PROPOSED RULEMAKING
PENNSYLVANIA GAMING CONTROL BOARD
[ 58 PA. CODE CH. 433a ]
Principal Licensing Amendments
[40 Pa.B. 434]
[Saturday, January 16, 2010]The Pennsylvania Gaming Control Board (Board), under the general authority in 4 Pa.C.S. § 1202(b)(30) (relating to general and specific powers) and the specific authority in 4 Pa.C.S. § 1202(b)(9) and (23) and §§ 1311.1 and 1326 (relating to licensing of principals; and license renewals), proposes to amend Chapter 433a to read as set forth in Annex A.
Purpose of the Proposed Rulemaking
The proposed rulemaking amends Chapter 433a (relating to principal licenses). These amendments revise and update this chapter to improve its clarity and eliminate or reduce some of the requirements to obtain a principal license.
Explanation of Amendments to Chapter 433a
In § 433a.1 (relating to definitions), the definitions of ''officer'' and ''principal affiliate'' have been amended to include individuals who may have an ability to influence or direct matters related to the operations of a slot machine licensee.
In § 433a.2 (relating to officers and directors of licensees), a number of changes have been made to improve the clarity of the existing licensing requirements. References to applicants for licenses have been deleted. While principals of applicants will be required to file principal applications as part of the application process for an applicant for a license, they do not have to hold a license as a precondition for an applicant to apply for a license. Similar revisions have been made in the other sections in this chapter for the same reason.
Subsection (b) has been revised to apply to all licensees, not just slot machine licensees, eliminating the need for the existing requirements in subsection (c) regarding licensees other than slot machine licensees. As a result of the amendments to subsection (b), subsection (c) has been revised so that it now addresses the licensing requirements for officers and directors of subsidiary of a slot machine licensee.
Subsection (d) has been deleted. It is no longer needed because of the change to the definition of ''officer'' in § 433a.1. The waiver provisions in subsections (e) and (g) of the current regulation are also being deleted and have been replaced with a new subsection (d) (formerly subsection (f)) which provides an exemption from licensure for outside directors of a public traded corporation. This will eliminate the paperwork required by the waiver request process for these directors who typically have no significant involvement with the operations of a licensee.
New subsections (e) and (f) have been added to address the filing requirements of new officers and directors. Under subsection (e), most new directors or officers will be allowed to commence their duties upon appointment and will only be required to file a completed Multi Jurisdictional Personal History Disclosure Form and the Pennsylvania Supplement to the Multi Jurisdictional Personal History Disclosure Form within 30 days of performing any duties or exercising any powers as an officer or director. However, an officer or director of a privately held slot machine licensee, privately held licensed management company or privately held principal affiliate of a slot machine licensee or licensed management company may not perform any duties or exercise any powers of an officer or director prior to being granted temporary authorization from the Bureau of Licensing. The Bureau of Licensing may grant temporary authorization to a new officer or director of a privately held entity if the individual has submitted a completed Multi Jurisdictional Personal History Disclosure Form, a completed Pennsylvania Supplement to the Multi Jurisdictional Personal History Disclosure Form, and fingerprints in a manner prescribed by the Bureau of Investigation and Enforcement. The more restrictive provisions for directors or officers of these privately held entities have been imposed because of the potential threat to the integrity of gaming and the lack of any other regulatory oversight of these entities.
New § 433a.3 (relating to interests in licensees held by individuals) has been reorganized. Subsection (a) now requires individuals who meet the criteria contained in this subsection to both apply for and obtain a principal license before acquiring an interest in a slot machine or management company licensee. In subsection (b), individuals acquiring an interest in other licensees will only be required to file a principal application before acquiring the interest; however, under subsection (c), if the individual does not obtain a principal license, the individual must divest the interest. The more rigorous requirements related to interests in slot machine or management company licensees are in recognition of the greater potential threat to the integrity of gaming from the acquisition of an interest in a slot machine or management company licensee as opposed to other licensees.
New subsections (d) and (e) establish new principal licensing requirements for individuals seeking to acquire a direct or indirect ownership interest of 20% or more in licensees other than slot machine or management company licensees. Under subsection (d), these individuals will be required to file a completed principal application and a Notification of a Change in Control of a Licensee form at least 30 days prior to the acquisition. This will allow the Bureau of Licensing to review the acquisition before it actually takes place. Additionally, under subsection (e) the Board may require that the individual successfully complete the licensing process prior to completing the acquisition. This is being done to ensure the suitability of these individuals prior to their acquisition of a controlling interest in these licensees.
