AB 2020 Form 10-K

The Fund is a non-diversified investment company within the meaning of the 1940 Act, and therefore it is not limited with respect to the proportion of its assets that may be invested in securities of a single issuer. The Fund is classified as a non-diversified investment company within the meaning of the 1940 Act, which means that it is not limited by the 1940 Act with respect to the proportion of its assets that the Fund may invest in securities of a single issuer. To the extent that the Fund holds large positions in the securities of a small number of issuers, or within a particular industry, the Fund’s net asset value may fluctuate to a greater extent than that of a diversified investment company as a result of changes in the issuer’s financial condition or the market’s assessment of the issuer. The Fund may also be more susceptible to any single economic or regulatory occurrence than a diversified investment company. The Board is authorized to reclassify any unissued Shares into one or more classes of preferred stock, which could convey special rights and privileges to its owners. Under the Maryland General Corporation Law (the “MGCL”) and the Fund’s charter, the Board is authorized to classify and reclassify any authorized but unissued Shares into one or more classes of stock, including preferred stock. Prior to the issuance of Shares of each class or series, the Board is required by Maryland law and the Fund’s charter to set the terms, preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms or conditions of redemption for each class or series. Thus, the Board could authorize the issuance of shares of preferred stock with terms and conditions which could have the effect of delaying, deferring or preventing a transaction or a change in control that might involve a premium price for holders of the Fund’s common stock or otherwise be in their best interest. The cost of any such reclassification would be borne by the Fund’s existing common stockholders. Certain matters under the 1940 Act require the separate vote of the holders of any issued and outstanding preferred stock. For example, holders of preferred stock would vote separately from the holders of common stock on a proposal to cease operations as a BDC. In addition, the 1940 Act provides that holders of preferred stock are entitled to vote separately from holders of common stock to elect two preferred stock directors. The Fund currently has no plans to issue preferred stock, but may determine to do so in the future. The issuance of preferred stock convertible into Shares might also reduce the net income per share and net asset value per share of the Fund’s common stock upon conversion, provided, that the Fund will only be permitted to issue such convertible preferred stock to the extent the Fund complies with the requirements of Section 61 of the 1940 Act, including obtaining common stockholder approval. These effects, among others, could have an adverse effect on an investment in the Fund’s common stock. The Board may change the Fund’s investment objective, operating policies and strategies without prior notice or stockholder approval, the effects of which may be adverse. The Board will have the authority to modify or waive the Fund’s investment objective, current operating policies, investment criteria and strategies without prior notice (except as required by the 1940 Act) and without stockholder approval. However, absent stockholder approval, the Fund may not change the nature of its business so as to cease to be, or withdraw its election as, a BDC. The Fund cannot predict the effect any changes to its current operating policies, investment criteria and strategies would have on its business, net asset value, operating results and value of its stock. However, the effects might be adverse, which could negatively impact the Fund’s ability to pay you dividends and cause you to lose all or part of your investment. The Fund will be subject to corporate-level U.S. federal income tax if it is unable to qualify as a RIC. Although the Fund has elected to be treated as a RIC, no assurance can be given that it will be able to maintain its qualification as a RIC. To maintain qualification as a RIC, the Fund must meet the following source-of-income, asset diversification, and distribution requirements. The income source requirement will be satisfied if the Fund obtains at least 90% of its gross income for each year from dividends, interest, foreign currency, payments with respect to loans of certain securities, gains from the sale of stock or other securities, net income from certain “qualified publicly traded partnerships,” or similar sources. The asset diversification requirement will be satisfied if the Fund meets certain asset diversification requirements at the end of each quarter of its taxable year. Failure to meet those requirements may result in the Fund having to dispose of certain investments quickly in order to prevent the loss of its qualification as a RIC. Because most of the Fund’s investments will be in private companies, and therefore will be relatively illiquid, any such dispositions could be made at disadvantageous prices and could result in substantial losses. The Fund may have difficulty satisfying the diversification requirement during its ramp-up phase until it has a portfolio of investments. The Fund may also have difficulty satisfying the diversification requirements if it determines to wind up and liquidate its assets. The Fund may be prevented from making follow-on investments in its portfolio companies in order to satisfy the diversification requirements. 40