[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3264 Introduced in House (IH)]







106th CONGRESS
  1st Session
                                H. R. 3264

      To amend the Investment Company Act of 1940 to promote the 
         establishment of small business investment companies.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            November 9, 1999

Mr. Kuykendall (for himself and Mr. Campbell) introduced the following 
         bill; which was referred to the Committee on Commerce

_______________________________________________________________________

                                 A BILL


 
      To amend the Investment Company Act of 1940 to promote the 
         establishment of small business investment companies.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Small Business Investment Incentive 
Act of 1999''.

SEC. 2. EXEMPTION FROM REGISTRATION UNDER THE INVESTMENT COMPANY ACT OF 
              1940.

    Section 6(a) of the Investment Company Act of 1940 (15 U.S.C. 80a-
6(a)) is amended by adding at the end the following new paragraph:
            ``(6)(A) Any company that is not engaged in the business of 
        issuing redeemable securities, the operations of which are 
        subject to regulation by the Small Business Administration as a 
        small business investment company under the Small Business 
        Investment Act of 1958 (15 U.S.C. 661 et seq.) if--
                    ``(i) the organizational documents of the company 
                state that the activities of the company are limited to 
                providing financial and business assistance to small 
                business concerns as a small business investment 
                company licensed by the Small Business Administration 
                pursuant to the Small Business Investment Act of 1958;
                    ``(ii) the securities of the company are sold, or 
                proposed to be sold, by the company or by any 
                underwriter for the company, solely to accredited 
                investors, as that term is defined in section 2(a)(15) 
                of the Securities Act of 1933, or to the Small Business 
                Administration pursuant to the Small Business 
                Investment Act of 1958, or to such other persons that 
                the Commission, as necessary or appropriate in the 
                public interest and consistent with the protection of 
                investors, may permit by rule, regulation, or order; 
                and
                    ``(iii) the company does not purchase any security 
                issued by an investment company or by any company that 
                would be an investment company except for the 
                exclusions from the definition of the term `investment 
                company' under paragraph (1) or (7) of section 3(c), 
                other than--
                            ``(I) any debt security that is rated 
                        investment grade by not less than 1 nationally 
                        recognized statistical rating organization; or
                            ``(II) any security issued by a registered 
                        open-end investment company that is required by 
                        its investment policies to invest not less than 
                        65 percent of its total assets in securities 
                        described in subclause (I) or securities that 
                        are determined by such registration open-end 
                        investment company to be comparable in quality 
                        to securities described in subclause (I).
            ``(B) Notwithstanding the exemption provided by this 
        paragraph, section 9 (and, to the extent necessary to enforce 
        section 9, sections 38 through 51) shall apply to a company 
        described in this paragraph as if the company were an 
        investment company registered under this title.
            ``(C) Any company proposing to rely on the exemption 
        provided by this paragraph shall file with the Commission a 
        notification stating that the company intends to do so, in such 
        form and manner as the Commission may prescribe by rule.
            ``(D) Any company meeting the requirements of this 
        paragraph may rely on the exemption provided by this paragraph 
        upon filing with the Commission the notification required by 
        subparagraph (C), until such time as the Commission determines 
        by order that such reliance is not in the public interest or is 
        not consistent with the protection of investors.
            ``(E) The exemption provided by this paragraph may be 
        subject to such additional terms and conditions as the 
        Commission may by rule, regulation, or order determine are 
        necessary or appropriate in the public interest or for the 
        protection of investors.''.
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