New subsections (f), (g) and (h) provide higher thresholds for principal licensing for interests acquired in publicly traded corporations and exempted private investment funds. This is because of the more limited ability of these acquisitions to affect the operations of a licensee. Finally, the existing subsection (g), which is now subsection (i) still retains the Board's ability to require any individual to obtain a principal license if the Board determines licensure to be appropriate.
New section 433a.4 (relating to interests in licensees held by entities) has been reorganized in the same manner as § 433a.3. Subsection (a) addresses entities acquiring an interest in a slot machine or management company licensee and subsection (b) addresses entities acquiring an interest in other licensees. Subsections (c), (d), (e), (f) and (g) also mirror the provisions in § 433a.3(c), (d), (e), (f) and (g). Subsection (h) (formerly subsection (f)) has been amended to improve its clarity and existing subsection (g) has been deleted because it no longer applies. Existing subsection (h), which is now subsection (i), has been revised to make it consistent with the revisions to § 433a.3(i).
Section 433a.5 (relating to institutional investors) has been revised to reduce the filing requirements imposed on institutional investors. Under subsection (a), institutional investors that meet the criteria in paragraphs (1) and (2) will be allowed to file an Institutional Investor Notice of Ownership instead of being required to file an application for a principal licensee. Additionally, the Board has deleted the existing provisions related to waivers because they are not needed.
In § 433a.6 (relating to lenders and underwriters), references to applicants for a license have been deleted for the reasons previously discussed. Existing subsection (c) has been deleted and replaced with new text that includes specific criteria pertaining to when a lender will not be required to be licensed as a principal. Additionally, a new subsection (d) has been added which sets forth the circumstances under which the purchaser of debt issued by a licensee will not be required to be licensed as a principal. Subsection (e) (formerly subsection (d)) has been revised to make it consistent with the requirements in new subsection (d). These revisions will make it easier for lenders to determine whether or not they will be required to be licensed as principals.
In § 433a.7 (relating to trusts), existing subsections (a), (b) and (c) have been revised and rearranged to mirror the requirements in §§ 433a.3(a) and (b) and 433a.4(a) and (b) so that trusts will be treated in the same manner as an individual or other entity. The new subsection (c) is a reformatted version of the current subsection (d). Subsections (d) and (e) mirror the language of subsections (c) and (f) in §§ 433a.3 and 433a.4.
Affected Parties
This rulemaking will affect officers and directors of licensees; individuals, entities, institutional investors and trusts which hold an interest in a licensee; and lending institutions and other purchasers who hold debt of a licensee. It will provide greater clarity regarding who must be licensed as a principal and eliminate the need for some of these entities to be licensed as principals.
Fiscal Impact
Commonwealth
There will be no significant increase or decrease in regulatory costs for the Board or other State agencies as a result of this rulemaking. This is because the Board recovers the costs associated with licensing activities from the applicants for licenses.
Political Subdivisions
This proposed rulemaking will have no fiscal impact on political subdivisions of the Commonwealth.
Private Sector
Overall, this proposed rulemaking should result in a slight reduction in the number of applications for a principal license from the affected groups listed in this preamble.
General Public
This proposed rulemaking will have no fiscal impact on the general public.
Paperwork Requirements
This proposed rulemaking will reduce the number of applications that are filed for principal licenses and allow some institutional investors to file the shorter Institutional Investor Notice of Ownership form.
Effective Date
The proposed rulemaking will become effective upon final-form publication in the Pennsylvania Bulletin.
Public Comments
Interested persons are invited to submit written comments, suggestions or objections regarding the proposed rulemaking, within 30 days after the date of publication in the Pennsylvania Bulletin to Richard Sandusky, Director of Regulatory Review, Pennsylvania Gaming Control Board, P. O. Box 69060, Harrisburg, PA 17106-9060, Attention: Public Comment on Regulation #125-108.
Contact Person
The contact person for questions about this proposed rulemaking is Richard Sandusky, Director of Regulatory Review, at (717) 214-8111.
