
[Federal Register Volume 81, Number 163 (Tuesday, August 23, 2016)]
[Notices]
[Pages 57636-57639]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-20059]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 32221; 812-14567]


FS Global Credit Opportunities Fund, et al.; Notice of 
Application

August 17, 2016.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application under section 6(c) of the Investment 
Company Act of 1940 (the ``Act'') for an exemption from sections 18(c) 
and 18(i) of the Act and for an order pursuant to section 17(d) of the 
Act and rule 17d-1 under the Act.

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SUMMARY OF APPLICATION: Applicants request an order to permit certain 
registered closed-end management investment companies to issue multiple

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classes of shares (``Shares'') with sales loads and/or asset-based 
distribution and/or service fees and contingent deferred sales loads 
(``CDSCs'').

APPLICANTS: FS Global Credit Opportunities Fund (the ``Master Fund''), 
FS Global Credit Opportunities Fund-ADV (``FSGCO-ADV'') and FS Global 
Advisor, LLC (the ``Adviser'').

FILING DATES: The application was filed on October 16, 2015, and 
amended on February 18, 2016, June 3, 2016 and August 4, 2016.

HEARING OR NOTIFICATION OF HEARING: An order granting the requested 
relief 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 September 9, 2016, 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, U.S. Securities and Exchange Commission, 100 F 
Street NE., Washington, DC 20549-1090; Applicants, 201 Rouse Boulevard, 
Philadelphia, PA 19112.

FOR FURTHER INFORMATION CONTACT: Barbara T. Heussler, Senior Counsel, 
at (202) 551-6990 or Mary Kay Frech, 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. FSGCO-ADV and the Master Fund are non-diversified closed-end 
management investment companies registered under the Act and organized 
as Delaware statutory trusts.\1\ FSGCO-ADV invests substantially all of 
its assets in shares of the Master Fund. The Master Fund's primary 
investment objective is to generate an attractive total return 
consisting of a high level of current income and capital appreciation, 
with a secondary objective of capital preservation. The Master Fund 
primarily invests in a portfolio of secured and unsecured floating and 
fixed rate loans, bonds and other types of credit instruments.
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    \1\ The Master Fund currently serves as the master fund in a 
master-feeder structure operating in accordance with section 
12(d)(1)(E) of the Act. The Master Fund will not issue multiple 
classes of its shares and is an applicant because of the master-
feeder structure.
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    2. The Adviser, a Delaware limited liability company, is registered 
with the Commission as an investment adviser under the Investment 
Advisers Act of 1940 and serves as investment adviser to the Master 
Fund.
    3. FSGCO-ADV's Shares \2\ are currently offered in a continuous 
public offering pursuant to a registration statement under the 
Securities Act of 1933 and the Act. FSGCO-ADV's Shares are not offered 
or traded in a secondary market and are not listed on any securities 
exchange or quoted on any quotation medium. Applicants do not expect 
that a secondary market will develop for the Shares.
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    \2\ The term ``Shares'' includes any other equivalent 
designation of a proportionate ownership interest (such as interests 
or units) in the Funds (as defined below). The holders of Shares are 
referred to as ``Shareholders''.
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    4. FSGCO-ADV currently has outstanding a single class of Shares. 
FSGCO-ADV accepts subscriptions for Shares on a continuous basis and 
issues Shares at weekly closings at its then-current net asset value 
per Share without a sales load, but Shares are subject to an annual 
distribution fee of 0.67% of net asset value and a CDSC of up to 2.0% 
of the aggregate net asset value of a Shareholder's Shares repurchased 
by the Fund if Shares are tendered for repurchase within three years. 
The Fund proposes to offer multiple classes of Shares that would be 
offered at net asset value and may also charge front-end sales loads, 
CDSCs, and/or annual asset-based service and/or distribution fees. Each 
class of Shares of any Fund would comply with the provisions of rule 
12b-1 under the Act or any successor thereto or replacement rule, as if 
that rule applied to closed-end management investment companies, and 
with the provisions of rule 2830(d) of the Conduct Rules of the 
National Association of Securities Dealers Inc., or any successor 
thereto or replacement rule (``NASD Conduct Rule 2830''),\3\ as if that 
rule applied to the Funds.
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    \3\ All references to NASD Conduct Rule 2830 include any 
successor or replacement rule that may be adopted by the Financial 
Industry Regulatory Authority (``FINRA'').
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    5. Applicants request that the order also apply to any other 
continuously offered registered closed-end management investment 
company, existing now or in the future, for which the Adviser or any 
entity controlling, controlled by, or under common control with the 
Adviser acts as investment adviser, and which either (a) provides 
periodic liquidity with respect to its Shares pursuant to rule 13e-4 
under the Securities Exchange Act of 1934 (``1934 Act'') or (b) 
operates as an ``interval fund'' pursuant to rule 23c-3 under the Act 
(each, a ``Future Fund'' and, together with FSGCO-ADV, the 
``Funds'').\4\
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    \4\ Any Fund relying on this relief will do so in a manner 
consistent with the terms and conditions of the application. 
Applicants represent that each entity presently intending to rely on 
the order requested in the application is listed as an applicant.
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    6. In order to provide Shareholders with a limited degree of 
liquidity, FSGCO-ADV may from time to time offer to repurchase Shares 
at their then current net asset value in accordance with the 
requirements of rule 13e-4 under the 1934 Act and section 23(c)(2) of 
the Act.\5\ FSGCO-ADV may repurchase Shares on such terms as may be 
determined by its Board \6\ in its complete and absolute discretion 
unless, in the judgment of the majority of the directors or trustees 
who are not ``interested persons'' of such Fund within the meaning of 
section 2(a)(19) of the Act, such repurchases would not be in the best 
interests of its Shareholders or would violate applicable law.\7\ 
FSGCO-ADV will offer to repurchase Shares at a price equal to the net 
asset

