
[Federal Register Volume 80, Number 186 (Friday, September 25, 2015)]
[Notices]
[Pages 57891-57893]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-24445]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 31833; 812-14550]


General Electric Company and GE Capital International Funding 
Company; Notice of Application

September 21, 2015.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application under section 6(c) of the Investment 
Company Act of 1940 (``Act'') for an exemption from all provisions of 
the Act.

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Summary of Application: Applicants request an order that would permit 
GE Capital International Funding Company (``FinCo'') to issue and sell 
commercial paper, preferred stock and other debt securities to finance 
the operations of subsidiaries of General Electric Company (``GE''). 
Applicants state that FinCo would qualify for the exemption provided by 
rule 3a-5 under the Act but for the fact that FinCo may finance GE 
subsidiaries that are not ``companies controlled by'' GE within the 
meaning of rule 3a-5 due to their reliance on sections 3(c)(5) or 
3(c)(6) of the Act (collectively, the ``Controlled Companies'').

Applicants: GE and FinCo.

Filing Date: The application was filed on September 21, 2015.

Hearing or Notification of Hearing: An order granting the application 
will be issued unless the Commission orders a hearing. Interested 
persons may request a hearing by writing to the Commission's Secretary 
and serving applicants with a copy of the request, personally or by 
mail. Hearing requests should be received by the Commission by 5:30 
p.m. on October 16, 2015, and should be accompanied by proof of service 
on applicants, in the form of an affidavit or, for lawyers, a 
certificate of service. Pursuant to rule 0-5 under the Act, hearing 
requests should state the nature of the writer's interest, any facts 
bearing upon the desirability of a hearing on the matter, the reason 
for the request, and the issues contested. Persons who wish to be 
notified of a hearing may request notification by writing to the 
Commission's Secretary.

ADDRESSES: Secretary, Securities and Exchange Commission, 100 F Street 
NE., Washington, DC 20549-1090; Applicants, 299 Park Avenue, New York, 
NY 10171.

FOR FURTHER INFORMATION CONTACT: Steven I. Amchan, Senior Counsel, at 
(202) 551-6826, or Mary Kay Frech,

[[Page 57892]]

Branch Chief, at (202) 551-6821 (Division of Investment Management, 
Chief Counsel's Office).

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained via the 
Commission's Web site by searching for the file number, or for an 
applicant using the Company name box, at http://www.sec.gov/search/search.htm or by calling (202) 551-8090.

