AB 2020 Form 10-K

Additionally, the Fund intends to document its internal control procedures to satisfy the requirements of Section 404, which requires annual management assessments of the effectiveness of its internal controls over financial reporting. The Fund’s independent registered public accounting firm is not currently required to formally attest to the effectiveness of the Fund’s internal control over financial reporting. Because the Fund does not currently have comprehensive documentation of internal controls and have not yet tested internal controls in accordance with Section 404, it cannot conclude in accordance with Section 404 that it does not have a material weakness in its internal controls or a combination of significant deficiencies that could result in the conclusion that it has a material weakness in internal controls. The Fund will be required to complete its initial assessment in a timely manner. If the Fund is not able to implement the requirements of Section 404 in a timely manner or with adequate compliance, its operations, financial reporting or financial results could be adversely affected. Matters impacting the Fund’s internal controls may cause it to be unable to report its financial information on a timely basis and thereby subject it to adverse regulatory consequences, including sanctions by the SEC or violations of applicable stock exchange listing rules, and result in a breach of the covenants under the agreements governing any of its financing arrangements. There could also be a negative reaction in the financial markets due to a loss of investor confidence in the Fund and the reliability of its consolidated financial statements. Confidence in the reliability of the Fund’s consolidated financial statements could also suffer if the Fund or its independent registered public accounting firm were to report a material weakness in the Fund’s internal controls over financial reporting. This could materially adversely affect the Fund and lead to a decline in the market price of its common stock, to the extent it has completed a Qualified IPO. There may be state licensing requirements. The Fund may be required to obtain various state licenses in order to, among other things, originate commercial loans. Applying for and obtaining required licenses can be costly and take several months. There is no assurance that the Fund will obtain all of the licenses that it needs on a timely basis. Furthermore, the Fund will be subject to various information and other requirements in order to obtain and maintain these licenses, and there is no assurance that it will satisfy those requirements. The Fund’s failure to obtain or maintain licenses might restrict investment options and have other adverse consequences. Investors in the Private Offering will be subject to transfer restrictions. Prior to the completion of a Qualified IPO, and other than in connection with a New BDC Spin-Off, creation of a Liquidating Share Class, a Limited Tender Offer, or pursuant to a Share repurchase program of the Fund, investors who participate in the Private Offering may not sell, assign, transfer or otherwise dispose of (in each case, a “Transfer”) any common stock unless (i) the Fund gives consent and (ii) the Transfer is made in accordance with applicable securities laws. No Transfer will be effectuated except by registration of the Transfer on the Fund’s books. Each transferee must agree to be bound by these restrictions and all other obligations as an investor in the Fund. Following completion of a Qualified IPO, stockholders will be restricted from selling or disposing of their Shares contractually by a lock-up agreement with the underwriters of the IPO and secondary offerings, and by the terms of the subscription agreement. The proposals to establish a Liquidating Share Class, New BDC or a Limited Tender Offer (together, the “Proposals”) would involve transactions that are currently prohibited by the 1940 Act and would require an SEC order in order to be put in place. The SEC has not previously granted orders with respect to a Liquidating Share Class or a New BDC, and it could take several years before the SEC determines whether relief is appropriate and it may ultimately deny the requests for any or all of the Proposals. If the SEC were to deny any of the requests for the exemptive relief required to effectuate the Proposals, the Board would need to consider other ways to permit stockholders to liquidate their investments. If you expect to need access to your investment in the near future, you should not invest in the Fund. Changes in laws or regulations governing the Fund’s operations may adversely affect its business. Legal, tax and regulatory changes could occur that may adversely affect the Fund. For example, from time to time the market for private equity transactions has been (and is currently being) adversely affected by a decrease in the availability of senior and subordinated financings for transactions, in part in response to credit market disruptions and/or regulatory pressures on providers of financing to reduce or eliminate their exposure to the risks involved in such transactions. In addition, as private equity firms become more influential participants in the U.S. and global financial markets and economy generally, there recently has been pressure for greater governmental scrutiny and/or regulation of the private equity industry, in part. It is uncertain as to what form and in what jurisdictions such enhanced scrutiny and/or regulation, if any, on the private equity industry may ultimately take. Therefore, there can be no assurance as to whether any such scrutiny or initiatives will have an adverse impact on the private equity industry, including the Fund’s ability to effect operating improvements or restructurings of its portfolio companies or otherwise achieve its objectives. 43