ability to
employ new redemption and repurchasing procedures, subject to Commission rulemaking and oversight.
In accordance with this
recommendation, and shortly after Protecting Investors was published, the Commission proposed for comment a new rule designed to assist the industry in this endeavor.1617 The Commission proposed Rule 23c-3, which began from the closed-end, illiquid perspective under Section 23(c), and provided flexibility to increase shareholder liquidity through periodic repurchase offers
under simplified procedures. Rule 23c-3 was adopted in April 1993.1718
1213
SEC Staff Report, Protecting Investors: A Half Century of Investment Company Regulation (May 1992) at 421.
1314 Id. at 424.
1415 Id. at 439-40.
1516 Id. at 424.
1617 Investment Co. Act Rel. No. 18869 (July 28, 1992)
(the “Proposing Release”).
1718
Investment Co. Act Rel. No. 19399 (April 7, 1993) (the “Adopting Release”). The Commission also had
proposed Rule 22e-3, which began from the open-end, complete liquidity perspective under Section 22 of the Act, and permitted periodic or delayed, rather than constant liquidity. The Commission neither adopted nor withdrew proposed Rule 22e-3.
To Applicants’ knowledge, the Commission has taken no further action with respect to Rule 22e-3.
11
Page 31 of 65, including exhibits
The prime rate funds were cited in both Protecting Investors and the Proposing Release as
the prototype for the interval concept.1819 Nonetheless, while the prime rate funds broke the path for
innovation in this area, developments since the origin of these funds make further innovation appropriate. Precedent exists for the granting of exemptive relief to permit funds other than “prime rate” interval funds to engage in
repurchases on a monthly
basis.1920
B. | Monthly Repurchases |
Applicants request an order pursuant to Sections 6(c) and 23(c) of the Act exempting them from Rule 23c-3(a)(1) solely to the extent necessary to permit the Fund (and any Future Fund) to make monthly repurchase offers. Applicants also request an exemption from the notice provisions of Rule 23c-3(b)(4) solely to the extent necessary to permit the Fund (and any Future Fund) to send notification of an upcoming repurchase offer to shareholders at least seven days but not more than fourteen days in advance of the repurchase request deadline. In Applicants’ view, this modification would enhance, rather than diminish, the investor benefits provided by Rule 23c-3 and is consistent with the public interest and investor protection. As long as the Fund (and any Future Fund), as supervised by its Board of Trustees, can make monthly repurchase offers pursuant to the modified notification requirements requested herein and otherwise comply with the remainder of Rule 23c-3, including its requirements with respect to liquidity — and Applicants believe the Fund (and any Future Fund) will be able to do so — there is no public interest nor investor protection concern that justifies prohibiting monthly repurchase offers.
In the rulemaking
proceeding in which Rule 23c-3 was adopted, certain commenters requested that a provision for monthly repurchases be incorporated in the final Rule. At the time of adoption, the Commission declined to do so. The Commission was concerned that shorter
repurchase intervals would not be compatible with the notification requirement in paragraph (b)(4) of the Rule because a fund would need to send out a notification for a repurchase offer before it had completed the previous offer.2021
Applicants believe that this concern should not deter the Commission from granting the relief requested in this case. First, it is understandable that, in its initial efforts to “chart
new territory,” the Commission was reluctant to provide too many options. Regulatory prudence might well have dictated adopting a more limited rule and considering more flexible proposals on a case-by-case basis. Second, it is significant that
the
1819 Protecting Investors at 439-40; Proposing Release at 27.
1920
In the Matter of Lord Abbett Floating
Rate High Income Fund, et al., Rel. No. IC-34308 (June 22, 2021) (notice), Rel. No. IC-34336 (July
19, 2021) (order) (“Lord Abbett”). In the Matter of Arca U.S. Treasury Fund, et al., Rel. No. IC-34026 (Sep. 24, 2020) (notice), Rel. No. IC-34055 (Oct. 20, 2020) (order) (“Arca”). In the Matter of Weiss Strategic Interval Fund, et al., Rel. No. IC-33101 (May 21, 2018) (notice), Rel. No. IC-33124 (June 18, 2018) (order) (“Weiss”). In the Matter of Blackstone / GSO Floating
Rate Enhanced Income Fund, et al., Rel. No.
IC-32866 (Oct. 23, 2017) (notice), Rel. No. IC-32902 (Nov. 20, 2017) (order)
(“Blackstone”). In the Matter of Van Kampen Asset Management, et al., Rel. No. IC-27317 (May 12, 2006) (notice), Rel. No. IC-27390 (June 7, 2006) (order) (“Van Kampen”). In the Matter of CypressTree
Asset Management Corporation Inc., et al., Rel. No. IC-23020 (Feb. 4, 1998) (notice), Rel. No. IC-23055 (Mar. 3, 1998) (order) (“CypressTree”).
In the Matter of ING Pilgrim Investments. LLC, et al., Rel.
No. IC-25167 (Sep. 21, 2001) (notice), Rel. No. IC-25212 (Oct. 17, 2001) (order) (“Pilgrim Investments”)Prior Order supra at note 1.
2021 See Adopting Release at 28-29.
12
Page 32 of 65, including exhibits
reason given is one of logistics rather than substance. In fact, as discussed below, the logistical concern mentioned would not pertain to Applicants’ proposal.
Rule 23c-3(b)(4) requires that notification of each
repurchase offer be sent to common shareholders no less than 21 days and no more than 42 days before the repurchase request deadline. In order to prevent any overlap between payment for a repurchase and notification of the next month’s
repurchase offer or resulting investor confusion, Applicants request an exemption from the notice provisions of Rule 23c-3(b)(4) to the extent necessary to permit the Fund (and any Future Fund) to send notification of an upcoming repurchase offer to
common shareholders at least seven calendar days, but not more than fourteen calendar days, in advance of the repurchase request deadline. Because the Fund, upon
commencing monthly repurchase offers, intends
prices (and any Future Fund intends) towill price) on the repurchase request deadline, and pay by the fifth business day
or seventh calendar day (whichever period is shorter) following the repurchase pricing date (and, in any event, no later than seven calendar days after the repurchase pricing date), this proposed timing will
ensureensures that common shareholders have
received payment in full for any repurchases before receiving notification of the next repurchase offer. The entire repurchase procedure will beis completed before the next notification is sent out, thus avoiding any
overlap. Applicants believe that these procedures will eliminate any possibility of investor confusion
from monthly repurchases.
The Fund’s prospectus will
continue to provide (and any Future Fund’s prospectus will
provide) a clear explanation of the repurchase program. Moreover, shareholders in the Fund and any Future Fund that seeks shareholder approval to adopt or change a fundamental policy to permit monthly repurchase offers will receive full disclosure
in the proxy materials sent to obtain the requisite shareholder approval. Applicants expectbelieve that, before long, the monthly repurchase opportunity willhas become as routine in the shareholder’s mind as daily redemptions, and that the significance of the notification will
diminishhas diminished. Thus, any remote
possibility of investor confusion due to the proximity in time of the repurchase payment deadline to the sending of the next notification will
beis adequately dealt with by disclosure.
Finally, upon commencing monthly repurchase
offers, the Fund’s procedures provide (and any Future Fund’s) procedures will provide) that the Fund’s Board of Trustees are (and any Future Fund’s Board of Trustees) will
be) informed of the number of repurchase requests made in
the previous repurchase offer — which repurchases will have been completed — at the time
such fund’s Board of Trustees determines the repurchase offer amount for the current month. This will enableenables the Fund’s Board of Trustees (and any Future Fund’s
Board of Trustees) to take that information, as well as relevant liquidity reports from the portfolio manager, into account in setting the repurchase offer amount.
Applicants believe that monthly rather than quarterly repurchases offer many benefits and therefore would be in the public interest and in the
common shareholders’ interests and be consistent with the policies underlying Rule 23c-3. Rule 23c-3 currently permits periodic repurchase offers no more frequently than once every three months, but monthly repurchases would provide significant
benefits to common shareholders because their investments will be more liquid than an investment in a fund conducting only quarterly repurchase offers. Investors also will be better able to manage their investments and plan transactions because they will know
13
Page 33 of 65, including exhibits
that, if they decide to forego a repurchase offer, they only need to wait one (rather than three) months for the next offer. Applicants believe the requested relief allowing monthly repurchases provides the public marketplace and the Fund (and any Future Fund) common shareholders with more investment options. Finally, consistent with Section 23(c)(3), monthly repurchase offers will be made available to all common shareholders and thus, will not unfairly discriminate against any holders of the common shares to be purchased.