Regulatory Review
Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on January 6, 2010, the Board submitted a copy of this proposed rulemaking and a copy of the Regulatory Analysis Form to the Independent Regulatory Review Commission (IRRC) and to the House Gaming Oversight Committee and the Senate Community, Economic and Recreational Development Committee. A copy of this material is available to the public upon request and is available on the Board's web site at www.pgcb.state.pa.us.
Under section 5(g) of the Regulatory Review Act, IRRC may convey any comments, recommendations or objections to the proposed rulemaking within 30 days of the close of the public comment period. The comments, recommendations or objections must specify the regulatory review criteria which have not been met. The Regulatory Review Act specifies detailed procedures for review, prior to final publication of the rulemaking, by the Board, the General Assembly and the Governor of comments, recommendations or objections raised.
GREGORY C. FAJT,
ChairpersonFiscal Note: 125-108. No fiscal impact; (8) recommends adoption.
Annex A
Title 58. RECREATION
PART VII. GAMING CONTROL BOARD
Subpart B. LICENSING, PERMITTING, CERTIFICATION AND REGISTRATION
CHAPTER 433a. PRINCIPAL LICENSES § 433a.1. Definitions.
The following words and terms, when used in this chapter, have the following meanings, unless the context clearly indicates otherwise:
* * * * * Officer—A president, chief executive officer, chief operating officer, secretary, treasurer, principal legal officer, principal compliance officer, principal financial officer, [comptroller,] principal accounting officer, chief engineer or technical officer of a manufacturer, [or] principal slot operations officer of a slot machine licensee, senior surveillance and audit executives of an intermediary or holding company of a slot machine licensee and any person routinely performing corresponding functions with respect to an entity whether incorporated or unincorporated.
Principal affiliate—
(i) An intermediary or holding company of an applicant or licensee.
(ii) A general partner of a limited partnership that is an applicant or licensee.
(iii) A general partner of a limited partnership that is an intermediary or holding company of an applicant or licensee.
* * * * * Registered investment adviser—An investment adviser [that has] registered with the SEC under the Investment Advisers Act of 1940 (15 U.S.C.A. §§ 80b-1—80b-21).
Registered investment company—An investment company [that has] registered with the SEC under the Investment Company Act of 1940 (15 U.S.C.A. §§ 80a-1—80a-64).
* * * * * § 433a.2. [Directors or officers] Officers and directors of licensees.
(a) Each officer and director of [an applicant or] a licensee shall be licensed as a principal.
(b) Each officer and director of an intermediary [, subsidiary] or holding company of a [slot machine applicant or] licensee shall be licensed as a principal.
(c) Each officer and director of [an intermediary or holding company of a licensed supplier, licensed manufacturer, licensed manufacturer designee, licensed junket enterprise or licensed management company] a subsidiary of a slot machine licensee shall be licensed as a principal.
(d) [The senior surveillance or internal audit executives of a holding or intermediate company which has authority to direct the operations of a slot machine licensee shall be licensed as a principal if the most senior executive in the reporting line reports directly to the independent audit committee of the board of directors of the holding or intermediary company
(e) Notwithstanding subsection (b), an officer or director of a publicly traded intermediary or holding company of a slot machine applicant or licensee, who is not a member of the audit committee, may request that the Board waive his requirement to be licensed as a principal if he is not actively involved in the affairs of the slot machine applicant or licensee. The waiver request shall be submitted on a Principal/Key Employee Waiver Form, and require that the officer or director certify that he is not actively involved in the affairs of the slot machine applicant or licensee.
(f)] Notwithstanding [subsection (c)] subsection (a) or (b), an outside director of a publicly traded [intermediary or holding company of a licensed supplier, licensed manufacturer, licensed manufacturer designee, licensed junket enterprise or licensed management company] corporation, who is [not] neither a member of the audit committee [or] nor chairperson of the board of directors of the [intermediary or holding company] publicly traded corporation will not be required to be licensed as a principal unless the Board determines that the licensure of the individual is necessary to protect the integrity of gaming in this Commonwealth.
[(g) Notwithstanding subsection (c), an officer of a publicly traded intermediary or holding company of a licensed supplier, licensed manufacturer, licensed manufacturer designee, licensed junket enterprise or licensed management company may request that the Board waive the requirement to be licensed as a principal if the officer is not actively involved in the affairs of the applicant or licensee. The waiver request shall be submitted on a Principal/Key Employee Waiver Form and require that the officer certify that he is not actively involved in the affairs of the applicant or licensee.]
