VCOCs

[Guest 91smithie]

This a Plan Asset Regulation Question. Company A invests 60% in Company B and unrelated third parties invest in the rest. Company B is a 100% owner of Company C, an operating company. Company B has no other investments. Company A has direct contractual management rights in Company C. Company B and Company C have the same board of directors, and essentially because Company B is majority-owner of Company C, it manages Company C. Company A wishes to know if its investment in Company C qualifies as a venture capital investment ("VCI") for purposes of the Plan Asset Regulations. This issue is whether Company B is an intervening venture capital operating company ("VCOC") which would prevent Company A's investment in Company C from qualifying as a VCI. Does the fact that Company B may be a VCOC by virtue of the fact that it is majority owner preclude Company A from counting the investment in Company C as a VCI? If that is the case, wouldn't all 100% investments in operating companies make the investor a VCOC? Doesn't that seem wrong? Does the intervening entity have to consider itself and attempt to treat itself as a VCOC for this to apply or is the status automatic if the requirements are made? This is an urgent question and any thought on the issue would be greatly appreciated.