For all of these reasons, Applicants believe that the requested relief is “appropriate in the public interest and consistent with the
protection of investors and the purposes fairly intended by the policy and provisions” of the Act. Because the Fund will
continue to describe (and any Future Fund will describe) its
repurchase policy fully in its prospectus and annual report, shareholders and potential investors will have available all information about the Fund (and any Future Fund) and its differences from a traditional open-end fund and traditional
closed-end fund. Finally, because the requested Order will increase the investment alternatives available to investors, the requested Order is appropriate in the public interest. Because the monthly repurchase offers will continue to be made available to all common shareholders and otherwise
comply with the requirements of Rule 23c-3 (except as it relates to the imposition of early withdrawal fees), the repurchase offers willare not be made in a manner or on a basis which unfairly discriminates against holders of the common shares to be
purchased.
Applicants believe that there is precedent for the requested relief and that monthly repurchases are consistent with
the policies underlying Rule 23c-3. The Commission has granted exemptive relief under Rule 23c-3 to permit other interval funds to make monthly repurchase offers under modified notice procedures.2122 Under the Weiss and Blackstone orders, closed-end funds operating as interval funds sought to make monthly repurchase offers of not less than 5% of their outstanding common shares but not more than 25% in any
three month period pursuant to modified notice procedures under Rule 23c-3. Under the Van Kampen order, a closed-end fund investing in senior secured floating rate loans sought
to make monthly repurchase offers of not less than 5% of its outstanding common shares but not more than 25% in the trailing three month period pursuant to modified notice procedures under Rule 23c-3, and was granted relief that was similar to that
which the Applicants seek here. Under thePrior Order, a closed-end fund investing in senior secured floating rate
loans sought to make monthly repurchase offers of not less than 5% of its outstanding common shares but not more than 25% in the aggregate in any one quarter pursuant to modified notice procedures under Rule 23c-3, and was granted relief that was
similar to that which the Applicants seek here. Under the CypressTree order, another closed-end fund investing in senior secured floating rate loans sought to make monthly repurchase offers of not more than 10% of its outstanding common
shares. Applicants submit that the requested relief is appropriate under the applicable statutory standards. Pilgrim Investments order
VI. APPLICANTS’ CONDITIONS
2122 See Weiss supra at note 1720, See Blackstone supra at note 1720, See Van Kampen supra at note 1720, See Pilgrim Investments supra at note 171. See also CypressTree, supra at note 1720.
14
Page 34 of 65, including exhibits
Applicants agree that any order granting the requested relief will be subject to the following conditions:
a. | The Fund (and any Future Fund relying on this relief) will make a repurchase offer pursuant to Rule 23c-3(b) for a repurchase offer amount of not less than 5% in any one-month period. In addition, the repurchase offer amount for the then current monthly period, plus the repurchase offer amounts for the two monthly periods immediately preceding the then current monthly period, will not exceed 25% of the Fund’s (or Future Fund’s, as applicable) outstanding common shares. The Fund (and any Future Fund relying on this relief) may repurchase additional tendered common shares pursuant to Rule 23c-3(b)(5) only to the extent the percentage of additional common shares so repurchased does not exceed 2% in any three-month period. |
b. | Payment for repurchased common shares will occur at least five business days before notification of the next repurchase offer is sent to common shareholders of the Fund (or any Future Fund relying on this relief). |
VII. CONCLUSION
For the reasons stated above, Applicants submit that the exemptions requested are necessary or
appropriate in the public interest and are consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act, and thus meet the standards of Section 6(c). Applicants further submit that the
relief requested pursuant to Section 23(c)(3) will be consistent with the protection of investors and will ensure that any purchases are made in a manner or on a basis which does not unfairly discriminate against any holders of the class of
securities to be purchased. Finally, Applicants submit that the relief requested is consistent with that previously provided by the Commission in the Weiss, Blackstone, Van Kampen, Pilgrim InvestmentsPrior
Order and CypressTree orders.
Applicants desire that the Commission issue the requested Order pursuant to Rule 0-5 under the Act without conducting a hearing.
As required by Rule 0-2(c)(1) under the Act, each Applicant hereby states that all of the requirements for execution and filing of this Application have been complied with in accordance with the operating agreements of the Applicants, as applicable, and the persons signing and filing this document are authorized to do so on behalf of the Applicants. The resolutions of the Fund’s Board of Trustees are attached as Exhibit A to this Application in accordance with the requirements of Rule 0-2(c)(1) under the Act, and the verifications required by Rule 0-2(d) under the Act, are attached as Exhibits B to this Application, respectively. In accordance with the requirements for a request for expedited review of this Application, marked copies of two recent applications seeking the same relief as Applicants that are substantially identical as required by Rule 0-5(e) of the Act are attached as Exhibits C and D.
15
Page 35 of 65, including exhibits
Pursuant to Rule 0-2(f) under the Act, the Applicant’s address is 90 Hudson Street, Jersey City, New Jersey
07302-39737337 E. Doubletree Ranch Road, Suite 100, Scottsdale, AZ 85258 and that all written communications regarding this Application should be directed to the individuals and addresses indicated on the first page of this Application.
[Signature page follows.]
16
Page 36 of 65, including exhibits
SIGNATURES
By: /s/ |
Name: |
Title: |
VOYA INVESTMENTS, LLC |
By: /s/ Todd Modic Name: Todd Modic |
Title: Senior Vice President Dated: March 30, 2022 |
MANAGEMENT CO. LLC |
By: /s/ |
Name: |
Title: |
Dated: |
DISTRIBUTOR, LLC |
By: /s/ |
Name: |
Title: |
Dated: |
17
Page 37 of 65, including exhibits
EXHIBIT A
Resolutions of the Board of Trustees of
Lord Abbett Floating Rate HighVoya Senior Income Fund
RESOLVED, that the appropriate officers
of theVoya Senior
Income Fund (the “Fund”) be and they hereby are, and each of them acting individually hereby is, authorized to prepare, execute and file with the Securities and Exchange Commission (the “SEC”) on behalf of the Fund an
application for an exemptive order pursuant to Sections 6(c) and 23(c)(3) under the Investment Company Act of
1940, as amended (the “1940 Act”) to allow the Fund to conduct monthly repurchase offers, such application to be in form and substance satisfactory to counsel for the Fund, and subject to review by counsel to the Trustees who are not “interested persons” as defined in the 1940
Act, the execution and filing of any such application, or amendment to such application, to be conclusive evidence of its authorization hereby; and further
RESOLVED, that the appropriate officers of the Fund be, and they hereby are, authorized to prepare execute and file with the SEC any amendments to such exemptive application requested by the SEC or as they believe necessary or appropriate; and further
RESOLVED, that the appropriate officers of the Fund be, and they hereby are, authorized to take all such further action and to execute and deliver all such further instruments and documents, in the name of and on behalf of the Fund, on the advice and assistance of Fund counsel, and to pay all such expenses as shall be necessary, proper, or advisable, in order to fully carry out the intent, and accomplish the purposes of, the foregoing; and further
RESOLVED, that the appropriate officers of the Fund be, and they hereby are, authorized and directed, for and on the Fund’s behalf, to take or cause to be taken, any and all action, to execute and deliver any and all certificates, instructions, requests, or other instruments, and to do any and all things that in their judgment, on the advice and assistance of Fund counsel, as may be necessary or advisable to effect each of the resolutions adopted to carry out the purposes and intent thereof, and as may be necessary or advisable for the conduct of the Fund’s business.
18
Page 38 of 65, including exhibits
EXHIBIT B
VERIFICATION OF
LORD ABBETT FLOATING RATE HIGHVOYA SENIOR INCOME
FUND
The undersigned states that he has duly executed the attached Application dated February 23March
30,
20212022
, for and on behalf of Lord Abbett Floating Rate HighVoya Senior Income Fund in his capacity as Vice President and Assistant Secretary of such entity and that all actions by the holders and other bodies
necessary to authorize the undersigned to execute and file such instrument have been taken. The undersigned further states that he is familiar with such instrument, and the contents thereof, and that the facts therein set forth are true to the best
of his knowledge, information and belief.
By: /s/ Name: Title: Dated: |
19
Page 39 of 65, including exhibits
VERIFICATION OF
LORD, ABBETT & CO. LLC
VOYA INVESTMENTS, LLC
The undersigned states that he has duly executed the attached Application dated February 23, 2021March
30, 2022, for and on behalf of Lord, Abbett & Co.Voya Investments, LLC in his capacity as Member and General
CounselSenior Vice President of such entity and
that all actions by the holders and other bodies necessary to authorize the undersigned to execute and file such instrument have been taken. The undersigned further states that he is familiar with such instrument, and the contents thereof, and that
the facts therein set forth are true to the best of his knowledge, information and belief.