(e) Except as provided in subsection (f), an officer or director required to be licensed under this section shall submit a completed Multi Jurisdictional Personal History Disclosure Form and the Pennsylvania Supplement to the Multi Jurisdictional Personal History Disclosure Form within 30 days of performing any duties or exercising any powers as an officer or director.
(f) An officer or director of a privately held slot machine licensee, privately held licensed management company or privately held principal affiliate of a slot machine licensee or licensed management company may not perform any duties or exercise any powers of an officer or director prior to being granted temporary authorization from the Bureau of Licensing. The Bureau of Licensing may grant temporary authorization to a new officer or director of a privately held entity if the individual has submitted a completed Multi Jurisdictional Personal History Disclosure Form, a completed Pennsylvania Supplement to the Multi Jurisdictional Personal History Disclosure Form, and fingerprints in a manner prescribed by the Bureau of Investigation and Enforcement.
§ 433a.3. [Individual ownership] Interests in licensees held by individuals.
(a) An individual [who has a direct ownership interest in, or has a right to any profit, distribution or benefit directly from, an applicant or licensee shall be licensed as a principal.] shall apply for and obtain a principal license from the Board prior to possessing any of the following:
(1) A direct ownership interest in a slot machine or management company licensee.
(2) A 1% or greater indirect ownership interest in a slot machine or management company licensee. An ownership interest that is held indirectly by an individual through one or more intervening entities will be determined by successive multiplication of the ownership percentages for each link in the vertical chain.
(3) A right to receive a payment from a slot machine licensee based directly or indirectly on the earnings, profits or receipts from the slot machines and associated equipment for use or play in this Commonwealth.
(4) A right or ability to control or influence the management or policies of a slot machine licensee.
(b) An individual who [, directly or indirectly, has the power to control or direct the management or policies of an applicant or licensee shall be licensed as a principal] possesses any of the interests or rights in paragraphs (1)—(3) shall apply for and obtain a principal license. An individual may possess any of the interests or rights in paragraphs (1)—(3) if the individual notifies the Board and submits a completed application to the Board in accordance with § 433a.8 (relating to principal applications) prior to acquiring the interest or right.
(1) A direct ownership interest of 1% or more in a licensed manufacturer, licensed supplier, licensed manufacturer designee or licensed junket enterprise.
(2) A 1% or greater indirect ownership interest in a licensed manufacturer, licensed supplier, licensed manufacturer designee or licensed junket enterprise. An ownership interest that is held indirectly by an individual through one or more intervening entities will be determined by successive multiplication of the ownership percentages for each link in the vertical chain.
(3) A right or ability to control or influence the management or policies of a licensed manufacturer, licensed supplier, licensed manufacturer designee or licensed junket enterprise.
(c) [An individual who has a direct ownership interest in, or has a right to any profit, distribution or benefit directly from, an intermediary or holding company of a slot machine applicant or licensee shall be licensed as a principal] An individual who has acquired an interest or right set forth in subsection (b)(1)—(3) prior to being licensed, whose application is denied or withdrawn shall divest the interest or right.
(d) [An individual that has a 1% or greater indirect ownership interest in an applicant or licensee shall be licensed as a principal. An ownership interest that is held indirectly by an individual through one or more intervening entities will be determined by successive multiplication of the ownership percentages for each link in the vertical chain.] An individual seeking to acquire a direct or indirect ownership interest of 20% or greater in a licensed manufacturer, licensed supplier, licensed manufacturer designee or licensed junket enterprise shall submit the following, at least 30 days prior to acquiring the ownership interest:
(1) A notification of a Change in Control of a Licensee Form.
(2) A completed principal application.
(e) Notwithstanding [any provision to the contrary in this section, an individual who holds less than 5% of the voting securities of an applicant or licensee or an intermediary or holding company of an applicant or licensee that is a publicly traded company will not be required to be licensed as a principal] subsection (d), the Board may require an individual to obtain a principal license prior to acquiring a direct or indirect ownership interest of 20% or greater in a licensed manufacturer, licensed supplier, licensed manufacturer designee or licensed junket enterprise.
