Notice2023-21731
Exemption From Certain Prohibited Transaction Restrictions Involving the Mitsubishi UFJ Trust and Banking Corporation Located in New York, NY
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
October 2, 2023
Issuing agencies
Labor DepartmentEmployee Benefits Security Administration
Abstract
This document contains a notice of an exemption issued by the Department of Labor (the Department) from certain of the prohibited transaction restrictions of the Employee Retirement Income Security Act of 1974 (ERISA or the Act). The exemption permits certain transactions arising from credit arrangements involving Mitsubishi UFJ Trust and Banking Corporation (the Applicant or MUTB) and investment funds in which employee benefit plans invest.
Full Text
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<title>Federal Register, Volume 88 Issue 189 (Monday, October 2, 2023)</title>
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[Federal Register Volume 88, Number 189 (Monday, October 2, 2023)]
[Notices]
[Pages 67817-67822]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-21731]
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DEPARTMENT OF LABOR
Employee Benefits Security Administration
[Prohibited Transaction Exemption 2023-19; Exemption Application No. D-
12003]
Exemption From Certain Prohibited Transaction Restrictions
Involving the Mitsubishi UFJ Trust and Banking Corporation Located in
New York, NY
AGENCY: Employee Benefits Security Administration, Labor.
ACTION: Notice of exemption.
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SUMMARY: This document contains a notice of an exemption issued by the
Department of Labor (the Department) from certain of the prohibited
transaction restrictions of the Employee Retirement Income Security Act
of 1974 (ERISA or the Act). The exemption permits certain transactions
arising from credit arrangements involving Mitsubishi UFJ Trust and
Banking Corporation (the Applicant or MUTB) and investment funds in
which employee benefit plans invest.
[[Page 67818]]
DATES: This exemption will be in effect on the date that this grant
notice is published in the Federal Register.
FOR FURTHER INFORMATION CONTACT: Mr. Frank Gonzalez of the Department
at (202) 693-8553. (This is not a toll-free number.)
SUPPLEMENTARY INFORMATION: The Applicant requested an exemption
pursuant to ERISA Section 408(a) and supplemented the request with
certain additional information (collectively, this information is
referred to as ``the Initial Application'').\1\ On June 28, 2021, the
Department published a notice of proposed exemption in the Federal
Register at 86 FR 34048 (Proposed Exemption).
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\1\ The procedures for requesting an exemption are set forth in
29 CFR part 2570, subpart B (76 FR 66637, 66644, October 27, 2011).
Effective December 31, 1978, section 102 of the Reorganization Plan
No. 4 of 1978, 5 U.S.C. App. 1 (1996), transferred the authority of
the Secretary of the Treasury to issue administrative exemptions
under the Code Section 4975(c)(2) to the Secretary of Labor.
Accordingly, the Department grants this exemption under its sole
authority.
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Based on the record, the Department has determined to grant the
Proposed Exemption. This exemption provides only the relief specified
herein. It provides no relief from violations of any law other than the
prohibited transaction provisions of ERISA, as expressly stated herein.
The Department makes the requisite findings under ERISA Section
408(a) based on the Applicants' adherence to all the conditions of the
exemption. Accordingly, affected parties should be aware that the
conditions incorporated in this exemption are, taken individually and
as a whole, necessary for the Department to grant the relief requested
by the Applicants. Absent these conditions, the Department would not
have granted this exemption.
Background
The Applicant seeks to provide secured revolving lines of credit (a
Credit Facility or Credit Facilities) for certain funds (Fund(s)). The
Funds invest directly or indirectly in private equity investments, real
estate investments, non-real estate operating company ventures, or
other investments. The Funds are formed and operated through the Funds'
organizing and governing documents (Fund Agreements).
A Credit Facility provides a Fund with access to direct or indirect
borrowing, letters of credit and similar forms of credit arrangements
without the Fund having to seek permanent or interim financing before
making an investment. The Credit Facility eliminates the delay that a
Fund will encounter in obtaining capital if it makes capital calls to
Investors. Covered plans may invest in the Funds, as may endowment
funds, private or public persons, insurance companies, public or
private corporations, trusts, and individuals (collectively,
Investors).