[[Page 57638]]

value per Share in effect on each date of repurchase. The applicants 
anticipate that any Future Funds will offer to repurchase Shares on a 
quarterly basis.
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    \5\ To date, the Master Fund has not conducted repurchase offers 
for its shares. To the extent the Master Fund is required in the 
future to conduct repurchase offers for its shares in order to allow 
FSGCO-ADV to satisfy repurchase requests under its Share repurchase 
program, it will do so in accordance with the requirements of rule 
13e-4 under the 1934 Act and section 23(c)(2) of the Act.
    \6\ The boards of trustees or similar governing body of each 
Fund is referred to herein as a ``Board''.
    \7\ The Funds may subject Shares to an ``early withdrawal 
charge'' (a ``Repurchase Fee'') at a rate of up to 2.00% of the 
aggregate net asset value of a Shareholder's Shares repurchased by 
the Fund if the interval between the date of the Shareholder's 
purchase of Shares and the date on which the applicable Fund 
repurchases such Shares is less than one year. Any Repurchase Fee 
will apply equally to all Shareholders of the applicable Fund, 
regardless of the class of Shares held by such Shareholders, 
consistent with section 18 of the Act and rule 18f-3 thereunder. To 
the extent a Fund determines to waive, impose scheduled variations 
of or eliminate the Repurchase Fee, the Fund will comply with the 
requirements of rule 22d-1 under the Act as if the Repurchase Fee 
were a CDSC and as if the Fund were an open-end investment company. 
The Fund's waiver, scheduled variation or elimination of the 
Repurchase Fee will apply uniformly to all Shareholders of the Fund, 
regardless of the class of Shares held by such Shareholders.
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    7. Applicants represent that any asset-based service and/or 
distribution fees will comply with the provisions of NASD Conduct Rule 
2830. Applicants also represent that each Fund will disclose in its 
prospectus the fees, expenses and other characteristics of each class 
of Shares offered for sale by the prospectus as is required for open-
end multiple class funds under Form N-1A. As if they were open-end 
investment companies, the Funds will disclose fund expenses borne by 
holders of each class of Shares during the reporting period in 
Shareholder reports and describe in their prospectuses any arrangements 
that result in breakpoints in, or elimination of, sales loads.\8\ Each 
Fund will also comply with any requirements that may be adopted by the 
Commission or FINRA regarding disclosure at the point of sale and in 
transaction confirmations about the costs and conflicts of interest 
arising out of the distribution of open-end investment company shares, 
and regarding prospectus disclosure of sales loads and revenue sharing 
arrangements as if those requirements applied to the Funds.\9\
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    \8\ See Shareholder Reports and Quarterly Portfolio Disclosure 
of Registered Management Investment Companies, Investment Company 
Act Release No. 26372 (Feb. 27, 2004) (adopting release) (requiring 
open-end investment companies to disclose fund expenses in 
shareholder reports); and Disclosure of Breakpoint Discounts by 
Mutual Funds, Investment Company Act Release No. 26464 (June 7, 
2004) (adopting release) (requiring open-end investment companies to 
provide prospectus disclosure of certain sales load information).
    \9\ See Confirmation Requirements and Point of Sale Disclosure 
Requirements for Transactions in Certain Mutual Funds and Other 
Securities, and Other Confirmation Requirement Amendments, and 
Amendments to the Registration Form for Mutual Funds, Investment 
Company Act Release No. 26341 (Jan. 29, 2004) (proposing release).
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    8. All expenses incurred by a Fund will be allocated among its 
various classes of Shares based on the respective net assets of such 
Fund attributable to each class of Shares, except that the net asset 
value and expenses of each class of Shares will reflect the expenses 
associated asset-based service and/or distribution fees, Shareholder 
service fees, and any other incremental expenses of that class of 
Shares. Expenses of a Fund allocated to a particular class of Shares 
will be borne on a pro rata basis by each outstanding Share of that 
class. Applicants state that each Fund will comply with the provisions 
of rule 18f-3 under the Act as if it were an open-end investment 
company.
    9. If the Funds offer an exchange privilege or conversion feature 
on certain future classes of Shares, any such privilege or feature 
introduced in the future will comply with rule 11a-1, rule 11a-3 and 
rule 18f-3 under the Act as if the Fund were an open-end investment 
company.
    10. If the requested relief is granted, FSGCO-ADV, and any other 
Fund that imposes a CDSC, will comply with rule 6c-10 as if that rule 
applied to closed-end management investment companies. Applicants 
further state that any Fund that imposes a CDSC will apply the CDSC 
(and any waivers or scheduled variations of the CDSC) uniformly to all 
Shareholders in a given class and consistently with the requirements of 
rule 22d-1 under the Act.