By: /s/ |
Name: |
Title: |
Dated: |
20
Page 40 of 65, including exhibits
VERIFICATION OF
VOYA INVESTMENT MANAGEMENT CO. LLC
The undersigned states that she has duly executed the attached Application dated March 30, 2022, for and on behalf of Voya Investment Management Co. LLC in her capacity as Senior Vice President and Assistant Secretary of such entity and that all actions by the holders and other bodies necessary to authorize the undersigned to execute and file such instrument have been taken. The undersigned further states that she is familiar with such instrument, and the contents thereof, and that the facts therein set forth are true to the best of her knowledge, information and belief.
VOYA INVESTMENT MANAGEMENT CO. LLC |
By: /s/ Marie E. Picard |
Name: Marie E. Picard |
Title: Senior Vice President and Assistant Secretary |
Dated: March 30, 2022 |
21
Page 41 of 65, including exhibits
VERIFICATION OF
LORD ABBETTVOYA INVESTMENTS
DISTRIBUTOR, LLC
The undersigned states that he has duly executed the attached Application dated February 23March
30,
20212022
, for and on behalf of Lord AbbettVoya Investments Distributor, LLC in his capacity as Member and General Counsel of Lord, Abbett &
Co. Vice President of Voya Investment Distributor,
LLC and that all actions by the holders and other bodies necessary to authorize the undersigned to execute and file such instrument have been taken. The undersigned further states that he is familiar with such instrument, and the contents thereof,
and that the facts therein set forth are true to the best of his knowledge, information and belief.
By: /s/ |
Name: |
Title: |
Dated: |
22
Page 42 of 65, including exhibits
As filed with the U.S. Securities and Exchange Commission on March 31, 2022
File
No. 812811-1514510223
UNITED STATES OF AMERICA
BEFORE THE
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
In the Matter of
Arca U.S. Treasury Fund
Arca Capital Management, LLC
4151 Redwood Ave., Suite 206
Los Angeles,
CA 90066
Amendment No. 1 to the APPLICATION PURSUANT TO
SECTIONS 6(C) AND 23(C)(3) OF
THE INVESTMENT COMPANY ACT OF 1940
(THE “ACT”) FOR AN ORDER GRANTING CERTAIN EXEMPTIONS FROM THE
PROVISIONS OF RULE 23C-3
THEREUNDER
EXPEDITED REVIEW REQUESTED UNDER 17 CFR 270.0-5(d)
In the Matter of the Application of:
Voya Senior Income Fund
7337 E. Doubletree Ranch Road, Suite 100
Scottsdale, AZ 85258
and
Voya Investments, LLC
7337 E. Doubletree Ranch Road, Suite 100
Scottsdale, AZ 85258
and
Voya Investment Management Co. LLC
230 Park Avenue
New York, NY, 10169
and
Voya Investments Distributor, LLC
7337 E. Doubletree Ranch Road, Suite 100
Page 1of 121 of 65 sequentially numbered pages (including exhibits)
Page 43 of 65, including exhibits
Scottsdale, AZ 85258
Please send all communications, notices and orders regarding this
applicationApplication to:
Huey P. Falgout, Jr.
Voya Investments, LLC
Philip Liu, Esq.
Arca
Labs
4151 Redwood Ave.7337 E.
Doubletree Ranch Road, Suite 206100
Los Angeles, CA 90066
Scottsdale, AZ 85258
With a copycopies to:
Kelley
A. Howes, Esq.
Elizabeth J. Reza
Morrison & FoersterRopes & Gray LLP
370 17th Street, Suite 4200
Denver, CO
80202
Prudential Tower
800 Boylston Street
Boston, MA 02199-3600
TABLE OF CONTENTSTABLE OF CONTENTS
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III. |
EXEMPTIONS REQUESTED | 9 | ||||
IV. |
COMMISSION AUTHORITY | 10 | ||||
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VII. |
CONCLUSION | 16 |
2
Page 44 of 65, including exhibits
File No. 811-10223
|
I. THE PROPOSAL
Arca U.S. TreasuryVoya
Senior Income Fund (the “Fund”) is a newly organized Delaware statutory trust organized on December 14, 2000 and
is registered under the Investment Company Act of 1940, as amended (the “Act”), as a diversified, closed-end management investment company that operates as an interval fund. The
Fund will make a continuous public offering of its shares. The Fund is advised by Arca Capital Management, LLC (the
“Adviser”).is advised by Voya Investments, LLC (“Voya Investments”)
and sub-advised by Voya Investment Management Co. LLC (“Voya IM” and together with Voya Investments, the “Adviser”). Voya Investments Distributor, LLC (the “Distributor”) is the principal underwriter and
distributor of the Fund’s shares. The Fund and, the Adviser and the Distributor are referred to herein as the
“Applicants.”
The Applicants hereby seek an order (the “Order”) from the U.S. Securities and Exchange Commission (the “Commission” or the “SEC”) pursuant to Sections 6(c) and 23(c)(3) of the Act for an exemption from certain provisions of Rule 23c-3 under the Act to permit the Fund to make repurchase offers to its common shareholders every month and to provide notification to its common shareholders of an upcoming repurchase offer no less than seven and no more than fourteen calendar days in advance of the repurchase request deadline.
The Order sought by this application (the “Application”) would supersede the order dated October 17, 2001, issued by the Commission to ING Pilgrim Investments, LLC and certain of its affiliates under Sections 6(c) and 23(c)(3) of the Act and Rule 23c-3 under the Act permitting the Fund to make repurchase offers to its common shareholders every month subject to certain conditions set forth in the order (the “Prior Order”),1 with the result that no person will continue to rely on the Prior Order if the Order is granted.
Applicants request that the Order also apply to any registered closed-end management investment company that has been previously organized or
that may be organized in the future for which the Adviser, or any entity controlling, controlled by, or under common control with the Adviser, or any successor in interest to any such entity2,1 acts as an investment adviser, and which operates as an interval fund pursuant to Rule 23c-3 under the Act (each a “Future Fund” and, together with the Fund, the “Funds”). Any
entityof the
Funds relying on this relief in the future will do so in compliance with the terms and conditions of this
application (the “Application”).
Applicants represent that each entity presently intending to rely on the requested
1 In the Matter of ING Pilgrim Investments, LLC, et al., Rel. No. IC-25167 (Sep. 21, 2001) (notice), Rel. No. IC-25212 (order) (Oct. 17, 2001) (the “Prior Order”).
2 A successor in interest is limited to an entity that results from reorganization into another jurisdiction or a change in the type of business organization.
1 A successor in
interest is limited to an entity that results from reorganization into another jurisdiction or a change in the type of business organization.
3
Page 45 of 65, including exhibits
relief is listed as an Applicant. Unless otherwise provided relief, the Fund will comply with all other provisions of Rule 23c-3. Terms as used in this Application that are defined in Rule 23c-3 have the same meaning as they are given in Rule 23c-3.
|
II. STATEMENT OF FACTS
A. | Voya Senior Income
Fund |
The Fund is a Delaware statutory
trust organized on November 12, 2018. The Fund filed its initial Form N-8A and Form N-2 with the Commission on November 9, 2018, and was declared effective
by the Commission on July 6, 2020 (File Nos. 333-236320 and 811-23392). The FundDecember 14, 2000 and is registered under the Act as a diversified, closed-end management investment company that operates as
an interval fund pursuant to Rule 23c-3 under the Act. The Fund’s investment objective is to seek maximum total return consistent with preservation of
capitalprovide investors with a high level of monthly income. Common shares of the Fund are offered on a continuous basis at net asset
value per share plus the applicable sales load, if any, and are not offered or traded in the secondary market and are not listed on any exchange or quoted on any quotation medium. The Fund issues its shares as digital securities (“ArCoins”), meaning the securities are uncertificated securities, the ownership and transfer of
which are authenticated and recorded as ERC-1404 compatible tokens on Ethereum, an electronic distributed ledger that is secured using cryptography (referred to as a “blockchain”).