The Credit Facility's collateral security includes the right to
make capital calls on Investors, including in the event of a Fund's
default, and apply the proceeds to the repayment of the Fund's
obligations, a secured interest in an account (Collateral Account) the
Fund maintains in a financial institution into which capital
contributions can be made, and the Investor's acknowledgement of the
Fund's assignment of rights to the Lender (Investor Consent). The
Investor Consent may include an agreement between the Investor and MUTB
in which the Investor: (1) acknowledges the Credit Facility, including,
amongst others, that the Investor will make capital contributions only
to the Collateral Account (except in limited circumstances); and (2)
will make Capital Contributions to the Fund without setoff, reduction,
counterclaim, or defense of any kind or nature, for the purpose of
repayment of the Credit Facility (Agreement to Fund). The Agreement to
Fund does not limit the Investor's right to assert a claim or defense
in a separate action against the Fund, and keeps the risk of the Fund
mismanagement or fraud between the Investors and the Funds.
The Department invited all interested persons to submit written
comments and/or requests for a public hearing with respect to the
Proposed Exemption. On August 12, 2021, the Department received one
written comment, which came from the Applicant, and raised a number of
issues regarding the accuracy of the Proposed Exemption.\2\ On March
10, 2022, the Department held a tentative denial conference with the
Applicant to address these accuracy issues.
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\2\ Applicants and recipients of an exemption are strongly
cautioned to immediately alert the Department regarding any material
statement in an application or proposed exemption that may not be,
or may no longer be, completely and factually accurate.
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On April 1, 2022, the Applicant submitted additional information to
the Department. The material issues that the Applicant raised and the
material information it submitted to the Department are discussed
below.\3\
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\3\ All information submitted by the Applicant to the Department
in connection with this exemption is available through the
Department's Public Disclosure Office, by referencing D-12003.
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Written Comments
Comments From the Applicant
As a general comment, the Applicant states that its primary goal is
to obtain a credit facility exemption that is substantially similar (if
not identical in all material respects) to the Prior Credit Facility
Exemptions,\4\ and thereby to have equal footing with other financial
institutions that have received the Prior Credit Facility Exemptions.
The Applicant maintains it is critical for the final exemption to be
substantially similar to the Prior Credit Facility Exemptions.
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\4\ The term Prior Credit Facility Exemptions refers to similar
exemptions that the Department has either granted or authorized; see
PTE 2004-02, FAN 2005-19E, FAN 2006-04E, FAN 2007-07E, and FAN 2008-
01E.
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The Department notes that the existence of previously issued
administrative exemptions is not determinative of whether the
Department will propose future exemption applications with the same or
similar facts, or whether a proposed exemption will contain the same
conditions as a similar previously issued administrative exemption. The
Department has the sole authority to issue exemptions and is not bound
by the facts or conditions of prior exemptions in making determinations
with respect to an exemption application. This policy allows the
Department to retain sufficient flexibility to grant exemptions that
are appropriate in an ever-changing business, legislative, and
regulatory policy environment.
I. Section I(e) of the Proposed Exemption
Section I(e) states that: ``A Covered Plan's execution of an
agreement (the Investor Consent) consenting to the assignment by the
Fund and General Partner (or Manager) to Mitsubishi Bank, as sole
Lender or Agent, of their right to make Capital Calls.''
Applicant's Request: The Applicant seeks to add the following new
language to Section I(e), as it relates to the Investor Consent.
