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EX-99.2r
ALLIED CAPITAL CORPORATION
CODE OF ETHICS
SECTION 1: STATEMENT OF PURPOSE AND APPLICABILITY
(A) Statement of Purpose
It is the policy of Allied Capital Corporation (the "Company") that
no affiliated person of the Company shall, in connection with the
purchase or sale, directly or indirectly, by such person of any
security held or to be acquired by the Company,
(1) Employ any device, scheme or artifice to defraud the
Company;
(2) Make to the Company any untrue statement of a material fact or
omit to state to the Company a material fact necessary in
order to make the statement made, in light of the
circumstances under which it is made, not misleading;
(3) Engage in any act, practice, or course of business which
operates or would operate as a fraud or deceit upon the
Company; or
(4) Engage in any manipulative practice with respect to
the Company.
(B) Scope of the Code
In order to prevent the access persons, as defined in Section II,
paragraph (A) below, of the Company from engaging in any of these
prohibited acts, practices or courses of business, the Board of
Directors of the Company has adopted this Code of Ethics.
SECTION II: DEFINITIONS
(A) Access Person. "Access Person" means any director, officer, or
"Advisory Person" of the Company.
(B) Advisory Person. "Advisory person" of the Company means:(i) any
employee of the Company or of any company in a control relationship
to the Company, who, in connection with his or her regular functions
or duties, makes, participates in, or obtains information regarding
the purchase or sale of a security by the Company, or whose
functions relate to the making of any recommendations with respect
to such purchases or sales; and (ii) any natural person in a control
relationship to the Company who obtains information concerning
recommendations made to the Company with regard to the purchase or
sale of security.
(C) Beneficial Interest. "Beneficial Interest" includes any entity,
person, trust, or account with respect to which an Access Person
exercises investment discretion or provides investment advice. A
beneficial interest shall be presumed to include all accounts in the
name of or for
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the benefit of the Access Person, his or her spouse, dependent
children, or any person living with him or her or to whom he or she
contributes economic support.
(D) Beneficial Ownership. "Beneficial Ownership" shall be determined in
accordance with Rule 16a-1(a)(2) under the Securities Exchange Act
of 1934, except that the determination of direct or indirect
Beneficial Ownership shall apply to all securities, and not just
equity securities, that an Access Person has or acquires.
Rule 16a-1(a)(2) provides that the term "beneficial owner" means any
person who, directly or indirectly, through any contract,
arrangement, understanding, relationship, or otherwise, has or
shares a direct or indirect pecuniary interest in any equity
security. Therefore, an Access Person may be deemed to have
Beneficial Ownership of securities held by members of his or her
immediate family sharing the same household, or by certain
partnerships, trusts, corporations, or other arrangements.
(E) Covered Security. "Covered Security" means a security as defined in
Section 2(a)(36) of the Investment Company Act of 1940, as amended
(the "1940 Act"), except that it does not include (i) direct
delegations of the Government of the United States; (ii) banker's
acceptances, bank certificates of deposit, commercial paper and high
quality short-term debt instruments including repurchase agreements;
and (iii) shares issued by open-end funds.
(F) Company. The "Company" means Allied Capital Corporation, a Maryland
corporation.
(G) Designated Officer. "Designated Officer" shall mean the officer of
the Company designated by the Board of Directors from time to time
to be responsible for management of compliance with this Code. The
Designated Officer may appoint a designee to carry out certain of
his or her functions pursuant to this Code.
(H) Disinterested Director. "Disinterested Director" means a director of
the Company who is not an "interested person" of the Company within
the meaning of Section 2(a)(19) of the 1940 Act.
(I) Purchase or Sale of a Covered Security. Purchase or Sale of a
Covered Security includes, among other things, the writing of an
option to purchase or sell a covered security, or the use of
derivative product to take a position in a Covered Security.
SECTION III: STANDARDS OF CONDUCT
(A) General Standards
(1) No Access Person shall engage, directly or indirectly,
in any business transaction or arrangement for personal
profit that is inconsistent with the best interests of
the Company or its shareholders; nor shall he or she
make use of any confidential information gained by
reason of his or her employment by or affiliation with
the Company or affiliates thereof in order to derive a
personal profit for himself or herself or for any
Beneficial Interest, in violation of the fiduciary duty
owed to the Company or its shareholders.
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(2) Any Access Person recommending or authorizing the
purchase or sale of a Covered Security by the Company
shall, at the time of such recommendation or
authorization, disclose any Beneficial Interest in or
Beneficial Ownership of such Covered Security or the
issuer thereof.
(3) No Access Person shall dispense any information
concerning Securities holdings or Securities
transactions of the Company to anyone outside the
Company, without obtaining prior written approval from
the Designated Officer, or such person or persons as
these individuals may designate to act on their behalf.