The Fund operates as an interval fund pursuant to Rule 23c-3 under the Act and offers its shareholders an exchange feature under which the shareholders of the Fund may, in connection with the Fund’s periodic repurchase offers, exchange their shares of the Fund for shares of the same class of registered open-end investment companies that are in the Fund’s group of investment companies (collectively, the “Other Funds”). Shares of any of the Funds operating pursuant to Rule 23c-3 that are exchanged for shares of Other Funds will be included as part of the repurchase offer amount for such Fund as specified in Rule 23c-3 under the Act. Any exchange option will continue to comply with Rule 11a-3 under the Act, as if the Fund were an open-end investment company subject to Rule 11a-3. In complying with Rule 11a-3 under the Act, the Fund will treat an early withdrawal charge as if it were a contingent deferred sales load (“CDSL”).3
As further discussed below, the Fund seeks an Order to make offers to repurchase a portion of its common shares at one-month intervals, rather than the “periodic intervals” (three, six or twelve months) specified by Rule 23c-3, and to notify common shareholders seven to fourteen calendar days in advance of the repurchase request deadlines, rather than the “no less than twenty-one and no more than forty-two days before each repurchase request deadline” specified by Rule 23c-3.
3 A CDSL, assessed by an open-end fund pursuant to Rule 6c-10 of the Act, is a distribution related charge payable to the distributor. Pursuant to the requested order, the early withdrawal charge will likewise be a distribution-related charge payable to the Distributor as distinguished from a repurchase fee which is payable to a Fund to reimburse a Fund for costs incurred in liquidating securities in the Fund’s portfolio.
4
Page 46 of 65, including exhibits
In connection with making monthly repurchases with modified notice provisions, the Fund will be subject to conditions (as described herein) such that the aggregate percentage of common shares subject to repurchase in any three-month period will not exceed 25% of the Fund’s outstanding common shares and payment for such common shares will occur at least five business days before notification of the next repurchase offer.
To the extent the Fund receives the requested Order,
theThe Fund’s Board of Trustees will adopthas
adopted a fundamental policy of making monthly repurchase offers. In addition, prior to
relying in reliance on the requestedPrior Order,
the.4 The Fund will
obtainobtained the approval of a majority
of itsthe
Fund’s outstanding voting securities to adopt a fundamental policy to permit monthly repurchase
offers in connection with the Prior Order. The Fund
will continue to disclose in its prospectus and annual
reports its fundamental policy to make monthly offers to repurchase a portion of its common shares at net asset value, less deduction of a repurchase fee, if any, as permitted by Rule 23c-3(b)(1), and the imposition of early withdrawal charges as permitted pursuant to the Multi-Class Order (as defined below). The Fund’s fundamental policies with respect to repurchase offers, including the periodic repurchase offer interval,
will beare changeable by majority vote of the
holders of the Fund’s outstanding voting securities. Monthly repurchase offers shall be for an amount not less than 5% nor more than 25% of the common shares outstanding during any three month period in accordance with any exemptive relief
granted by the
Commission.25
The Fund’s fundamental policies will
also specify the means to determine the dates of the repurchase request deadlines and the maximum number of days between each repurchase request deadline and the repurchase pricing date as required by Rule 23c-3(b)(2)(i)(C) and (D) and in
accordance with Rule
23c-3(a)(5).36
The Fund’s repurchase
4 In the case of a Future Fund that has not yet offered its shares to the public, the Future Fund will obtain the approval of its sole initial shareholder to adopt a fundamental policy to permit monthly repurchase offers. In the case of a Future Fund that seeks to adopt a fundamental policy of making monthly repurchase offers after selling shares to the public, the Future Fund will obtain the approval of a majority of the Fund’s outstanding voting securities to the adoption of such policy.
25 Applicants agree that, as a condition to the relief requested
in this Application, the repurchase offer amount for the then-current monthly period, plus the repurchase offer amounts for the two monthly periods immediately preceding the then current monthly period, will not exceed 25% of its outstanding common
shares, subject to any additional tendered common shares repurchased pursuant to Rule 23c-3(b)(5). The Fund may repurchase additional tendered common shares pursuant to Rule 23c-3(b)(5) only to the extent the percentage of additional common shares
so repurchased does not exceed 2% in any three-month period.
36 A Future Fund that relies on the exemptive relief requested hereby will have fundamental investment policies in compliance with Rule 23c-3(b)(2)(i), as modified by the requested Order, which will include the date
of repurchase request deadlines or the means of determining the repurchase request deadlines and the maximum number of days between each repurchase request deadline and the next repurchase pricing date (as required by Rule 23c- 3(b)(2)(i)(C) and
(D) and in accordance with Rule 23c-3(a)(5)). A Future Fund’s repurchase pricing date normally will be the same date as the repurchase request deadline and pricing will be determined after close of business on that date. A Future Fund will
disclose in its prospectus and annual reports its fundamental policy to make monthly offers to repurchase a portion of its common shares at net asset value, less deduction of a repurchase fee, if any, as permitted by Rule 23c-3(b)(1). A Future
Fund’s fundamental policies with respect to repurchase offers, including the periodic offer interval, will be changeable only by majority vote of the holders of such Future Fund’s outstanding voting securities. Under a Future Fund’s
fundamental policy, the repurchase offer amount will be determined by such Future Fund’s Board of Trustees prior to each repurchase offer and will not be less than 5% of its outstanding common shares on the repurchase request deadline.
Applicants agree that, as a condition to the relief requested in this application, the repurchase offer amount for the then current monthly period, plus the repurchase offer amounts for the two monthly periods immediately preceding the then-current
monthly period, will not exceed 25% of its outstanding common shares, subject to any additional tendered common shares repurchased pursuant to Rule 23c- 3(b)(5). A Future Fund may repurchase additional tendered common shares pursuant to Rule
23c-3(b)(5) only to the extent the percentage of additional common shares so repurchased does not exceed 2% in any three-month period.
5
Page 47 of 65, including exhibits
pricing date normally will continue to be the same date as the repurchase request deadline and pricing will be determined after the close of business on that date.
The Fund offers five classes of common shares: Class A common shares (“Class A Shares”), Class C common shares (“Class C Shares”), Class I common shares (“Class I Shares”), Class T common shares (“Class T Shares”) and Class W common shares (“Class W Shares”). The Fund is relying on an exemptive order (“Multi-Class Order”) from the SEC that permits the Fund to issue multiple classes of shares and to impose asset-based distribution fees and early-withdrawal fees.7 From time to time the Fund may create additional classes of shares, the terms of which may differ from the Fund’s Class A, Class C, Class I, Class T and Class W Shares in the following respects: (i) the amount of fees permitted by a distribution and service plan as to such class; (ii) voting rights with respect to a distribution and service plan as to such class; (iii) different class designations; (iv) the impact of any class expenses directly attributable to a particular class of shares allocated on a class basis as described in the Multi-Class Order; (v) differences in any dividends and net asset values per share resulting from differences in fees under a distribution and service plan or in class expenses; (vi) any early withdrawal charge or other sales load structure; (vii) all shares will be offered to the public at net asset value plus any applicable sales charge; and (viii) any exchange or conversion features, in each case, as permitted under the Act.
B. |
|
The Adviser is a DelawareVoya Investments is a limited liability company with its principal offices located
at 4151 Redwood Ave., Suite 206, Los Angeles, CA 90066. The
Adviserorganized under the laws of the state of Arizona. Voya Investments serves as investment adviser
to the Fund. Voya Investments is registered with the
Commission as an investment adviser under the Investment Advisers Act of 1940 and serves as investment
adviser to the Fund, as amended (the “Advisers Act”).
Voya Investments provides services to the Fund pursuant to an investment management agreement between the Fund and Voya Investments. Voya Investments has overall responsibility for the management of the Fund. Voya Investments oversees all investment advisory and portfolio management services and assists in managing and supervising all aspects of the general day-to-day business activities and operations of the Fund, including custodial, transfer agency, dividend disbursing, accounting, auditing, compliance and related services.
C. | Voya Investments Management Co. LLC |
Voya IM is a limited liability company organized under the laws of the state of Delaware. Voya IM serves as sub-adviser to the Fund and is an indirect, wholly-owned subsidiary of Voya
7 In the Matter of ING Pilgrim Investments, LLC, et al., Rel. No. IC-24881 (Feb. 28, 2001) (notice), Rel. No. IC-24916 (Mar. 27, 2001) (order).
6
Page 48 of 65, including exhibits
Financial, Inc. and is an affiliate of Voya Investments. Voya IM is registered with the Commission as an investment adviser under the Advisers Act.
The AdviserVoya IM provides services to the Fund pursuant to an investment advisorya
sub-advisory agreement between the Fund and the Adviser. Under the investment advisory
agreementVoya Investments and Voya IM. Voya IM provides, subject to the supervision and direction of the Fund’s Board of
Trustees, of the Adviser manages the Fund’s
portfolioFund and Voya Investments, a continuous investment program for the Fund and determines the
composition of the assets of the Fund, including determination of the purchase, retention, or sale of the securities, cash and other investments for the Fund, in accordance with the Fund’s
investment objective and policies, makes investment decisions for the Fund, places orders to purchase and sell securities, and employs professional portfolio
managers and securities analysts who provide research services to the Fund.objectives, policies and
restrictions and applicable laws and regulations.