According to the Applicant, Covered Plans generally expect to see and
take comfort in seeing the list of items that may be included in the
Investor Consent, and it reduces ambiguity for the Covered Plan
Investors and improves administrative efficiency and negotiation with
the Covered Plan Investors:
``(e) The execution by a Covered Plan of an agreement (``Investor
Consent'') consenting to the assignment by the Fund and General Partner
(or Manager) to Mitsubishi Bank, as sole Lender or
[[Page 67819]]
the Agent, of their right to make Capital Calls, which may contain,
among other things: (i) an acknowledgment of the Covered Plan's
obligation to deliver the Covered Plan's financial information
statements to Mitsubishi Bank, as sole Lender or the Agent; (ii) an
acknowledgment of the Covered Plan's unpaid and owing capital
commitment amount and the Covered Plan's obligation to make Capital
Contributions (up to its unfunded Capital Commitment amount) to satisfy
the indebtedness incurred by the Fund under the Credit Facility; (iii)
an acknowledgment by the Covered Plan of the Fund's assignment to
Mitsubishi Bank, as sole Lender or the Agent, of the right to make
Capital Calls upon the Covered Plan, enforce the Capital Calls, collect
the Capital Contributions, and apply them to any amount due under the
Credit Facility; (iv) a consent (as either part of the Fund Agreements
or as a separate agreement) by the Covered Plan to make Capital
Contributions to the Fund without setoff, reduction, counterclaim, or
defense of any kind or nature, for the purpose of repayment of the
Credit Facility; (v) a representation that the Covered Plan has no
knowledge of claims, offsets or defenses that would adversely affect
its obligation to fund Capital Contributions under the Fund Agreements,
or events which, with the passage of time would constitute a default or
would constitute a defense to, or right of offset against the Covered
Plan's obligation to fund its Capital Commitment to the Fund; and (vi)
an agreement that the Covered Plan will fund Capital Contributions only
into the Collateral Account; provided that with respect to all
transactions described above, the conditions set forth below in Section
III are met.''
Department's Response: The Department has revised the condition
consistent with the Applicant's request.
II. Section III(i) of the Proposed Exemption
Section III(i) of the Proposed Exemption states that: ``The Funds
will not hold `plan assets' for purposes of ERISA or Code section
4975.''
Applicant's Request: The Applicant objects to the inclusion of the
condition in Section III(i). The Applicant states that no ``Covered
Transaction'' is impacted by, or has any relationship to, the ``plan
asset'' status of the Fund. Further, the Applicant states that it does
not have any control over the ``plan asset'' status of the Fund.
According to the Applicant, to condition the availability of the
exemption on a condition for which the Applicant has no control, and
for which the condition has no impact on the relationship between the
Covered Plan and the Applicant, would be arbitrary and lead to
inequitable consequences to the Covered Plan and the Applicant.
Although the Prior Credit Facility Exemptions note that the Funds
typically do not hold ``plan assets,'' the operative language in those
exemptions does not expressly make this status a condition. Requiring
that the Funds will not hold ``plan assets'' for purposes of ERISA or
Code section 4975 would place the Applicant at a significant
competitive disadvantage because Fund Managers of Plan Asset Entities
would seek to borrow from Agent/Lenders that have a less restrictive
exemption that does not discriminate against them based on their ``plan
asset'' status.
Department's Response: The Department notes that the Applicant made
the following representation in its application: ``. . . [i]n certain
rare instances, a Fund's underlying assets may constitute plan assets
for purposes of the [Department's] Plan Assets Regulation.\5\ However,
in such cases, the Applicant would not enter into a Credit Facility
with such Fund unless the Fund was managed by a QPAM [qualified
professional asset manager] and the extension of credit under the
Credit Facility to the Fund and the Fund's pledge of collateral would
be covered by the QPAM Exemption, or unless another exemption was
applicable.'' The Department has revised Section III(i) of this
exemption for consistency with that representation.
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\5\ See the Department's Plan Assets Regulation, 29 CFR part
2510.3-101 (51 FR 41280, Nov. 13, 1986), as amended at 51 FR 47226,
(Dec. 31, 1986).
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III. Section III(j) of the Proposed Exemption
Section III(j) of the Proposed Exemption states that: ``Any service
covered by the exemption must be necessary for the establishment or
operation of the plan, and no more than reasonable compensation may be
paid.''
Applicant's Request: The Applicant objects to this condition. The
Applicant states that this condition improperly implies that there is
some form of service relationship between the Applicant/Lenders and the
Covered Plan Investors. The condition is therefore likely to confuse
Covered Plan Investors and add additional costs and delays if the
Covered Plan expends additional resources to evaluate this condition
since it does not appear in the Prior Credit Facility Exemptions.
The Applicant states that while it is possible that a Covered Plan
Investor may inquire about the status of, or request information from
the Applicant or a Lender, with respect to a credit facility, including
outstanding obligations thereunder, these communications would be
relayed by the Covered Plan Investors through the Fund to the
Applicant/Lenders, and not made directly.