Notwithstanding the preceding sentence, such Access
Person may dispense such information without obtaining
prior written approval:
(a) when there is a public report containing
the same information;
(b) when such information is dispensed in accordance
with compliance procedures established to prevent
conflicts of interest between the Company and its
affiliates;
(c) when such information is reported to directors of
the Company; or
(d) in the ordinary course of his or her duties on
behalf of the Company.
(4) All personal securities transactions should be conducted
consistent with this Code and in such a manner as to
avoid actual or potential conflicts of interest, the
appearance of a conflict of interest, or any abuse of an
individual's position of trust and responsibility within
the Company.
(B) Prohibited Transactions
(1) General Prohibition. No Access Person shall purchase
or sell, directly or indirectly, any Covered Security in
which he or she has, or by reason of such transaction
acquires, any direct or indirect Beneficial Ownership
and which such Access Person knows or should have known
at the time of such purchase or sale is being considered
for purchase or sale by the Company, or is held in the
portfolio of the Company unless such Access Person shall
have obtained prior written approval for such purpose
from the Designated Officer.
(a) An Access Person who becomes aware that the
Company is considering the purchase or sale of
any Covered Security by any person (an issuer)
must immediately notify the Designated Officer
of any interest that such Access Person may have
in any outstanding Covered Securities of that
issuer.
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(b) An Access Person shall similarly notify the
Designated Officer of any other interest or
connection that such Access Person might have in
or with such issuer.
(c) Once an Access Person becomes aware that the
Company is considering the purchase or sale of a
Covered Security or that the Company holds a
Covered Security in its portfolio, such Access
Person may not engage, without prior approval of
the Designated Officer, in any transaction in any
Covered Securities of that issuer.
(d) The notifications or permission may be provided
verbally, but should be confirmed in writing as
soon and with as much detail as possible.
(2) Gifts. No Access Person may accept, directly or
indirectly, any gift, favor, or service of more than a
de minimis value from any person with whom he or she
transacts business on behalf of the Company under
circumstances when to do so would conflict with the
Company's best interests or would impair the ability of
such person to be completely disinterested when
required, in the course of business, to make judgments
and/or recommendations on behalf of the Company.
(3) Service as Director. No Access Person shall serve on
the board of directors of a portfolio company of the
Company without prior written authorization of the
Designated Officer based upon a determination that the
board service would be consistent with the interests of
the Company and its shareholders.
SECTION IV: PROCEDURES TO IMPLEMENT CODE OF ETHICS
The following reporting procedures have been established to assist Access
Persons in avoiding a violation of this Code, and to assist the Company in
preventing, detecting, and imposing sanctions for violations of this Code.
Every Access Person must follow these procedures. Questions regarding
these procedures should be directed to the Designated Officer.
(A) Applicability
All Access Persons are subject to the reporting requirements
set forth in Section IV(B) except:
(1) with respect to transactions effected for, and Covered
Securities held in, any account over which the Access
Person has no direct or indirect influence or control;
(2) a Disinterested Director who would be required to make a
report solely by reason of being a Director need not
make an annual holdings report.
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(3) an Access Person need not make a quarterly transaction
report if the report would duplicate information
contained in broker trade confirmations or account
statements received by the Company with respect to the
Access Person.
(B) Report Types
(1) Initial Holdings Report. An Access Person must file an
initial report not later than 10 days after that person
became an Access Person. The initial report must (a)
contain the title, number of shares and principal amount
of each Covered Security in which the Access Person had
any direct or indirect beneficial ownership when the
person became an Access Person; (b) identify any broker,
dealer or bank with whom the Access Person maintained an
account in which any Covered Securities were held for
the direct or indirect benefit of the Access Person as
of the date the person became an Access Person, and (c)
indicate the date that the report is filed with the
Designated Person.
(2) Quarterly Transaction Report. An Access Person must file
a quarterly transaction report not later than 10 days
after the end of a calendar quarter. With respect to any
transaction made during the reporting quarter, the
quarterly transaction report must contain (a) the
transaction date, title, interest date and maturity date
(if applicable), the number of shares and the principal
amount of each Covered Security; (b) the nature of the
transaction; (c) the price of the Covered Security at
which the transaction occurred; (d) the name of the
broker, dealer or bank through which the transaction was
effected; and (e) the date that the report is submitted
by the Access Person.
(3) Annual Holdings Report. An Access Person must file an
annual holdings report not later than 30 days after the
end of a fiscal year. The annual report must contain (a)
the title, number of shares, and principal amount of
each Covered Security in which the Access Person had any
direct or indirect beneficial ownership; (b) the name of
any broker, dealer or bank in which any Covered
Securities are held for the direct or indirect benefit
of the Access Person; and (c) the date the report is
submitted.