D. | Voya Investments Distributor, LLC |
The Distributor is a Delaware limited liability company and affiliate of the Adviser. The Distributor is a broker-dealer registered with the Commission and a member of FINRA.
The Distributor acts as the principal underwriter of Shares for the Fund pursuant to a distribution agreement with the Fund. As principal underwriter, the Distributor has agreed to use reasonable efforts to distribute the Shares, although it is not obligated to sell any particular amount of Shares.
Subject to the terms and conditions of the distribution agreement, the Fund may issue and sell Shares of the Fund from time to time through certain broker-dealers which have entered into dealer agreements with the Distributor.
Other Requirements for a Rule 23c-3 Fund8 |
Rule 23c-3(b)(4) requires that common shareholders be provided with notification of each quarterly repurchase offer no less than twenty-one
and no more than forty-two days before each repurchase request deadline. If the relief requested herein is obtained, however, the Fund
will provide (and any Future Fund) will
provide) common shareholders with notification of each
monthly repurchase offer no less than seven and no more than fourteen days before each repurchase request deadline. The Fund’s notification will include (and any Future Fund’s notification will include), all information required by Rule
23c-3(b)(4)(i). Applicants agree that, as a condition of the relief requested in this application, the Fund will
make (and any Future Fund) will make) payment for common shares repurchased in the previous month’s
repurchase offer at least five business days before sending notification of the next repurchase offer. The Fund, upon commencing monthly repurchase
offers, will file (and any Future Fund will file), copies of the notification with the Commission, together with Form N-23c-3, within three business days after sending the notification to
common shareholders as required by Rule 23c-3(b)(4)(ii).
8 The Fund is currently in compliance with the requirements described in this section in reliance on the Prior Order.
7
Page 49 of 65, including exhibits
Pursuant to Rule 23c-3(b)(1), the Fund, upon commencing monthly repurchase offers, will repurchase (and any Future Fund will repurchase), common shares
for cash at the net asset value determined on the repurchase pricing date and will pay the holders on or before the “repurchase payment deadline,“49 which will be no later than seven calendar days after the “repurchase pricing date,” unless the offer is suspended or postponed as provided in Rule 23c-3(b)(3). The Fund intends to make payment by the
fifth business day or seventh calendar day (whichever period is shorter) following the repurchase pricing date. The Fund and a Future Fund may deduct a repurchase fee in an amount not to exceed 2% from the repurchase proceeds payable to tendering
common shareholders, in compliance with Rule 23c-3(b)(1), and then only to the extent such repurchase fee is reasonably intended to compensate the Fund (and any Future Fund) for expenses directly related to the repurchase. The Fund, upon commencing monthly repurchase
offers,Such a fee would be in addition to the early withdrawal charges the Fund (or any Future Fund
relying on the Multi-Class Order or similar relief) may charge pursuant to the Multi-Class Order or similar relief. The Fund will not condition (and any Future Fund will not condition), a
repurchase offer upon tender of any minimum amount of common shares.
The Fund, upon commencing monthly repurchase offers, will comply (and any Future Fund will comply), with the pro ration and
other allocation requirements applicable if common shareholders tender more than the repurchase offer amount in accordance with Rule 23c-3(b) (5). The Fund,
upon commencing monthly repurchase offers, will permit (and any Future Fund will permit), tenders to be withdrawn or modified at any time until the repurchase request deadline, but will not
permit tenders to be withdrawn or modified thereafter in accordance with Rule 23c-3(b)(6). The Fund, upon commencing monthly repurchase offers, will compute (and any Future Fund will compute), the net asset value for its common shares in accordance with Rule 23c-3(b)(7). The Fund (and any Future Fund) will not suspend or postpone a repurchase offer
except pursuant to the vote of a majority of its trustees, including a majority of its Disinterested Trustees (as defined below), and only under the limited circumstances specified by Rule 23c-3(b)(3)(i). At least a majority of the trustees of the
Fund will be (and at least a majority of trustees of any Future Fund will be) persons who are not interested persons of the Fund (or a Future Fund, as applicable) within the meaning of Section 2(a)(19) of the Act (“Disinterested
Trustees”), and the selection or nomination of those trustees is, in the case of the Fund, or will be, in the case of any Future Fund, committed to the discretion of the Disinterested Trustees in accordance with Rule 23c-3(b)(8)(i). The Fund (and any Future Fund) will comply with Rule 23c-3(b)(8)’s requirements with respect to its Disinterested Trustees and their legal counsel. Any senior security issued by the Fund (and
any Future Fund) or other indebtedness of the Fund (and any Future Fund) will either mature by the next repurchase pricing date or provide for the Fund’s (or Future Fund’s, as applicable) ability to call, repay of redeem such senior
security or other indebtedness by the repurchase pricing date, either in ‘whole or in part without penalty or premium, as necessary to permit the Fund (or Future Fund, as applicable) to complete the repurchase offer in such amounts, as the trustees have determined, in compliance with
the asset coverage requirements of Section 18 of the Act and in accordance with Rule 23c-3(b)(9).
49
Rule 23c-3(a)(4).
8
Page 50 of 65, including exhibits
In accordance with Rule 23c-3(b)(10), from the time the Fund (or any Future Fund) sends its
notification to common shareholders of the repurchase offer, which shall be sent in compliance with the requirements of Rule 23c-3(b)(4) as modified by the requested Order, until the repurchase pricing date, a percentage of such fund’s assets
equal to at least 100% of the repurchase offer amount will consist of: (1) assets that can be sold or disposed of in the ordinary course of business at approximately the price at which such fund has valued such investment, within a period equal
to the period between the repurchase request deadline and the repurchase payment deadline, or (2) assets that mature by the next repurchase payment deadline; and in the event the Fund’s (or any Future Fund’s) assets fail to comply
with this requirement, the Board of Trustees of such fund will cause such fund to take such action as it deems appropriate to ensure compliance. The Fund’s Board of Trustees will adopt (and any Future Fund’s Board of Trustees will adopt) written procedures reasonably designed, taking into account current market conditions and such
fund’s investment objectives, to ensure that such fund’s portfolio assets are sufficiently liquid so that the Fund (and any Future Fund, as applicable) can comply with its fundamental policy on repurchases and with the liquidity
requirements described above. The Fund’s Board of Trustees (and any Future Fund’s Board of Trustees) will review the overall composition of the portfolio and make and approve such changes to the procedures as it deems necessary. Applicants
believe the Fund’s portfolio can be (and any Future Fund’s portfolio will be) managed to provide ample liquidity for its proposed monthly repurchase offers in accordance with the requirements of Rule 23c-3(b)(10).
The Fund and any underwriter for the Fundthe Distributor will (and any Future Fund and any respective underwriter
for such fund will) comply as if the Fund (and any Future Fund, as applicable) was an open-end investment company, with the provisions of Section 24(b) of the Act and the rules thereunder with respect to any advertisement, pamphlet, circular,
form letter, or other sales literature addressed to, of intended for distribution to, prospective investors in accordance with Rule 23c-3(b)(11).
|
III. EXEMPTIONS REQUESTED
Section 23(c) of the Act provides, in relevant part, that no registered closed-end investment company shall purchase any securities of any class of which it is the issuer except: (a) on a securities exchange or other open market; (b) pursuant to tenders, after reasonable opportunity to submit tenders given to all holders of securities of the class to be purchased; or (c) under such other circumstances as the Commission may permit by rules and regulations or orders for the protection of investors in order to insure that such purchases are made in a manner or on a basis which does not unfairly discriminate against any holders of the class or classes of securities to be purchased. Repurchase offers made pursuant to the exception which permits closed-end funds to make repurchases pursuant to tender offers are considered issuer tender offers and thus, absent further relief, must comply with the requirements of the tender offer rules under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including Rules 13e-4 and 14e-1.