The Applicant represents that these would be ``incidental
interactions'' that would not cause the Applicant or a Lender, to be a
``covered service provider'' for purposes of ERISA Section 408(b)(2),
particularly where no compensation is being paid for any services. The
Applicant states that, to the extent there is any ``service''
relationship between the Applicant/Lenders and the Covered Plans, it
would be appropriate for the Applicant to rely on ERISA Section
408(b)(2) and not the credit facility exemption.
Department's Response: In a letter to the Department dated August
7, 2020, the Applicant stated that ``. . . from time to time, there may
be interactions between [the Applicant/Lenders] and the Covered Plan
Investors which may be construed as a service. For example, Covered
Plan Investors may inquire about the status and/or request information
from [the Applicant/Lenders] with respect to the Credit Facility and
the outstanding obligations thereunder, although, typically, such
communication would be relayed by the Covered Plan Investors through
the Fund to [the Applicant/Lenders], and not made directly.''
Although the Department has not made any determination regarding
whether any transaction permitted by this exemption falls within the
scope of ERISA Section 408(b)(2), this exemption is not intended to
provide exemptive relief for any transaction that is within the scope
of ERISA Section 408(b)(2). Accordingly, the Department has decided not
to delete the condition as requested. However, based on the Applicant's
representations, the Department is revising the condition as follows:
``The relief in this exemption does not extend to any transaction that
is within the scope of ERISA Section 408(b)(2).''
IV. Section III(k) of the Proposed Exemption
Section III(k) of the Proposed Exemption states that: ``No Lender
will have any influence, authority, or control over a Client Plan's
investment in the Fund.''
Applicant's Request: The Applicant requests that the Department
delete this condition. The Applicant states that the relationship
between a Covered Plan and the Applicant/Lenders is set forth
[[Page 67820]]
in Section III(a), which provides that: ``The decision to invest in the
Fund on behalf of each Covered Plan and to execute an Investor Consent
in favor of Mitsubishi Bank, as sole Lender or Agent, is made by
fiduciaries of the Covered Plan that are not included among and are
independent of and unaffiliated with, the Lenders (including Mitsubishi
Bank) and the Fund.''
Department's Response: Given the similarity between Section III(k)
and Section III(a), the Department is deleting Section III(k). The
Department has also redesignated Section III(l) of the Proposed
Exemption (further discussed below) as Section III(k) in the final
exemption.
Department's Note: Recipients of any administrative exemption from
the Department, including any Prior Credit Facility Exemption, are
strongly cautioned to immediately alert the Department regarding any
statement in an application or proposed exemption that may not be, or
may no longer be, completely and factually accurate. The Department is
granting this exemption with the expectation that all of the material
representations that the Applicant made in its exemption application,
including all factual information it submitted to the Department
subsequent to the Proposed Exemption's publication and all of the
statements set forth in the Proposed Exemption's Summary of Facts and
Representations, and in this exemption, are factually complete and
accurate, and will be fully complied with and adhered to.
For greater consistency with the Department's most recent
individual administrative exemptions, the Department has revised
condition (k) of the Proposed Exemption as follows: ``All of the
material facts and representations set forth in the Summary of Facts
and Representations are true and accurate. If there is any material
change in a transaction covered by the exemption, or in a material fact
or representation described by the Applicant in the application, the
exemption will cease to apply as of the date of the change.'' \6\
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\6\ In determining whether a specific fact or representation
within the application is material, the Applicant is urged to
contact the Department's Office of Exemption Determinations prior to
such fact or representation being changed.
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After considering the entire record developed in connection with
the Applicant's exemption application, along with the Applicant's
comment letter and the additional factual information it submitted
subsequent to the Proposed Exemption, the Department has determined to
grant the exemption described below.
The complete application file (D-12003) is available for public
inspection in the Public Disclosure Room of the Employee Benefits
Security Administration, Room N-1515, U.S. Department of Labor, 200
Constitution Avenue NW, Washington, DC 20210. For a more complete
statement of the facts and representations supporting the Department's
decision to grant this exemption, refer to the notice of proposed
exemption published on June 28, 2021, at 86 FR 34048.
