In order to continue to qualify as a RIC for federal income tax purposes and obtain favorable RIC tax treatment, we must meet certain requirements, including certain minimum distribution requirements.
Our shares of common stock, 7. We seek to avoid investments in high-risk, early stage enterprises. We invest by ourselves or tly with other funds or management of the portfolio company, depending on the opportunity.
If we are participating in an investment with one or more co-investors, our investment is likely to be smaller than if we were investing alone. We believe this ability to co-invest will continue to enhance our ability to further our investment objectives and strategies. In addition, many of the debt securities we hold typically do not amortize prior to maturity.
Gladstome seek debt instruments that pay interest monthly or, at a minimum, quarterly, and which may include a yield enhancement such as a success fee or deferred interest provision and are primarily interest only, with all principal and any accrued but unpaid interest due at maturity. Generally, success fees accrue at a set rate and are contractually due upon a change of control of the business.
Some debt securities have deferred interest whereby some prigate of the interest payment is added to the principal balance so that the interest is paid, together with the principal, at maturity. Typically, our investments in equity securities take the form of common stock, preferred stock, limited liability company interests, or warrants or options to purchase the foregoing.
Often, these equity investments occur in connection with our original investment, buyouts and recapitalizations of a business, or refinancing existing debt. Using its assets as collateral, the glasstone typically uses senior debt to cover a substantial portion of the funding needs of the business.
The senior secured debt security usually takes the form of first priority liens on all, or substantially all, of the assets of the business. Additionally, we may receive other yield enhancements, such as success fees, in connection with these senior subordinated secured debt securities.
These junior subordinated debts may be secured by certain assets of the borrower or may be unsecured loans. Additionally, we may receive other yield enhancements in addition to or in lieu of success moeling, such as warrants to buy common and preferred stock or limited liability interests in connection with these junior subordinated debt securities.
Additionally, we may receive equity investments derived from restructurings on some of our existing debt investments. In many cases, we will own a ificant portion of the equity which may include having voting control of the businesses in which we invest. Because the majority of the loans in our portfolio bisbee nd housewives personals of term debt in private companies that typically cannot or will not expend the resources to have their debt securities rated by a credit rating privwte, we expect that most, if not all, of the debt securities we acquire will be unrated.
Investments rated below investment grade are often referred to as high yield securities or junk bonds and may be considered higher risk, as compared to investment-grade debt instruments. Investment Concentrations Year over year, our investment concentration as a percentage of gladstond value and of cost has remained relatively unchanged.