The Commission also may exempt closed-end issuer repurchases from the prohibitions in Section 23(c) pursuant to Section 23(c)(3). Rule 23c-3 provides such an exemption as it permits
9
Page 51 of 65, including exhibits
a registered closed-end investment company to make repurchase offers for its common stock at net
asset value at periodic intervals pursuant to a fundamental policy of the investment company. “Periodic interval” is defined in Rule 23c-3(a)(1) as an interval of three, six or twelve months. Rule 23c-3(b)(4) requires that notification of
each repurchase offer be sent to common shareholders no less than 21 calendar days and no more than 42 calendar days before the repurchase request deadline. Rule 23c-3(a)(3) provides that a repurchase offer amount may be between 5% and 25% of the
common stock outstanding on the repurchase request deadline. At the time the Commission adopted Rule 23c-3, corresponding amendments to Rules 10b-6510 and 13e-4 of the Exchange Act and Regulation 14E of the Exchange Act were also adopted, exempting repurchase offers pursuant to Rule 23c-3 from most of the provisions of those rules.611
Applicants request an order pursuant to Sections 6(c) and 23(c)
of the Act exempting them from the definition of “periodic interval” under Rule 23c-3(a)(1) that would permit the Fund (and any Future Fund) to rely on the relief provided by Rule 23c-3 while making repurchase offers on a monthly basis.
Applicants also request an exemption from the notice provisions of Rule 23c-3(b)(4) to permit the Fund (and any Future Fund) to send notification of an upcoming repurchase offer to common shareholders at least seven but no more than fourteen
calendar days in advance of the repurchase request deadline.712
|
IV. COMMISSION AUTHORITY
Pursuant to Section 6(c) of the Act, the Commission may, by order on application, conditionally or unconditionally, exempt any person, security or transaction, or any class or classes of persons, securities or transactions from any provision or provisions of the Act or from any rule or regulation under the Act, if and to the extent that the exemption is necessary or appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act.
Section 23(c) of the Act provides, in relevant part, that no registered closed-end investment company shall purchase securities of which it is the issuer, except: (a) on a securities exchange or other open market; (b) pursuant to tenders, after reasonable opportunity to submit tenders given to all holders of securities of the class to be purchased; or (c) under such other circumstances as the Commission may permit by rules and regulations or orders for the protection of investors.
Section 23(c)(3) of the Act provides that the Commission may issue an order that would permit a closed-end investment company to repurchase its shares in circumstances in which the
510
Rule 102(b)(2) of Regulation M continues this exception.
611
Subsequently, the Commission also added paragraph (a)(1)(xi) to Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”), in order to permit closed-end funds
relying on Rule 23c-3 to make continuous or delayed offerings.
712 Based on the requested relief the Fund (or any Future Fund) will be able to rely on the exemptions provided under Exchange Act and Securities Act rules for repurchase offers made in accordance with Rule 23c-3.
10
Page 52 of 65, including exhibits
repurchase is made in a manner or on a basis that does not unfairly discriminate against any holders of the class or classes of securities to be purchased.
|
V. DISCUSSION
A. | Background |
In its 1992 study entitled Protecting Investors: A Half Century of Investment Company Regulation (“Protecting Investors”),
the Commission’s Division of Investment Management (the “Division”) recognized that the Act imposes a rigid classification system that dictates many important regulatory consequences.813
For example, the characterization of a management company as “open-end” or “closed-end” has historically been crucial to the determination of the degree of liquidity a
fund’s shareholders will have, and, thus, the liquidity required of a fund’s investments.
Furthermore, except as noted below, there has been no middle ground between the two extremes. Open-end funds have offered complete liquidity
to their shareholders and thus required virtually complete liquidity of the underlying investments, while closed-end funds have been subject to requirements that in fact restrict the liquidity they are permitted to offer their investors. Under this
dual system of regulation, neither form has provided the best vehicle for offering portfolios that have substantial, but not complete, liquidity. In Protecting Investors, the Division determined that, given the changes in the securities market since
1940 — in particular the emergence of semi-liquid investment opportunities — it was appropriate to re-examine the classification system and its regulatory requirements.914
The one exception to the liquid/illiquid dichotomy has been the so called “prime-rate funds.” These funds, first introduced in 1988, invest primarily in loans and provide shareholders liquidity through periodic tender offers or, more recently, periodic repurchases under Rule 23c-3.
Protecting Investors recognized that the rigidity of the Act’s classification system had become a limitation on sponsors’ ability to
offer innovative products that would take advantage of the vast array of semi-liquid portfolio securities currently existing. The report also noted the pioneering efforts of the prime rate funds and the market success they had experienced.1015
The report thus concluded that it would be appropriate to provide the opportunity for investment companies to “chart new territory” between the two extremes of the open-end and
closed-end forms, consistent with the goals of investor protection.1116 The Division thus recommended giving the industry the ability to
employ new redemption and repurchasing procedures, subject to Commission rulemaking and oversight.
813 SEC Staff Report, Protecting Investors: A Half Century of
Investment Company Regulation (May 1992) at 421.
914 Id. at 424.
1015
Id. at 439-40.
1116 Id. at 424.
11
Page 53 of 65, including exhibits
In accordance with this recommendation, and shortly after Protecting Investors was published, the
Commission proposed for comment a new rule designed to assist the industry in this endeavor.1217 The Commission proposed Rule 23c-3, which began from the
closed-end, illiquid perspective under Section 23(c), and provided flexibility to increase shareholder liquidity through periodic repurchase offers under simplified procedures. Rule 23c-3 was adopted in April 1993.1318
The prime rate funds were cited in both Protecting
Investors and the Proposing Release as the prototype for the interval concept.1419 Nonetheless, while the prime rate funds broke the path for
innovation in this area, developments since the origin of these funds make further innovation appropriate. Precedent exists for the granting of exemptive relief to permit funds other than “prime rate” interval funds to engage in
repurchases on a monthly
basis.1520
B. | Monthly Repurchases |
Applicants request an order pursuant to Sections 6(c) and 23(c) of the Act exempting them from Rule 23c-3(a)(1) solely to the extent necessary to permit the Fund (and any Future Fund) to make monthly repurchase offers. Applicants also request an exemption from the notice provisions of Rule 23c-3(b)(4) solely to the extent necessary to permit the Fund (and any Future Fund) to send notification of an upcoming repurchase offer to shareholders at least seven days but not more than fourteen days in advance of the repurchase request deadline. In Applicants’ view, this modification would enhance, rather than diminish, the investor benefits provided by Rule 23c-3 and is consistent with the public interest and investor protection. As long as the Fund (and any Future Fund), as supervised by its Board of Trustees, can make monthly repurchase offers pursuant to the modified notification requirements requested herein and otherwise comply with the remainder of Rule 23c-3, including its requirements with respect to liquidity — and Applicants believe the Fund (and any Future Fund) will be able to do so — there is no public interest nor investor protection concern that justifies prohibiting monthly repurchase offers.
1217 Investment Co. Act Rel. No. 18869 (July 28, 1992)
(the “Proposing Release”).
1318
Investment Co. Act Rel. No. 19399 (April 7, 1993) (the “Adopting Release”). The Commission also had
proposed Rule 22e-3, which began from the open-end, complete liquidity perspective under Section 22 of the Act, and permitted periodic or delayed, rather than constant liquidity. The Commission neither adopted nor withdrew proposed Rule 22e-3.
To Applicants’ knowledge, the Commission has taken no further action with respect to Rule 22e-3.
1419 Protecting Investors at 439-40; Proposing Release at 27.
1520 In the Matter of Aspiriant Defensive
AllocationLord Abbett Floating Rate High Income
Fund, et. al., Rel. No.
IC-33924 (July
1034308 (June 22, 2021) (notice), Rel. No. IC-34336 (July 19, 2021) (order) (“Lord Abbett”).
In the Matter of Arca U.S. Treasury Fund, et al., Rel. No. IC-34026 (Sep. 24, 2020) (notice)
and,
Rel. No. IC-33961 (July
3134055 (Oct. 20, 2020) (order) (“AspiriantArca
”);. In the Matter of Weiss Strategic
Interval Fund, et al., Rel. No. IC-33101 (May 21, 2018) (notice) and, Rel. No. IC-33124 (June 18, 2018) (order)
(“Weiss”);. In the Matter of Blackstone / GSO Floating Rate Enhanced Income Fund, et al., Rel. No. IC-32866 (Oct. 23, 2017)
(notice) and,
Rel. No. IC-32902 (Nov. 20, 2017) (order) (“Blackstone”);. In the Matter of Van Kampen Asset Management, et al., Rel. No. IC-27317 (May 12, 2006) (notice) and, Rel. No. IC-27390 (June 7, 2006) (order) (“Van Kampen”);. In the Matter of ING Pilgrim Investments. LLC, et al., Rel. No. IC-25167 (Sep. 21, 2001) (notice) and Rel. No. IC-25212 (Oct. 17, 2001) (order) (“Pilgrim
Investments”); In the Matter of CypressTree Asset Management Corporation Inc., et al., Rel. No. IC-23020 (Feb. 4, 1998) (notice) and, Rel. No. IC-23055 (Mar. 3, 1998) (order) (“CypressTree”).