General Information
The attention of interested persons is directed to the following:
(1) The fact that a transaction is the subject of an exemption
under ERISA Section 408(a) does not relieve a fiduciary or other party
in interest from certain requirements of other ERISA provisions,
including any prohibited transaction provisions to which the exemption
does not apply and the general fiduciary responsibility provisions of
ERISA Section 404, which, among other things, require a fiduciary to
discharge their duties respecting the plan solely in the interest of
the plan's participants and beneficiaries and in a prudent fashion in
accordance with ERISA Section 404(a)(1)(B).
(2) As required by ERISA Section 408(a), the Department hereby
finds that the exemption is (1) administratively feasible, (2) in the
interests of affected plans and of their participants and
beneficiaries, and (3) protective of the rights of participants and
beneficiaries of such plans;
(3) The exemption is supplemental to, and not in derogation of, any
other ERISA provisions, including statutory or administrative
exemptions and transitional rules. Furthermore, the fact that a
transaction is subject to an administrative or statutory exemption is
not dispositive of determining whether the transaction is in fact a
prohibited transaction; and
(4) The availability of this exemption is subject to the express
condition that the material facts and representations contained in the
application accurately describe all material terms of the transaction
that are the subject of the exemption.
Accordingly, the following exemption is granted under the authority
of ERISA Section 408(a) and in accordance with the procedures set forth
in 29 CFR part 2570, subpart B (76 FR 66637, 66644, October 27, 2011):
Exemption
Section I. Covered Transactions
The restrictions of ERISA Sections 406(a)(1)(A)-(D), and the
sanctions resulting from the application of Code Section 4975, by
reason of Code Sections 4975(c)(l)(A)-(D), shall not apply to:
(a) The granting by the Funds to Mitsubishi UFJ Trust and Banking
Corporation (Mitsubishi Bank), as an agent (Agent) for one or more
financial institutions (Lender(s)), which may include, without
limitation, Mitsubishi Bank) or as sole Lender, that will fund a credit
facility (Credit Facility) providing credit to certain investment funds
(Fund(s)), of a security interest in and lien on the capital
commitments (Capital Commitments), reserve amounts, and capital
contributions (Capital Contributions) of certain investors (Investors)
that are employee benefit plans (Covered Plan(s), as defined in Section
II(a)), investing in the Fund;
(b) Any Fund's collateral assignment and pledge to Mitsubishi Bank,
as sole Lender or Agent, of the Fund's security interest in an Investor
Covered Plan's equity interest in such Fund;
(c) The Fund's grant to Mitsubishi Bank, as sole Lender or Agent,
of a security interest in a collateral account (Collateral Account) to
which all Capital Contributions in the Fund will be deposited when paid
(except in certain limited circumstances that do not involve Covered
Plans);
(d) The granting by the Fund and/or its general partner (General
Partner) or manager (Manager) to Mitsubishi Bank, as sole Lender or
Agent, of its right to make calls on Covered Plan Investors for Capital
Contributions (the Capital Call), which shall be in cash, under the
operative Fund Agreements (as defined in Section II(d)), enforce the
Capital Calls, collect the Capital Contributions, and apply them to any
amount due under the Credit Facility; and
(e) The execution by a Covered Plan of an agreement (``Investor
Consent'') consenting to the assignment by the Fund and General Partner
(or Manager) to Mitsubishi Bank, as sole Lender or the Agent, of their
right to make Capital Calls, which may contain, among other things: (i)
an acknowledgment of the Covered Plan's obligation to deliver the
Covered Plan's financial information statements to Mitsubishi Bank, as
sole Lender or the Agent; (ii) an acknowledgment of the Covered Plan's
unpaid and owing capital commitment amount and the Covered Plan's
obligation to make Capital Contributions (up to its unfunded Capital
[[Page 67821]]
Commitment amount) to satisfy the indebtedness incurred by the Fund
under the Credit Facility; (iii) an acknowledgment by the Covered Plan
of the Fund's assignment to Mitsubishi Bank, as sole Lender or the
Agent, of the right to make Capital Calls upon the Covered Plan,
enforce the Capital Calls, collect the Capital Contributions, and apply
them to any amount due under the Credit Facility; (iv) a consent (as
either part of the Fund Agreements or as a separate agreement) by the
Covered Plan to make Capital Contributions to the Fund without setoff,
reduction, counterclaim, or defense of any kind or nature, for the
purpose of repayment of the Credit Facility; (v) a representation that
the Covered Plan has no knowledge of claims, offsets or defenses that
would adversely affect its obligation to fund Capital Contributions
under the Fund Agreements, or events which, with the passage of time
would constitute a default or would constitute a defense to, or right
of offset against the Covered Plan's obligation to fund its Capital
Commitment to the Fund; and (vi) an agreement that the Covered Plan
will fund Capital Contributions only into the Collateral Account;
provided that with respect to all transactions described above, the
conditions set forth below in Section III are met.
