which might not be in the best interests of us or our stockholders. For example, the principals of SSC may face conflicts of interest in the allocation of investment opportunities to us and such other funds. The fact thatThis conflict of interest could be amplified if our investment advisory fees are lower than those of certainsuch other funds.
In order to address potential conflicts of interest, SSC has adopted an investment allocation policy that governs the allocation of investment opportunities among the investment funds could amplify this conflict of interest.
managed by SSC and its affiliates. To the extent an investment opportunity is appropriate for us either or both of the Company and/or any other investment fund managed by our affiliates of SSC, and co-investment is not possible, SSC will adhere to its investment allocation policy in order to determine to which entity to allocate the opportunity. Any
The 1940 Act prohibits the Company from making certain co-investments with affiliates unless the Company receives an order from the SEC permitting it to do so. As such, the Company was substantially limited in its ability to co-invest with affiliates until it obtained an exemptive order from the SEC on January 9, 2023. The exemptive relief permits the Company to participate in co-investment transactions, subject to the conditions of the relief granted by the SEC, with certain affiliates in a manner consistent with its investment objectives and strategies.
If the Company is unable to rely on the exemptive relief for a particular opportunity, such opportunity will be allocated first to the entity whose investment strategy is the most consistent with the opportunity being allocated, and second, if the terms of the opportunity are consistent with more than one entity’s investment strategy, on an alternating basis. Although our investment professionals will endeavor to allocate investment opportunities in a fair and equitable manner, we and our common stockholders could be adversely affected to the extent investment opportunities are allocated among us and other investment vehicles managed or sponsored by, or affiliated with, our executive officers, directors and members of SSC.
The 1940 Act prohibits us from making certain negotiated co-investments with affiliates, unless we receive an order from the SEC permitting us to do so. The Company and SSC have submitted an exemptive application to the SEC to permit us to co-invest with other funds managed by SSC or its affiliates in a manner consistent with our investment objective, positions, policies, strategies and restrictions, as well as regulatory requirements and other pertinent factors. There can be no assurance that such exemptive order will be obtained. Prior to receiving any such exemptive order from the SEC, SSC will offer us the right to participate in all investment opportunities that it determines are appropriate for us in view of our investment objective, policies and strategies and other relevant factors. These offers will be subject to the exception that, in accordance with SSC’s investment allocation policy we might not participate in each individual opportunity, but will, on an overall basis, be entitled to participate equitably with other entities managed by SSC and its affiliates.
SSC’s policies areis also designed to manage and mitigate the conflicts of interest associated with the allocation of investment opportunities if we are able to co-invest, either pursuant to SEC interpretive positions or anour exemptive order, with other accounts managed by SSC and its affiliates. Generally, under the investment allocation policy, co-investments will be allocated pursuant to the conditions of the exemptive order. Under the investment allocation policy, a portion of each opportunity that is appropriate for us and any affiliated fund, which may vary based on asset class and liquidity, among other factors, will be offered to us and such other eligible accounts, as determined by SSC. TheIf there is a sufficient amount of securities to satisfy all participants, each order will be fulfilled as placed. If there is an insufficient amount of securities to satisfy all participants, the securities will generally be allocated pro rata based on each participant’s order size.
In accordance with SSC’s investment allocation policy, further provides that allocations among usthe Company might not participate in each individual opportunity, but will, on an overall basis, be entitled to participate equitably with other entities managed by SSC and other eligible accounts will generally be made in accordance with SEC interpretive positions or an exemptive order.its affiliates. SSC seeks to treat all clients fairly and equitably in a manner consistent with its fiduciary duty to each of them; however, in some instances, especially in instances of limited liquidity, the factors may not result in pro rata allocations or may result in situations where certain accounts receive allocations where others do not.
We have adopted a formal code of ethics that governs the conduct of our officers and directors. Our officers and directors also remain subject to the duties imposed by both the 1940 Act and the Maryland General Corporation Law.
Review of Transactions with Related Persons
The Audit Committee is required to review any transactions with related persons (as such term is defined in Item 404 of Regulation S-K).