What are the limitations on managing or operating a portfolio company held as a merchant banking investment?

CFR · 2024-01-01 · US · Title 12

(a) (b) (ii) (B) ( ( ( ( ( (iii) (2) (i) Any director, officer, or employee of the financial holding company serves as or has the responsibilities of an officer (other than an executive officer) or employee of the portfolio company; or (ii) Any officer or employee of the portfolio company is supervised by any director, officer, or employee of the financial holding company (other than (c) (d) (i) The portfolio company employs officers and employees responsible for routinely managing and operating the company; and (ii) The financial holding company does not routinely manage or operate the portfolio company, except as permitted in paragraph (e) of this section. (2) (i) The acquisition of significant assets or control of another company by the portfolio company or any of its subsidiaries; (ii) Removal or selection of an independent accountant or auditor or investment banker by the portfolio company; (iii) Significant changes to the business plan or accounting methods or policies of the portfolio company; (iv) Removal or replacement of any or all of the executive officers of the portfolio company; (v) The redemption, authorization or issuance of any equity or debt securities (including options, warrants or convertible shares) of the portfolio company or any borrowing by the portfolio company outside of the ordinary course of business; (vi) The amendment of the articles of incorporation or by-laws (or similar governing documents) of the portfolio company; and (vii) The sale, merger

official document · source cfr-2024 · id 12:§ 1500.2