Section II. Definitions
(a) The terms ``Covered Plan'' or ``Covered Plans'' means an
investor in a Fund (as defined below) that is an employee benefit plan,
as defined in ERISA Section 3(3) and that is covered by Title I, Part 4
of ERISA, and/or a plan defined in Code Section 4975, that satisfies
the conditions set forth herein in Section II.
(b) The terms ``Covered Transaction'' or ``Covered Transactions''
mean any combination of transactions described in Section I(a) through
(d), in conjunction with the Investor Consent described in Section
I(e).
(c) The terms ``Fund'' or ``Funds'' means an investment or venture
capital fund (organized as a corporation, limited partnership, limited
liability company, or another business entity authorized by applicable
law) in which one or more investors invest, including employee benefit
plans or special purpose entities holding ``plan assets'' subject to
ERISA, as described herein, by making capital contributions in cash to
such Fund, pursuant to specific Capital Commitments as established by
the Fund Agreement(s) and other operative documents executed by the
parties, for purposes of making certain real estate investments
(including real estate-related investments, such as venture capital
investments) or non-real estate investments (including, without
limitation, assets and/or interests relating to infrastructure,
maritime, energy, etc.).
Each Covered Plan investing in such special purpose entity must
satisfy the conditions set forth herein in Section III. The term
``Fund'' includes an entity created by the Fund that may borrow, or
receive, funds from the Credit Facility, provided that such entity is
considered an affiliate of the Fund as a subsidiary or other controlled
entity.
(d) The terms ``Fund Agreement'' or ``Fund Agreements'' mean the
written agreements under which a Fund (as defined above) is formed
(such as a limited partnership agreement, a limited liability company
agreement, trust agreement, or articles of incorporation, together with
ancillary related agreements, such as subscription agreements) that
obligate each Investor to make cash contributions of capital with
respect to Capital Commitments, upon receipt of a call for Capital
Contributions.
(e) The term ``officer'' means a president, any vice president in
charge of a principal business unit, division or function (such as
sales, administration or finance), or any other officer who performs a
policy-making function for the entity.
(f) The term ``Mitsubishi Bank'' means Mitsubishi UFJ Trust and
Banking Corporation, which is a foreign banking corporation organized
under the laws of Japan, and its indirectly wholly-owned subsidiary
named MUFG Alternative Fund Services (Cayman) Limited, an ordinary
resident company incorporated and existing under the laws of the Cayman
Islands. This exemption is intended to cover Mitsubishi Bank, and all
of its current and future branches.
(g) For purposes of determining whether a fiduciary is not included
among, is independent of, and unaffiliated with, a Fund, the term Fund
shall be deemed, as appropriate, to include the governing entity of the
Fund, or a member of the governing body of the Fund, as appropriate,
e.g., a general partner of a partnership, a manager of a limited
liability company, a member of a member-managed limited liability
company, or a member of the board of directors of a corporation. For
purposes of this exemption request, a fiduciary of a Covered Plan is
not included among, is independent of, and unaffiliated with, a Lender
(including Mitsubishi Bank) or a Fund, as applicable, if:
(i) The fiduciary is not, directly or indirectly, through one or
more intermediaries, controlling, controlled by, or under common
control with such Lender or Fund;
(ii) The fiduciary is not an officer, director, employee or
relative of, or partner in, such Lender or Fund; and
(iii) No officer, director, highly-compensated employee (within the
meaning of Code Section 4975(e)(2)(H)), or partner of the Fund, or any
officer, director or highly-compensated employee, or partner of the
Lender who is involved in the transactions described in Section I of
the exemption request, is also an officer, director, highly-compensated
employee, or partner of the fiduciary. However, if such individual is a
director of the Lender, and if they abstain from participation in, and
is not otherwise involved with, the decision made by the Covered Plan
to invest in the Fund, then this condition shall be deemed satisfied.