(f) [Each individual who is a grantor, trustee or beneficiary of a trust that is required to be licensed as a principal under this chapter shall be licensed as a principal] Notwithstanding subsections (a) and (b), an individual whose ownership interest in a licensee consists of less than 5% of the voting securities of a publicly traded corporation will not be required to be licensed as a principal.
(g) Notwithstanding subsections (a) and (b), an individual who indirectly owns less than 5% of the voting securities of a publicly traded corporation through one or more privately held entities will not be required to be licensed as a principal.
(h) Notwithstanding subsections (a) and (b), an individual who holds an indirect ownership interest of less than 5% in a licensee through a private investment fund that has been exempted from licensure under § 433a.4(e) (relating to interests in licensees held by entities) will not be required to be licensed as a principal.
[(g) The] (i) Notwithstanding any provision in this section, the Board may require any individual who has [a] any financial interest in [, or receives an economic benefit from,] an applicant or licensee to be licensed as a principal.
§ 433a.4. [Entity ownership] Interests in licensees held by entities.
(a) An [intermediary, subsidiary or holding company of an applicant or licensee] entity shall [be licensed as a principal.] apply for and obtain a principal license prior to possessing any of the following:
(1) A direct ownership interest in a slot machine or management company licensee.
(2) A 1% or greater indirect ownership interest in a slot machine or management company licensee. An ownership interest that is held indirectly by an entity through one or more intervening entities will be determined by successive multiplication of the ownership percentages for each link in the vertical chain.
(3) A right to receive a payment from a slot machine or management company licensee based directly or indirectly on the earnings, profits or receipts from the slot machines and associated equipment for use or play in this Commonwealth.
(4) A right or ability to control or influence the management or policies of a slot machine or management company licensee.
(b) An entity that [, indirectly or directly, has the power to control or direct the management or policies of an applicant or licensee shall be licensed as a principal] possesses any of the interests or rights in paragraphs (1)—(3) shall apply for and obtain a principal license. An entity may possess any of the interests or rights in paragraphs (1)—(3) if the entity notifies the Board and submits a completed application to the Board in accordance with § 433a.8 (relating to principal applications) prior to acquiring the interest or right.
(1) A direct ownership interest of 1% or more in a licensed manufacturer, licensed supplier, licensed manufacturer designee or licensed junket enterprise.
(2) A 1% or greater indirect ownership interest in a licensed manufacturer, licensed supplier, licensed manufacturer designee or licensed junket enterprise. An ownership interest that is held indirectly by an individual through one or more intervening entities will be determined by successive multiplication of the ownership percentages for each link in the vertical chain.
(3) A right or ability to control or influence the management or policies of a licensed manufacturer, licensed supplier, licensed manufacturer designee or licensed junket enterprise.
(c) An entity that has [a direct ownership interest in, or has a right to any profit, distribution or benefit directly from, an applicant or licensee shall be licensed as a principal] acquired an interest or right set forth in subsection (b)(1)—(3) prior to being licensed, whose application is denied or withdrawn shall divest his interest or right.
(d) An entity [that has a direct ownership interest in, or has a right to any profit, distribution or benefit directly from, an intermediary, subsidiary or holding company of a slot machine applicant or licensee, shall be licensed as a principal.] seeking to acquire a direct or indirect ownership interest of 20% or greater in a licensed manufacturer, licensed supplier, licensed manufacturer designee or licensed junket enterprise shall submit the following, at least 30 days prior to acquiring the ownership interest:
(1) A notification of a Change in Control of a Licensee Form.
(2) A completed principal application.
(e) [An entity that has an indirect ownership interest of 5% or greater in an applicant or licensee shall be licensed as a principal. An ownership interest that is held indirectly by an entity through one or more intervening entities will be determined by successive multiplication of the ownership percentages for each link in the vertical chain] Notwithstanding subsection (d), the Board may require an entity to obtain a principal licensed prior to acquiring a direct or indirect ownership interest of 20% or greater in a licensed manufacturer, licensed supplier, licensed manufacturer designee or licensed junket enterprise.
(f) Notwithstanding subsections (a) and (b), an entity whose ownership interest in a licensee consists of less than 5% of the voting securities of a publicly traded corporation will not be required to be licensed as a principal.
(g) Notwithstanding subsections (a) and (b), an entity that indirectly owns less than 5% of the voting securities of a publicly traded corporation through one or more privately held entities will not be required to be licensed as a principal.