Applicants' Representations

    1. GE, a New York corporation, is one of the largest and most 
diversified infrastructure and financial services corporations in the 
world. Its products and services range from aircraft engines, power 
generation, oil and gas production equipment and household appliances 
to medical imaging, business and consumer financing and industrial 
products. Applicants state that GE is not an investment company as 
defined in section 3(a) of the Act.\1\
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    \1\ For purposes of the requested order, GE will only be 
eligible to serve as the ``parent company'' of FinCo as contemplated 
by rule 3a-5 for so long as GE satisfies the definition of a 
``parent company'' set forth in rule 3a-5(b)(2).
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    2. General Electric Capital Corporation (``GE Capital'') is a 
Delaware corporation and a wholly-owned subsidiary of GE. GE Capital is 
a diversified financial services company that, directly or through its 
subsidiaries, engages in various forms of financing activity, including 
financing real estate, financing equipment and factoring. Applicants 
state that GE Capital is not an investment company pursuant to section 
3(c)(6) of the Act. As described below, applicants expect GE Capital to 
be restructured and subsequently merged out of existence as part of a 
reorganization of GE's financial services businesses, with certain GE 
Capital businesses being transferred to other wholly-owned subsidiaries 
of GE as part of the restructuring.
    3. On April 10, 2015, GE announced a plan to reduce the size of its 
financial services businesses through the sale of most of the assets of 
GE Capital over the next 24 months and to focus on continued investment 
and growth in GE's industrial businesses. In connection with this plan, 
GE Capital has formed FinCo, an Irish unlimited company and a wholly-
owned subsidiary of GE Capital and of GE. FinCo's primary purpose is to 
finance the operations of GE's foreign subsidiaries and, initially, 
will do so by issuing new notes (``New Notes'') in exchange for old 
notes (``Old Notes'') previously issued by GE Capital (the ``Exchange 
Offer''). Following the Exchange Offer, GE Capital's businesses will be 
reorganized into separate U.S. and non-U.S. holding companies, with GE 
Capital International Holdings Limited (``European Holdco'') \2\ owning 
all of the foreign businesses currently owned by GE Capital, including 
FinCo, and a domestic holding company owning all of the domestic 
businesses (as described in greater detail in the application, the 
``Reorganization''). Applicants state that any successor to GE Capital 
businesses will only be treated as a ``Controlled Company'' if it 
satisfies the requirements of section 3(c)(5) or 3(c)(6) of the Act.
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    \2\ European Holdco, a UK limited company, is a wholly-owned 
subsidiary of GE. As the successor to GE Capital's foreign 
businesses through the Reorganization, European Holdco will engage 
in financing activities, including financing real estate, financing 
equipment, and factoring. GE anticipates that the mix of businesses 
to be transferred to European Holdco from GE Capital will allow 
European Holdco to similarly rely on section 3(c)(6) upon completion 
of the Reorganization. European Holdco will only be treated as a 
``Controlled Company'' if it satisfies the requirements of section 
3(c)(5) or 3(c)(6) of the Act.
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    4. The New Notes that FinCo will issue in the Exchange Offer will 
include multiple classes with various maturity dates, interest rates 
and other terms. The New Notes will be offered for exchange only (i) to 
holders of Old Notes that are ``qualified institutional buyers'' as 
defined in rule 144A under the Securities Act of 1933 (the ``Securities 
Act'') in a private transaction in reliance upon the exemption from the 
registration requirements of the Securities Act provided by section 
4(a)(2) thereof and (ii) outside the United States, to non-U.S. holders 
of Old Notes in accordance with regulation S under the Securities Act. 
The New Notes will be guaranteed by GE and GE Capital, with European 
Holdco ultimately assuming GE Capital's guarantee obligation in 
connection with the Reorganization. In the future, FinCo may issue any 
manner of debt (including commercial paper exempt under section 3(a)(3) 
of the Securities Act) and preferred stock, in both public and private 
offerings in the United States or abroad, so long as such issuance is 
consistent with rule 3a-5 (together with the New Notes, 
``Securities''). Other than as noted in the application, FinCo will 
comply with the applicable requirements in rule 3a-5(a)(1) through (4) 
and with rule 3a-5(b)(1)(i) under the Act.
    5. FinCo will utilize the proceeds from the issuance and sale of 
Securities to finance the operations of Controlled Companies and other 
``companies controlled by'' GE within the meaning of rule 3a-5 under 
the Act.\3\ The Controlled Companies will use the proceeds of the 
financing from FinCo to engage in different financing activities, 
including, among others, (i) equipment financing, (ii) inventory 
financing and (iii) factoring. Applicants state that each of the 
Controlled Companies would be ``a company controlled by the parent'' as 
defined in rule 3a-5 but for the fact that the Controlled Companies 
rely, or upon their formation will rely, on section 3(c)(5) or 3(c)(6) 
of the Act for exclusion from regulation as an investment company under 
the Act.
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    \3\ FinCo may invest in or loan to Controlled Companies other 
than GE Capital and European Holdco. These other Controlled 
Companies will be wholly-owned subsidiaries of GE before and after 
the Reorganization, and wholly-owned subsidiaries of GE Capital 
before the Reorganization and of European Holdco thereafter.
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    6. Applicants state that in compliance with rule 3a-5(a)(5), FinCo 
will invest in or loan to Controlled Companies and other ``companies 
controlled by'' GE within the meaning of rule 3a-5 at least 85% of any 
cash or cash equivalents raised from the sale of Securities as soon as 
practicable, but in no event later than six months after the receipt of 
such cash or cash equivalents. In accordance with rule 3a-5(a)(6) under 
the Act, all investments by FinCo, including temporary investments, 
will be made in Government securities (as defined in the Act), 
securities of GE, Controlled Companies or other ``companies controlled 
by'' GE within the meaning of rule 3a-5, or debt securities that are 
exempted from the provisions of the Securities Act by section 3(a)(3) 
of the Securities Act.

Applicants' Legal Analysis

    1. Applicants request an order under section 6(c) of the Act 
exempting FinCo from all provisions of the Act. Rule 3a-5 under the Act 
provides an exemption from the Act for certain companies organized 
primarily to finance the business operations of their parent companies 
or companies controlled by their parent companies.
    2. Rule 3a-5(b)(3)(i) under the Act, in relevant part, defines a 
``company controlled by the parent company'' to mean any corporation, 
partnership, or joint venture that is not considered an investment 
company under section 3(a) of the Act, or that is excepted or exempted 
by order from the definition of investment company by section 3(b) or 
by the rules and regulations under section 3(a) of the Act. Applicants 
state that the Controlled Companies do not fit within the definition of 
``company controlled by the parent company'' because they derive their 
non-

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investment company status from sections 3(c)(5) or 3(c)(6) of the Act. 
Accordingly, applicants request exemptive relief to permit FinCo to 
issue and sell Securities to finance the operations of the Controlled 
Companies. Applicants state that neither FinCo, GE, nor any of the 
Controlled Companies engage primarily in investment company activities.
    3. Section 6(c) of the Act, in pertinent part, provides that the 
Commission, by order upon application, may 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 to the extent that such 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. Applicants submit that its exemptive request 
meets the standards set out in section 6(c) of the Act.

Applicants' Condition

    Applicants agree that the order granting the requested relief will 
be subject to the following condition:
    FinCo will comply with all of the provisions of rule 3a-5 under the 
Act, except FinCo will be permitted to (i) make loans to or make or 
hold investments in Controlled Companies that do not meet the portion 
of the definition of ``company controlled by a parent company'' in rule 
3a-5(b)(3)(i) under the Act solely because they are excluded from the 
definition of investment company under sections 3(c)(5) or 3(c)(6) of 
the Act; (ii) have its securities owned by such Controlled Companies; 
and (iii) treat European Holdco as a ``company controlled by the parent 
company'' for purposes of rule 3a-5, if European Holdco is exempt from 
registration under the Act pursuant to an order issued by the 
Commission under section 6(c) of the Act.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-24445 Filed 9-24-15; 8:45 am]
 BILLING CODE 8011-01-P


