when evaluating #protectiveProvisions in #SBALoans context, note: "finding of negative control here is not a presumption, and the regulation does not permit a rebuttal of a finding of negative control" Section 103; see, e.g., https://govt.westlaw.com/sbaoha/Document/If24fcc2c9f2511e590d4edf60ce7d742?viewType=FullText&listSource=Search&originationContext=Search+Result&transitionType=SearchItem&contextData=(sc.Search)&navigationPath=Search%2fv1%2fresults%2fnavigation%2fi0ad720f10000017152c71b8565a6ab0b%3fNav%3dADMINDECISION_PUBLICVIEW%26fragmentIdentifier%3dIf24fcc2c9f2511e590d4edf60ce7d742%26startIndex%3d1%26transitionType%3dSearchItem%26contextData%3d%2528sc.Default%2529%26originationContext%3dSearch%2520Result&list=ADMINDECISION_PUBLICVIEW&rank=5&t_Method=win&t_querytext=%22protective+provision%22

2) "These provisions go far beyond the type of control of extraordinary actions which #OHA has recognized as necessary to protect an investment." #SBALoans #ProtectiveProvisions #startups This is how SBA thinks about which veto rights are ok & which aren't under 103

3) Under @SBAgov precedent: "the power to #veto unusual or “extraordinary” actions may be designed to protect the interests of the minority investor & therefore do not pose issues of negative control." #sbaLoans #NegativeControls
https://govt.westlaw.com/sbaoha/Document/Ifbda0d9cbcf011e191598982704508d1?viewType=FullText&listSource=Search&originationContext=Search+Result&transitionType=SearchItem&contextData=(sc.Search)&navigationPath=Search%2fv1%2fresults%2fnavigation%2fi0ad720f10000017152d152b765a6abad%3fNav%3dADMINDECISION_PUBLICVIEW%26fragmentIdentifier%3dIfbda0d9cbcf011e191598982704508d1%26startIndex%3d1%26transitionType%3dSearchItem%26contextData%3d%2528sc.Default%2529%26originationContext%3dSearch%2520Result&list=ADMINDECISION_PUBLICVIEW&rank=7&t_Method=win&t_querytext=veto

4) "minority shareholder's power to #veto extraordinary actions outside ordinary course of business-such as issuance of additional stock, amend charter or bylaws, or entry into a substantially different line of business-doesn't necessarily constitute ‘ #negativeControl.’"

5) " #ordinaryDailyOperations include borrowing $, increasing employee&officer comp, purchasing equipment, amending/terminating leases, encumbering assets, paying dividends, creating debt securities, controlling operating budgets or incentive plans, &choosing independent auditors"

6) the above is from the OHA case #CARNTRIBE 2012. Helpful read on how #SBA thinks about #control #AffiliationRules for #SBALoans NOTE:

7) Most #OHACases we found construing #negativecontrols to confer control under #SBA's #AffiliationRules involved holders of 40% or more of the equity

8) it's like #AnimalFarm "2 legs bad, 4 legs good"
Dividends, Employment Comp, Borrowing = bad
M&A, New Preferred, Charter Amendments = good
That's an oversimplification, but helps!
cc @trevorloy @Samirkaji @doug_rand @nvca @LowensteinLLP

9) we reviewed OHA decisions (on #NegativeControls creating #Affiliation for #SBALoans) b/w 1985 to 2018, noting Section 103 dates to 1996 & 301(f) enacted 2016