Prior Order supra at note 1.
12
Page 54 of 65, including exhibits
In the rulemaking proceeding in which Rule 23c-3 was adopted, certain commenters requested that a
provision for monthly repurchases be incorporated in the final Rule. At the time of adoption, the Commission declined to do so. The Commission was concerned that shorter repurchase intervals would not be compatible with the notification requirement
in paragraph (b)(4) of the Rule because a fund would need to send out a notification for a repurchase offer before it had completed the previous offer.1621 Applicants believe that this concern should not deter the Commission from granting the relief requested in this case. First, it is understandable that, in its initial efforts to “chart new territory,”
the Commission was reluctant to provide too many options. Regulatory prudence might well have dictated adopting a more limited rule and considering more flexible proposals on a case-by-case basis. Second, it is significant that the reason given is
one of logistics rather than substance. In fact, as discussed below, the logistical concern mentioned would not pertain to Applicants’ proposal.
Rule 23c-3(b)(4) requires that notification of each repurchase offer be sent to common shareholders no less than 21 days and no more than 42
days before the repurchase request deadline. In order to prevent any overlap between payment for a repurchase and notification of the next month’s repurchase offer or resulting investor confusion, Applicants request an exemption from the notice
provisions of Rule 23c-3(b)(4) to the extent necessary to permit the Fund (and any Future Fund) to send notification of an upcoming repurchase offer to common shareholders at least seven calendar days, but not more than fourteen calendar days, in
advance of the repurchase request deadline. Because the Fund
intendsprices
(and any Future Fund intends) towill price) on the repurchase request deadline, and pay by the fifth business day
or seventh calendar day (whichever period is shorter) following the repurchase pricing date (and, in any event, no later than seven calendar days after the repurchase pricing date), this proposed timing will
ensureensures that common shareholders have
received payment in full for any repurchases before receiving notification of the next repurchase offer. The entire repurchase procedure will beis completed before the next notification is sent out, thus avoiding any
overlap. Applicants believe that these procedures will eliminate any possibility of investor confusion
from monthly repurchases.
The Fund’s prospectus
provideswill continue
to provide (and any Future Fund’s prospectus will provide) a clear explanation of the repurchase program. Moreover, shareholders in the Fund and any Future Fund that seeks shareholder
approval to adopt or change a fundamental policy to permit monthly repurchase offers will receive full disclosure in the proxy materials sent to obtain the requisite shareholder approval. Applicants expectbelieve that, before long, the monthly repurchase opportunity willhas become as routine in the shareholder’s mind as daily redemptions, and that the significance of the notification will
diminishhas diminished. Thus, any remote
possibility of investor confusion due to the proximity in time of the repurchase payment deadline to the sending of the next notification will
beis adequately dealt with by disclosure.
Finally, the Fund’s
procedures provide (and any Future Fund’s) procedures will
provide) that the Fund’s Board of Trustees are (and any Future Fund’s Board of Trustees) will
be) informed of the number of repurchase requests made
in each of the three monthly repurchase offers during the previous
1621
See Adopting Release at 28-29.
13
Page 55 of 65, including exhibits
calendar
quarterrepurchase offer — which
repurchases will have been completed — at the time such fund’s Board of Trustees determines
the percentage range of the repurchase offer amount for each of the three monthly periods during the next calendar quarter.17 This will enablethe current month. This enables the Fund’s Board of Trustees (and
any Future Fund’s Board of Trustees) to take that information, as well as relevant liquidity reports from the portfolio manager, into account in setting the repurchase offer amount.
Applicants believe that monthly rather than quarterly repurchases offer many benefits and therefore would be in the public interest and in the
common shareholders’ interests and be consistent with the policies underlying Rule 23c-3. Rule 23c-3 currently permits periodic repurchase offers no more frequently than once every three months, but monthly repurchases would provide significant
benefits to common shareholders because their investments will be more liquid than an investment in a fund conducting only quarterly repurchase offers. Investors also will be better able to manage their investments and plan transactions because they
will know that, if they decide to forego a repurchase offer, they only need to wait one (rather than three)
months for the next offer. Applicants believe the requested relief allowing monthly repurchases provides the public marketplace and the Fund (and any Future Fund) common shareholders with more investment options. Finally, consistent with
Section 23(c)(3), monthly repurchase offers will be made available to all common shareholders
and, thus, will not unfairly discriminate against any holders of the common shares to be purchased.
For all of these reasons, Applicants believe that the requested relief is “appropriate in the public interest and consistent
with the protection of investors and the purposes fairly intended by the policy and provisions” of the Act. Because the Fund will
continue to describe (and any Future Fund will describe) its
repurchase policy fully in its prospectus and annual report, shareholders and potential investors will have available all information about the Fund (and any Future Fund) and its differences from a traditional open-end fund and traditional
closed-end fund. Finally, because the requested Order will increase the investment alternatives available to investors, the requested Order is appropriate in the public interest. Because the monthly repurchase offers will continue to be made available to all common shareholders and otherwise
comply with the requirements of Rule 23c-3 (except as it relates to the imposition of early withdrawal
fees), the repurchase offers willare not be made in a manner or on a basis
thatwhich
unfairly discriminates against holders of the common shares to be purchased.
Applicants believe that there is precedent for the requested relief and that monthly repurchases are consistent with the policies underlying Rule 23c-3. The Commission has granted exemptive
17
Because the Fund’s (and any Future Fund’s) Board of Trustees typically will hold regular quarterly board meetings, the Board of Trustees will be asked to consider at each quarterly meeting a percentage range for each monthly
repurchase offer for each of the next three monthly periods, which range will be determined in accordance with any exemptive relief granted by the Commission. The Board of Trustees also will be asked to authorize the officers of the Fund to
determine the specific amount of the monthly repurchase offer for each of the next three monthly periods, within the approved range, prior to notifying shareholders of the monthly repurchase offer. If, based on the redemptions in any one prior
monthly period, the Fund’s officers determine that an amount outside of the approved range is required for the upcoming monthly period, a special board meeting will be held to ask the Board of Trustees to consider the approval of the monthly
repurchase offer amount.
14
Page 56 of 65, including exhibits
relief under Rule 23c-3 to permit other interval funds to make monthly repurchase offers under
modified notice
procedures.1822
Under the Aspiriant, Weiss
and Blackstone orders, closed-end funds operating as interval funds sought to make monthly repurchase offers to their respective common shareholders every month and to provide notification to their respective
common shareholders of an upcoming repurchase offer no less than seven and no more than fourteen calendar days in advance of the repurchase request
deadlineof not less than 5% of their outstanding common shares but not more than 25% in any three month
period pursuant to modified notice procedures under Rule 23c-3. Under the Van Kampen order, a closed-end fund investing in senior secured floating rate loans sought to make monthly
repurchase offers of not less than 5% of its outstanding common shares but not more than 25% in the trailing three month period pursuant to modified notice procedures under Rule 23c-3, and was granted relief that was similar to that which the
Applicants seek here. Under the Pilgrim Investments
orderPrior Order, a closed-end fund investing
in senior secured floating rate loans sought to make monthly repurchase offers of not moreless than 5% of its outstanding common shares but not more than 25% in
the aggregate in any one quarter pursuant to modified notice procedures under Rule 23c-3, and was granted relief that was similar to that which the Applicants seek here. Under the CypressTree order, another closed-end fund investing in senior
secured floating rate loans sought to make monthly repurchase offers of not more than 10% of its outstanding common shares. Applicants submit that the requested relief is appropriate under the applicable statutory standards.
|
VI. APPLICANTS’ CONDITIONS
Applicants agree that any order granting the requested relief will be subject to the following conditions:
a. | The Fund (and any Future Fund relying on this relief) will make a repurchase offer pursuant to Rule 23c-3(b) for a repurchase offer amount of not less than 5% in any one-month period. In addition, the repurchase offer amount for the then current monthly period, plus the repurchase offer amounts for the two monthly periods immediately preceding the then current monthly period, will not exceed 25% of the Fund’s (or Future Fund’s, as applicable) outstanding common shares. The Fund (and any Future Fund relying on this relief) may repurchase additional tendered common shares pursuant to Rule 23c-3(b)(5) only to the extent the percentage of additional common shares so repurchased does not exceed 2% in any three-month period. |
b. | Payment for repurchased common shares will occur at least five business days before notification of the next repurchase offer is sent to common shareholders of the Fund (or any Future Fund relying on this relief). |
1822
See Aspiriant, Weiss,
supra at note 20, See Blackstone,
supra at note 20, See Van Kampen,
supra at note 20, See Pilgrim
Investments,
and supra at note 1. See also
CypressTree, supra at note
1520
.