[(f)] (h) Notwithstanding [subsection (e)] subsections (a) and (b), a private investment fund [, including its feeder funds, that has an indirect ownership interest in an applicant or licensee, shall be exempt from obtaining] and its related management entities will not be required to be licensed as a principal [license] if the following apply:
(1) [Neither the] The private investment fund [, nor the investors in the private investment fund have any voting rights or any other power] has no voting rights in licensee and does not possess any other right or ability to control or to influence the [applicant or] licensee.
* * * * * (3) [No investor in the private investment fund has a right to redeem his interest in the private investment fund within 2 years of the purchase of the interest] Each individual who has an indirect ownership or beneficial interest of 5% or greater in the licensee through the private investment fund applies for and obtains a principal license.
(4) Each individual [and entity that] who has the ability to control or influence the management of the private investment fund [is licensed as] applies for and obtains a principal license.
* * * * * [(g) A private investment fund that does not qualify for the exemption under subsection (f) solely on the basis that it fails to satisfy paragraph (3), may still qualify for an exemption from licensure if the private investment fund satisfies the other conditions under subsection (f) and its indirect ownership interest in the applicant or licensee is less than 10%.
(h)] (i) Notwithstanding any provision to the contrary in this section, the Board may require any entity that has [a] any financial interest in [, or receives any economic benefit from, an applicant or] a licensee to be licensed as a principal.
§ 433a.5. Institutional investors.
(a) [Notwithstanding any provision to the contrary in this chapter, an] An institutional investor may file an Institutional Investor Notice of Ownership with the Bureau of Licensing, in lieu of applying for principal licensure required under this chapter, if:
(1) The institutional investor [that] owns or beneficially owns more than 5% but less than 15% of the outstanding voting securities of a publicly traded corporation that is an intermediary or holding company of [an applicant for or] a holder of a manufacturer license, manufacturer designee license, supplier license, management company license or junket enterprise license [will not be required to be licensed as a principal if the following conditions are satisfied:] and has filed and remains eligible to file a statement of beneficial ownership on Schedule 13G with the SEC as a result of the institutional investor's ownership interest in the publicly traded corporation.
[(1) The institutional investor or the applicant or licensee files a notice with the Board containing a description of the institutional investor's interests.]
(2) The institutional investor [has filed a Schedule 13G with the SEC, and the institutional investor continues to be eligible to file the Schedule 13G] owns or beneficially owns more than 5% but less than 10% of the outstanding voting securities of a publicly traded corporation that is an intermediary or holding company of a slot machine licensee and has filed and remains eligible to file a statement of beneficial ownership on Schedule 13G with the SEC as a result of the institutional investor's ownership interest in the publicly traded corporation.
[(b) Notwithstanding any provision to the contrary in this chapter, an institutional investor that owns less than 10% of the outstanding voting securities of an intermediary or holding company of a slot machine licensee or applicant shall be eligible to be receive a waiver from the requirements of licensure from the Board by filing a Principal Waiver-Entity Form. The waiver request must include, at a minimum, a certification by the institutional investor stating that the institutional investor has no present involvement in, and no intention of influencing or affecting the affairs of, the slot machine applicant or licensee or an intermediary or holding company of the slot machine applicant or licensee and will give the Board 30 days notice if the institutional investor intends to do so.
(c) Notwithstanding subsection (b), an institutional investor that has been granted a waiver shall be permitted to vote on matters put to the vote of the outstanding security holders.
(d) A holding company of an institutional investor may file a notice or waiver request on behalf of its institutional investor subsidiaries provided that the holding company does not own more than 5% or more of the securities of the intermediary or holding company of the applicant or licensee.
(e) A registered investment adviser or a holding company of a registered investment adviser may file a notice or waiver request, when permitted, on behalf of the registered investment companies that hold securities beneficially owned by the registered investment adviser.]
§ 433a.6. Lenders and underwriters.
(a) Each lender and underwriter of a slot machine, manufacturer or supplier [applicant or] licensee shall be licensed as a principal.
(b) Notwithstanding subsection (a), a lender that is a bank or lending institution which makes a loan to a slot machine, manufacturer or supplier [applicant or] licensee in the ordinary course of business [is] will not be required to be licensed as a principal. The Board may require a bank or lending institution to provide information or other assurances to verify its eligibility for this exemption.