Applicants' Legal Analysis

Multiple Classes of Shares

    1. Section 18(c) of the Act provides, in relevant part, that a 
closed-end investment company may not issue or sell any senior security 
if, immediately thereafter, the company has outstanding more than one 
class of senior security. Applicants state that the creation of 
multiple classes of Shares of a Fund may be prohibited by section 18(c) 
of the Act.
    2. Section 18(i) of the Act provides that each share of stock 
issued by a registered management investment company will be a voting 
stock and have equal voting rights with every other outstanding voting 
stock. Applicants state that permitting multiple classes of Shares of a 
Fund may violate section 18(i) of the Act because each class would be 
entitled to exclusive voting rights with respect to matters solely 
related to that class of Shares.
    3. Section 6(c) of the Act provides that the Commission may exempt 
any person, security or transaction or any class or classes of persons, 
securities or transactions from any provision of the Act, or from any 
rule under the Act, if and to the extent 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 request an exemption under section 
6(c) from sections 18(c) and 18(i) to permit the Funds to issue 
multiple classes of Shares.
    4. Applicants believe that the proposed allocation of expenses 
relating to distribution and voting rights is equitable and will not 
discriminate against any group or class of Shareholders. Applicants 
submit that the proposed arrangements would permit the Funds to 
facilitate the distribution of Shares through diverse distribution 
channels and provide investors with a broader choice of fee options. 
Applicants assert that the proposed closed-end investment company 
multiple class structure does not raise the concerns underlying section 
18 of the Act to any greater degree than open-end investment companies' 
multiple class structures that are permitted by rule 18f-3 under the 
Act. Applicants state that each Fund will comply with the provisions of 
rule 18f-3 as if it were an open-end investment company.

CDSCs

    5. Rule 6c-10 under the Act permits open-end investment companies 
to impose CDSCs, subject to certain conditions. FSGCO-ADV currently 
imposes a CDSC. If the requested relief is granted, FSGCO-ADV, and any 
other Fund that imposes a CDSC, will comply with rule 6c-10 as if that 
rule applied to closed-end management investment companies and will 
make all required disclosures in accordance with the requirements of 
Form N-1A concerning CDSCs. Applicants further state that any Fund that 
imposes a CDSC will apply the CDSC (and any waivers or scheduled 
variations of the CDSC) uniformly to all Shareholders in a given class 
and consistently with the requirements of rule 22d-1 under the Act.

Asset-Based Service and/or Distribution Fees

    6. Section 17(d) of the Act and rule 17d-1 under the Act prohibit 
an affiliated person of a registered investment company or an 
affiliated person of such person, acting as principal, from 
participating in or effecting any transaction in connection with any 
joint enterprise or joint arrangement in which the investment company 
participates unless the Commission issues an order permitting the 
transaction. In reviewing applications submitted under section 17(d) 
and rule 17d-1, the Commission considers whether the participation of 
the investment company in a joint enterprise or joint arrangement is 
consistent with the provisions, policies and purposes of the Act, and 
the extent to which the participation is on a basis different from or 
less advantageous than that of other participants.
    7. Rule 17d-3 under the Act provides an exemption from section 
17(d) and rule 17d-1 to permit open-end investment companies to enter 
into

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distribution arrangements pursuant to rule 12b-1 under the Act. 
Applicants request an order under section 17(d) and rule 17d-1 under 
the Act to permit the Funds to impose asset-based service and/or 
distribution fees. Applicants have agreed to comply with rules 12b-1 
and 17d-3 as if those rules applied to closed-end investment companies.
    8. For the reasons stated above, applicants submit that the 
exemptions requested under section 6(c) are necessary and 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. Applicants also believe that the requested relief meets the 
standards for relief in section 17(d) of the Act and rule 17d-1 
thereunder.

Applicants' Condition

    Applicants agree that any order granting the requested relief will 
be subject to the following condition:
    Each applicant will comply with the provisions of rules 6c-10, 12b-
1, 17d-3, 18f-3, 22d-1 and, where applicable, 11a-3 under the Act, as 
amended from time to time, or any successor rules thereto, as if those 
rules applied to closed-end management investment companies, and will 
comply with NASD Conduct Rule 2830, as amended from time to time, as if 
that rule applied to all closed-end management investment companies.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Brent J. Fields,
Secretary.
[FR Doc. 2016-20059 Filed 8-22-16; 8:45 am]
 BILLING CODE 8011-01-P


