§ 433a.4. Interests in licensees held by entities.
(a) An entity shall 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 or contingent upon the earnings, profits or receipts from the slot machines, table games 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.
(5) A general partnership interest in a limited partnership that is a slot machine or management company licensee.
(6) A general partnership interest in a limited partnership that is a principal affiliate of a slot machine or management company licensee.
(b) An entity shall notify the Board and submit a completed application 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 or licensed manufacturer designee.
(2) A 1% or greater indirect ownership interest in a licensed manufacturer, licensed supplier or licensed manufacturer designee. 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 or ability to control or influence the management or policies of a licensed manufacturer, licensed supplier or licensed manufacturer designee.
(4) A general partnership interest in a limited partnership that is a licensed manufacturer, licensed supplier or licensed manufacturer designee.
(5) A general partnership interest in a limited partnership that is a principal affiliate of a licensed manufacturer, licensed supplier or licensed manufacturer designee.
(c) An entity that has acquired an interest or right set forth in subsection (b)(1)—(5) prior to being licensed, and whose application is denied or withdrawn, shall divest its interest or right within a period of time established by the Office of Enforcement Counsel.
(d) An entity seeking to acquire a direct or indirect ownership interest of 20% or greater in a licensed manufacturer, licensed supplier or licensed manufacturer designee shall comply with the requirements in § 427a.6, § 429a.8 or § 431a.6 (relating to change of control of a manufacturer licensee; change of control of a manufacturer designee licensee; and change of control of a supplier licensee).
(e) Notwithstanding subsections (a) and (b), an entity whose indirect 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.
(f) 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.
(g) Notwithstanding subsections (a) and (b), a private investment fund and its related management entities will not be required to be licensed as a principal if the following apply:
(1) The private investment fund has no voting rights in the licensee and does not possess any other right or ability to control or to influence the licensee.
(2) At least 20% of the investors in the private investment fund are ‘‘institutional investors’’ as defined in § 401a.3 (relating to definitions).
(3) 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 who has the ability to control or influence the management of the private investment fund applies for and obtains a principal license.
(5) The private investment fund agrees to provide the Board with information the Board deems necessary to evaluate the integrity of the private investment fund and its investors, and its compliance with this section. Information provided to the Board will be confidential.
(6) Each individual required to be licensed as a principal in paragraph (4) shall as part of his principal license application sign a notarized statement affirming, at a minimum, the following:
(i) The private investment fund’s investment in the applicant or licensee will not violate applicable United States, Commonwealth or international laws and regulations, including anti-money laundering regulations or conventions, the Internal Revenue Code of 1986 (26 U.S.C.A.), the Employee Retirement Income Security Act of 1974 (Pub. L. No. 93-406, 88 Stat. 829), the Securities Act of 1933 (15 U.S.C.A. § § 77a—77aa), the Securities Exchange Act of 1934 (15 U.S.C.A. § § 78a—78pp), the Investment Company Act of 1940 (15 U.S.C.A. § § 80a-1—80a-64) and the Investment Advisers Act of 1940 (15 U.S.C.A. § § 80b-1—80b-18c).
(ii) To his best knowledge, no investor in the private investment fund:
(A) Holds an interest in the private investment fund in contravention of any applicable United States, Commonwealth or international laws and regulations, including anti-money laundering regulations or conventions, the Internal Revenue Code of 1986, the Employee Retirement Income Security Act of 1974, the Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Company Act of 1940 and the Investment Advisers Act of 1940.
(B) Is directly or indirectly affiliated with a prohibited country, territory, individual or entity on the List of Specially Designated Nationals and Blocked Persons maintained by the United States Treasury Department’s Office of Foreign Asset Control.
(C) Is currently charged with or is under indictment for any felony or gambling offense in any jurisdiction.
(D) Has been convicted of a felony when 15 years have not elapsed from the date of expiration of the sentence for the offense.
(h) The Board may require a subsidiary of a licensee to be licensed as a principal.
(i) Notwithstanding any provision to the contrary in this section, the Board may require any entity that has any financial interest in a licensee to be licensed as a principal.
Authority The provisions of this § 433a.4 amended under 4 Pa.C.S. § § 1202(b)(9)—(23) and (30), 1205, 1206(f) and (g), 1207(1) and (2), 1208(1)(iii), 1209(b), 1212, 1213, 1311.1, 1326, 13A11, 13A12—13A14, 13A15 and 1802 and Chapter 13.
Source The provisions of this § 433a.4 amended November 19, 2010, effective November 20, 2010, 40 Pa.B. 6676; amended June 12, 2015, effective June 13, 2015, 45 Pa.B. 2829. Immediately preceding text appears at serial pages (354543) to (354546).
Cross References This section cited in 58 Pa. Code § 433a.3 (relating to interests in licensees held by individuals).
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