July 5, 1979

You request a ruling with respect to ********** (the "Partnership").

The Partnership is a limited partnership organized under the Massachusetts Uniform Limited Partnership Act, Chapter 109 of the Massachusetts General Laws. The Partnership has been formed to operate as a Small Business Investment Company under the Small Business Investment Act (S.B.I.A.) of 1958, as amended. It will make diversified investments in businesses whose assets do not exceed $9 million and whose annual after tax income for the two previous years does not exceed $400,000. The Partnership has received a ruling from the Internal Revenue Service that it will be classified as a partnership for federal income tax purposes rather than as an association taxable as a corporation. The principal business office of the Partnership is at ********** Boston, Massachusetts.

The Partnership has one general partner ("General Partner"), ********** which is a business corporation organized under the laws of Massachusetts. The General Partner has two shareholders, [A Corp.] a wholly-owned subsidiary of [x] , Inc. and , a subsidiary of [B Corp.] a United Kingdom Corporation.

The General Partner's interest in the Partnership consists of any shares it has pursuant to its initial or subsequent capital contributions, any reimbursement and indemnification it is entitled to for liabilities and expenses, and finally, 15% of the income, profits and gains of the Partnership and 15% of the losses and expenses.

The partnership agreement provides for one initial limited partner who has made a nominal contribution and who will withdraw from the Partnership simultaneously with the execution of the partnership agreement by additional limited partners. The additional limited partnership interests, which will not be publicly offered, will consist largely of existing or future investment advisory clients of subsidiaries of [x] , Inc. The interest will be sold through **********, a broker-dealer which is a wholly owned subsidiary of [x] , Inc.

The objective of the Partnership is to provide the partners with relatively "long-term capital appreciation through a diversified portfolio of `venture capital' investments." The investments will be made in small businesses (as defined by the S.B.I.A.) which are growing or appear to have growth potential.

Under the partnership agreement, the management, operation and policies of the Partnership are exclusively in the General Partner, which has the power to enter into and perform all contracts and activities which are necessary to achieving the objectives of the Partnership.

The partnership agreement states that the General Partner may admit additional limited partners to the partnership at any time. In addition, the General Partner, upon approval of the Small Business Administration (SBA) and a majority in interest of the limited partners, may remove any limited partner. A limited partner may withdraw from the Partnership upon six month's prior written notice, subject to SBA approval. Death, incapacity, bankruptcy or legal action against a limited partner's Partnership interest, results in automatic withdrawal.

A limited partner's interest is not assignable without the written consent of the General Partner. If a limited partner owned more than 10% of the capital of the Partnership he must obtain the written consent of the SBA and the written consent of the General Partner to assign his interest.

The General Partner cannot approve the assignment of a limited partner's interest unless the General Partner receives an opinion of counsel that the assignment will not adversely affect the Partnership. An attempted assignment without the General Partner's consent is treated as a notice of withdrawal when communicated to the General Partner. Such assignee will only be entitled to the share of profits or other compensation to which his assignor would otherwise be entitled. Upon a limited partner's death, his liquidated interest is transferable by will or by the laws of intestacy.

Based on the foregoing it is ruled that the Partnership will not be a corporate trust . . . "the beneficial interest of which is represented by transferable shares" as defined by Massachusetts General Laws Chapter 62, Section 1, but rather will be a partnership under Massachusetts General Laws Chapter 62, Section 17 which, as an entity, is not subject to income taxation in Massachusetts.

Very truly yours,

/s/L. Joyce Hampers

L. Joyce Hampers
Commissioner of Revenue

LJH:RF:FC

LR 79-14