Nov. 21 at 3:54 PM
$OPTX
The "40% Equity" Rule: Clarified & Strengthened (Jan/June 2025)
While loan rules tightened, the equity investment rules for Mentors became clearer and better for a public company like Syntec.
The "Standardized Negative Controls" (New Safe Harbor)
Previously, if a Mentor owned 40% and had "veto power" over board decisions, the SBA often ruled they were "affiliated" (i.e., Syntec is no longer small).
The New Rule (13 CFR 121.103): The SBA now explicitly allows minority shareholders (Mentors) to have 5 Standardized Veto Rights without triggering affiliation:
1. Issuing New Stock (Preventing dilution).
2. Dissolving the Company.
3. Selling All Assets.
4. Mergers/Acquisitions.
5. Declaring Bankruptcy.
Why This Matters for Syntec:
Northrop Grumman (the potential Mentor) will demand these veto rights to protect their investment. Before 2025, these demands might have disqualified Syntec. Now, they are pre-approved. This removes the biggest legal barrier to the 40% equity deal.
