Harris & Harris Group, Inc.; Notice of Application

AGENCY:

Securities and Exchange Commission (“SEC”).

ACTION:

Issuance of Certification Pursuant to Section 851(e) of the Internal Revenue Code of 1986, as amended (“Code”).

SUMMARY:

The SEC is issuing a certification pursuant to section 851(e) of the Code that applicant Harris & Harris Group, Inc. (“Harris”) was, for the fiscal year ended December 31, 1999, principally engaged in the furnishing of capital to other corporations which are principally engaged in the development or exploitation of inventions, technological improvements, new processes or products not previously generally available.

FILING DATES:

The application was filed on December 22, 1999, and amended on February 24, 2000.

ADDRESSES:

Secretary, SEC, 450 Fifth Street, N.W., Washington, DC 20549-0609; Applicant, One Rockefeller Plaza, 14 Wast 49th Street, New York, New York 10020.

FOR FURTHER INFORMATION CONTACT:

Paula L. Kashtan, Senior Counsel, at (202) 942-0615, or Mary Kay Frech, Branch Chief, at (202) 942-0564 (Division of Investment Management, Office of Investment Company Regulation).

SUPPLEMENTARY INFORMATION:

The following is a summary of the application and a certification. The complete application may be obtained for a fee at the SEC's Public Reference Branch, 450 Fifth Street, NW, Washington, DC 20549-0102 (telephone (202) 942-8090).

Applicant's Representations

1. Harris is a New York corporation. On July 26, 1995, Harris elected to become regulated as a business development company pursuant to section 54(a) of the Investment Company Act of 1940.

2. Harris proposed to qualify as a “regulated investment company” under section 851(a) of the Code pursuant to section 851(e) of the Code. Section 851(b) of the Code imposes certain portfolio diversification requirements on investment companies that seek to qualify as a regulated investment company. Section 851(e) of the Code provides an exemption from these diversification requirements if the investment company, among other things, obtains a certification from the SEC that the investment company is principally engaged in the furnishing of capital to other corporations which are principally engaged in the development or exploitation of inventions, technological improvements, new processes or products not previously generally available (collectively, “Development Corporations”).

3. Harris has filed an application seeking a certification pursuant to section 851(e) of the Code for the fiscal year ended December 31, 1999. The application describes certain companies in Harris' portfolio during the fiscal year ended December 31, 1999, that Harris believes to be Development Corporations. Harris states that, in making this determination, it relied upon information provided by the portfolio companies to Harris and to others, including but not limited to, offering circulars, prospectuses, analyst reports, internal company memoranda, patent applications and similar documents. In addition, Harris generally is represented on the boards of directors of its portfolio companies through member or observe status, and also has direct access to senior management of the companies.

4. The following table shows the composition of the total assets of Harris as of each of the calendar quarters ended March 31, June 30, September 30, and December 31, 1999, as set forth in the application.

As reflected in the table above, Development Companies comprised the following percentages of the total assets of Harris at the end of each calendar quarter of 1999; March 31, 57.2%; June 30, 64.6%; September 30, 73.8%; and December 31, 91.6%.

Certification

On the basis of the information set forth in the application, it appears that Harris was principally engaged in the furnishing of capital to Development Corporations within the meaning of section 851(e) of the Code in the fiscal year ended December 31, 1999. IT IS THEREFORE CERTIFIED to the Secretary of the Treasury, or his delegate, pursuant to section 851(e) of the Code, that Harris was, for the twelve months ended December 31, 1999, principally engaged in the furnishing of capital to other corporations which are principally engaged in the development or exploitation of inventions, technological improvements, new processes or products not previously generally available.