(4) Confirmations and Account Statements. In lieu of
providing a quarterly transaction report, an Access
Person may direct his or her broker to provide to the
Designated Officer (a) duplicate confirmations of all
transactions in any Covered Security in which he or she
has, or by reason of such transaction acquires, any
direct or indirect Beneficial Ownership, and (b) copies
of periodic statements for all investment accounts in
which they have Beneficial Ownership.
(5) Company Reports. No less frequently than annually, the
Company must furnish to the Board of Directors, and the
Board of Directors must consider, a written report that:
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(a) describes any issues arising under the Code of
Ethics since the last report to the Board of
Directors, including but not limited to,
information about material violations of the code
or procedures and sanctions imposed in response to
the material violations; and
(b) certifies that the Company has adopted procedures
reasonably necessary to prevent Access Persons
from violating the code.
(C) Disclaimer of Beneficial Ownership. Any report required under
this Section IV may contain a statement that the report shall
not be construed as an admission by the person submitting such
duplicate confirmation or account statement or making such
report that he or she has any direct or indirect beneficial
ownership in the Covered Security to which the report relates.
(D) Review of Reports. The reports, duplicate confirmations, and
account statements required to be submitted under this Section
IV shall be delivered to the Designated Officer. The
Designated Officer shall review such reports, duplicate
confirmations, and account statements to determine whether
any transactions recorded therein constitute a violation of
the Code of Ethics. Before making any determination that a
violation has been committed by any Access Person, such Access
Person shall be given an opportunity to supply additional
explanatory material. The Designated Officer shall maintain
copies of the reports, duplicate confirmations, and account
statements as required by Rule 17j-1(d).
(E) Acknowledgment and Certification. Upon becoming an Access
Person and annually thereafter, all Access Persons shall sign
an acknowledgment and certification of their receipt of and
intent to comply with this Code in the form attached hereto as
Exhibit A and return it to the Designated Officer.
(F) Records. The Company shall maintain records with respect to
this Code in the manner and to the extent set forth below,
which records may be maintained on microfilm under the
conditions described in Rule 31a-2(f)(1) under the 1940 Act
and shall be available for examination by representatives of
the Securities and Exchange Commission (the "SEC").
(1) A copy of this Code and any other Code of Ethics of the
Company that is, or at any time within the past five
years has been, in effect shall be preserved in an
easily accessible place.
(2) A record of any violation of this Code and of any action
taken as a result of such violation shall be preserved
in an easily accessible place for a period of not less
than five years following the end of the fiscal year in
which the violation occurs.
(3) A copy of each report made or duplicate confirmation or
account statement received pursuant to this Code shall
be preserved for a period of not less
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than five years from the end of the fiscal year in which
it is made, the first two years in an easily accessible
place.
(4) A list of all persons who are, or within the past five
years have been, required to make reports pursuant to
this Code shall be maintained in an easily accessible
place.
(5) A record of any decision, and the reasons supporting the
decision, to approve a request by an Access Person to
purchase or sell any Covered Security shall be
maintained for at least five years after the end of the
fiscal year in which the request is approved.
(G) Obligation to Report a Violation. Every Access Person who
becomes aware of a violation of this Code of Ethics by any
person must report it to the Designated Officer, who shall
report it to appropriate management personnel. The management
personnel will take such disciplinary action that they
consider appropriate under the circumstances. In the case of
officers or other employees of the Company, such action may
include removal from office. If the management personnel
consider disciplinary action against any person, they will
cause notice thereof to be given to that person and provide to
that person the opportunity to be heard. The Board of
Directors will be notified, in a timely manner, of remedial
action taken with respect to violations of the Code of Ethics.
(H) Confidentiality. All reports of Covered Securities
transactions, duplicate confirmations, account statements and
other information filed with the Company or furnished to any
person pursuant to this Code shall be treated as confidential,
but are subject to review as provided herein and by
representatives of the SEC.
SECTION V: SANCTIONS
Upon determination that a violation of this Code has occurred, appropriate
management personnel of the Company may impose such sanctions as they deem
appropriate, including, among other things, a letter of censure or suspension or
termination of the employment of the violator. All violations of this Code and
any sanctions imposed with respect thereto shall be reported in a timely manner
to the Board of Directors of the Company.
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EXHIBIT A
ACKNOWLEDGMENT AND CERTIFICATION
I acknowledge receipt of the Code of Ethics of Allied Capital Corporation.
I have read and understand such Code of Ethics and agree to be governed by it at
all times. Further, if I have been subject to the Code of Ethics during the
preceding year, I certify that I have complied with the requirements of the Code
of Ethics and have disclosed or reported all personal securities transactions
required to be disclosed or reported pursuant to the requirements of the Code of
Ethics.
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(signature)
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(please print name)
Date:
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