Section III. Conditions
(a) The decision to invest in the Fund on behalf of each Covered
Plan and to execute an Investor Consent in favor of Mitsubishi Bank, as
sole Lender or Agent, is made by fiduciaries of the Covered Plan that
are not included among and are independent of and unaffiliated with,
the Lenders (including Mitsubishi Bank) and the Fund;
(b) The transaction is on terms that are no less favorable to the
Covered Plans than those which the Covered Plans could obtain in arm's-
length transactions with unrelated parties;
(c) At the time of the execution of an Investor Consent, the
Covered Plan has assets of not less than $100 million. In the case of
multiple plans maintained by the same employer, or by members of a
controlled group of corporations (within the meaning of Code Section
4l4(b)), or members of a group of trades or businesses under common
control (within the meaning of Code Section 414(c)) (hereafter,
referred to as ``members of a controlled group''), whose assets are
invested on a commingled basis (e.g., through a master trust), this
$100 million threshold applies to the aggregate assets of the
commingled entity;
(d) Not more than 5% of the assets of any Covered Plan, measured at
the time of the execution of an Investor Consent, is invested in the
Fund. In the case of multiple plans maintained by the same employer, or
by members of a controlled group, whose assets are invested on a
commingled basis (e.g., through a master trust), the 5% limit applies
to the aggregate assets of the commingled entity;
(e) Neither Mitsubishi Bank, nor any Lender, has discretionary
authority or
[[Page 67822]]
control with respect to a Covered Plan's investment in the Fund nor
renders investment advice (within the meaning of 29 CFR 2510.3-21(c))
with respect to such investment;
(f) Upon request, the Covered Plan fiduciaries must receive from
Mitsubishi Bank, a copy of this notice of proposed exemption and a copy
of the final exemption, as published in the Federal Register;
(g) Mitsubishi Bank receives from the Covered Plan fiduciaries a
written representation, or a written authorization, that permits
Mitsubishi Bank to rely on a written representation made to the Fund,
that the conditions set forth above in Section III(a), (c), and (d) are
satisfied for such transaction with respect to the Covered Plan for
which they are fiduciaries;
(h) No Covered Transaction is part of an arrangement, agreement or
understanding, designed to benefit a party in interest or disqualified
person with respect to a Covered Plan;
(i) In the event that a Fund's underlying assets constitute plan
assets for purposes of the Department's Plan Assets Regulation,
Mitsubishi Bank or any Lender will not enter into a Credit Facility
with such Fund unless the Fund is managed by a QPAM, and the extension
of credit under the Credit Facility to the Fund and the Fund's pledge
of collateral would be covered by the QPAM Exemption or another
applicable exemption; \7\
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\7\ See the Department's Plan Assets Regulation. 29 CFR part
2510.3-101 (51 FR 41280, Nov. 13, 1986), as amended at 51 FR 47226,
(Dec. 31, 1986).
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(j) The relief in this exemption does not extend to any transaction
that is within the scope of ERISA Section 408(b)(2); and
(k) All of the material facts and representations set forth in the
Summary of Facts and Representations are true and accurate. If there is
any material change in a transaction covered by the exemption, or in a
material fact or representation described by the Applicant in the
application, the exemption will cease to apply as of the date of the
change.
Effective Date: This exemption will be in effect on the date that
this grant notice is published in the Federal Register.
George Christopher Cosby,
Director Office of Exemption Determinations, Employee Benefits Security
Administration, U.S. Department of Labor.
[FR Doc. 2023-21731 Filed 9-29-23; 8:45 am]
BILLING CODE 4510-29-P
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</html>Indexed from Federal Register on October 2, 2023.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.