(c) [An underwriter or lender of an intermediary, subsidiary or holding company of a slot machine applicant or licensee shall be required to be licensed as a principal if the Board determines that the suitability of the underwriter or lender is at issue and is necessary to consider a pending application for a slot machine license.] A lender to an intermediary or holding company of a slot machine licensee shall be required to be licensed as a principal unless all of the following apply:
(1) The lender is in the business of providing debt or equity capital to individuals or enterprises.
(2) The lender's loan to the intermediary or holding company of a slot machine licensee is in the ordinary course of its business.
(3) The lender does not have the ability to control or otherwise influence the affairs of the intermediary or holding company of a slot machine licensee or the slot machine licensee.
(d) A person who acquires a debt instrument issued by a licensed supplier, licensed manufacturer, slot machine licensee or intermediary or holding company of a slot machine licensee in a secondary market shall not be required to be licensed as a principal if:
(1) The person does not have any right or ability to control or influence the affairs of the applicant or licensee.
(2) The person's acquisition of the debt instrument is in the ordinary course of business and is not part of a plan or scheme to avoid the requirements of this section.
(e) Notwithstanding any provision to the contrary in this section, the Board may require the licensure of any [lender or underwriter of an applicant or] person who holds a debt instrument issued by a licensee or any holding or intermediary company or subsidiary of [an applicant or] a licensee if the Board has reason to believe that the [lender or underwriter] person would not satisfy the character requirements of section 1310(a) of the act (relating to slot machine license application character requirements).
§ 433a.7. Trusts.
(a) A trust or similar business entity [that holds a direct ownership interest in an applicant or licensee must be licensed as a principal.] shall apply for and obtain a principal license prior to possessing any of the following:
(1) A direct ownership interest in a slot machine licensee.
(2) A 1% or greater indirect ownership interest in a slot machine licensee. An ownership interest that is held indirectly by an individual through one or more intervening entities will be determined by successive multiplication of the ownership percentages for each link in the vertical chain.
(3) A right to receive a payment from a slot machine licensee based directly or indirectly on the earnings, profits or receipts from the slot machines and associated equipment for use or play in this Commonwealth.
(4) A right or ability to control or influence the management or policies of a slot machine licensee.
(b) A trust or similar business entity [that holds a 1% or greater indirect ownership interest in an applicant or licensee must be licensed as a principal. An ownership interest that is held indirectly by an entity through one or more intervening entities will be determined by successive multiplication of the ownership percentages for each link in the vertical chain.] shall notify the Board and submit an application to the Board in accordance with § 433a.8 (relating to principal applications) prior to possessing any of the following:
(1) A direct ownership interest of 1% or more in a licensed manufacturer, licensed supplier, licensed manufacturer designee, management company licensee or junket enterprise licensee.
(2) A 1% or greater indirect ownership interest in a licensed manufacturer, licensed supplier, licensed manufacturer designee, management company licensee or junket enterprise licensee. An ownership interest that is held indirectly by an individual through one or more intervening entities will be determined by successive multiplication of the ownership percentages for each link in the vertical chain.
(3) A right or ability to control or influence the management or policies of a licensed manufacturer, licensed supplier, licensed manufacturer designee, management company licensee or junket enterprise licensee.
(c) [A trust or similar business entity that receives any payment, percentage or share of revenue, profits or receipts directly from an applicant or licensee must be licensed as a principal.
(d) A trust or similar business entity will not be issued a principal license unless each] Each trustee, grantor and beneficiary, including a minor child beneficiary, [has been granted a principal license] of a trust required to be licensed as a principal under this section shall be required to be licensed as a principal.
(e) Notwithstanding [any provision to the contrary in this section] subsection (a), a trust [will not be required to be licensed as a principal if the holdings of the trust consist of less than 5% of the voting securities of a publicly traded company] whose ownership interest in a licensee consists of less than 5% of the voting securities of a publicly traded company will not be required to be licensed as a principal.
(f) Notwithstanding any provision to the contrary in this section, the Board may require any trust that has any financial interest in a licensee to be licensed as a principal.
[Pa.B. Doc. No. 10-107. Filed for public inspection January 15, 2010, 9:00 a.m.]
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