15
Page 57 of 65, including exhibits
|
VII. CONCLUSION
For the reasons stated above, Applicants
submit that the exemptions requested are necessary or appropriate in the public interest and are consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act, and thus meet the standards of
Section 6(c). Applicants further submit that the relief requested pursuant to Section 23(c)(3) will be consistent with the protection of investors and will ensure that any purchases are made in a manner or on a basis which does not
unfairly discriminate against any holders of the class of securities to be purchased. Finally, Applicants submit that the relief requested is consistent with that previously provided by the Commission in the Aspiriant, Weiss, Blackstone, Van Kampen, Pilgrim Investments,Prior
Order and CypressTree orders.
Applicants desire that the Commission issue the requested Order pursuant to Rule 0-5 under the Act without conducting a hearing.
As required by Rule 0-2(c)(1) under the Act, each Applicant hereby states that all of the
requirements for execution and filing of this Application have been complied with in accordance with the operating agreements of the Applicants, as applicable, and the persons signing and filing this document are authorized to do so on behalf of the
Applicants. Philip Liu is authorized to sign on behalf of the Fund pursuant to his authority as President of the Fund. J. Rayne Steinberg is authorized to sign and
file this document on behalf of the Adviser pursuant to the general authority vested in him as Chief Executive
Officer.The resolutions of the Fund’s Board of Trustees are attached as Exhibit A to this
Application in accordance with the requirements of Rule 0-2(c)(1) under the Act, and the verifications required by Rule 0-2(d) under the Act, are attached as Exhibits B to this Application, respectively. In accordance with the requirements for a
request for expedited review of this Application, marked copies of two recent applications seeking the same relief as Applicants that are substantially identical as required by Rule 0-5(e) of the Act are attached as Exhibits C and D.
Applicants desire that the Commission issue
the requested Order pursuant to Rule 0-5 under the Act without conducting a hearing.
Pursuant to Rule 0-2(f) under the Act, the Applicant’s address is 7337 E. Doubletree Ranch Road, Suite 100, Scottsdale, AZ 85258 and that all written communications regarding this Application should be directed to the individuals and addresses indicated on the first page of this Application.
[Signature page follows.]
16
Page 58 of 65, including exhibits
SIGNATURES
VOYA SENIOR INCOME FUND | ||||
By: /s/ Paul A. Caldarelli | ||||
Name: Paul A. Caldarelli | ||||
Title: Assistant Secretary | ||||
30, 2022 | ||||
VOYA INVESTMENTS, LLC | ||||
By: /s/ |
||||
Title: Senior Vice President | ||||
Dated: March 30, 2022 | ||||
VOYA INVESTMENT MANAGEMENT CO. LLC | ||||
By: /s/ Marie E. Picard | ||||
Name: Marie E. Picard | ||||
Title: Senior Vice President and Assistant Secretary | ||||
Dated: March 30, 2022 | ||||
INVESTMENTS | ||||
DISTRIBUTOR, LLC | ||||
By: /s/ |
||||
Andrew K. Schlueter | ||||
Vice President | ||||
Dated: March 30, 2022 |
17
Page 59 of 65, including exhibits
EXHIBIT A
Resolutions of the Board of Trustees of
Voya Senior Income Fund
RESOLVED, that the appropriate officers of Voya Senior Income Fund (the “Fund”) be and they hereby are, and each of them acting individually hereby is, authorized to prepare, execute and file with the Securities and Exchange Commission (the “SEC”) on behalf of the Fund an application for an exemptive order pursuant to Sections 6(c) and 23(c)(3) under the Investment Company Act of 1940, as amended (the “1940 Act”) to allow the Fund to conduct monthly repurchase offers, such application to be in form and substance satisfactory to counsel for the Fund, and subject to review by counsel to the Trustees who are not “interested persons” as defined in the 1940 Act, the execution and filing of any such application, or amendment to such application, to be conclusive evidence of its authorization hereby; and further
RESOLVED, that the appropriate officers of the Fund be, and they hereby are, authorized to prepare execute and file with the SEC any amendments to such exemptive application requested by the SEC or as they believe necessary or appropriate; and further
RESOLVED, that the appropriate officers of the Fund be, and they hereby are, authorized to take all such further action and to execute and deliver all such further instruments and documents, in the name of and on behalf of the Fund, on the advice and assistance of Fund counsel, and to pay all such expenses as shall be necessary, proper, or advisable, in order to fully carry out the intent, and accomplish the purposes of, the foregoing; and further
RESOLVED, that the appropriate officers of the Fund be, and they hereby are, authorized and directed, for and on the Fund’s behalf, to take or cause to be taken, any and all action, to execute and deliver any and all certificates, instructions, requests, or other instruments, and to do any and all things that in their judgment, on the advice and assistance of Fund counsel, as may be necessary or advisable to effect each of the resolutions adopted to carry out the purposes and intent thereof, and as may be necessary or advisable for the conduct of the Fund’s business.
18
Page 60 of 65, including exhibits
EXHIBIT B
19
Page 61 of 65, including exhibits
VERIFICATION OF
VOYA SENIOR INCOME FUND
The undersigned states that he has duly executed the attached Application dated March 30, 2022, for and on behalf of Voya Senior Income Fund in his capacity as Assistant Secretary of such entity and that all actions by the holders and other bodies necessary to authorize the undersigned to execute and file such instrument have been taken. The undersigned further states that he is familiar with such instrument, and the contents thereof, and that the facts therein set forth are true to the best of his knowledge, information and belief.
VOYA SENIOR INCOME FUND | ||
By: /s/ Paul A. Caldarelli | ||
Name: Paul A. Caldarelli | ||
Title: Assistant Secretary | ||
Dated: March 30, 2022 |
20
Page 62 of 65, including exhibits
VERIFICATION OF APPLICATION
AND STATEMENT OF FACT
VOYA INVESTMENTS, LLC
In accordance with Rule 0-2(d) under
the Investment Company Act of 1940, theThe
undersigned states that he has duly executed the attached
applicationApplication dated September 9,
2020March 30, 2022, for and on behalf of Arca U.S. Treasury Fund; that he
isVoya Investments, LLC in his capacity as Senior Vice President of Arca U.S. Treasury Fund;such entity and that all action taken by shareholders,
trusteesactions by the holders and other personsbodies necessary to authorize the undersigned to execute and file such instrument hashave been taken. The undersigned further states that he is familiar with
such instrument, and the contents thereof, and that the facts therein set forth are true to the best of his knowledge, information, and belief.
VOYA INVESTMENTS, LLC | ||||
By: /s/ | ||||
Title: Senior Vice President | ||||
Dated: March 30, 2022 |
21
Page 63 of 65, including exhibits
VERIFICATION OF
VOYA INVESTMENT MANAGEMENT CO. LLC
The undersigned states that she has duly executed the attached Application dated March 30, 2022, for and on behalf of Voya Investment Management Co. LLC in her capacity as Senior Vice President and Assistant Secretary of such entity and that all actions by the holders and other bodies necessary to authorize the undersigned to execute and file such instrument have been taken. The undersigned further states that she is familiar with such instrument, and the contents thereof, and that the facts therein set forth are true to the best of her knowledge, information and belief.
VOYA INVESTMENT MANAGEMENT CO. LLC | ||
By: /s/ Marie E. Picard | ||
Name: Marie E. Picard | ||
Title: Senior Vice President and Assistant Secretary | ||
Dated: March 30, 2022 |
22
Page 64 of 65, including exhibits
VERIFICATION OF
VOYA INVESTMENTS DISTRIBUTOR, LLC
In accordance with Rule
0-2(d) under the Investment Company Act of 1940, theThe undersigned states that he has duly executed the attached applicationApplication dated September 9March
30,
20202022
, for and on behalf of Arca Capital Management, LLC; that he is Chief Executive Officer of Arca Capital Management,
LLC; and that all action taken by shareholders, directors and other personsVoya Investments
Distributor, LLC in his capacity as Vice President of Voya Investment Distributor, LLC and that all actions by the holders and other bodies necessary to authorize the undersigned to execute and
file such instrument
hashave
been taken. The undersigned further states that he is familiar with such instrument, and the contents thereof, and that the facts therein set forth are true to the best of his knowledge, information, and belief.
VOYA INVESTMENTS DISTRIBUTOR, LLC | ||||
By: /s/ | ||||
Schlueter | ||||
Schlueter | ||||
Dated: March 30, 2022 |
23
Page 65 of 65, including exhibits