[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4267 Reported in House (RH)]

<DOC>





                                                 Union Calendar No. 495
115th CONGRESS
  2d Session
                                H. R. 4267

                          [Report No. 115-646]

     To amend the Investment Company Act of 1940 to change certain 
requirements relating to the capital structure of business development 
 companies, to direct the Securities and Exchange Commission to revise 
certain rules relating to business development companies, and for other 
                               purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            November 7, 2017

  Mr. Stivers (for himself, Mr. Sherman, Mr. McHenry, and Ms. Moore) 
 introduced the following bill; which was referred to the Committee on 
                           Financial Services

                             April 24, 2018

 Additional sponsors: Mr. Royce of California, Mr. Himes, Mrs. Beatty, 
 Mrs. Wagner, Mr. Perlmutter, Mr. David Scott of Georgia, Ms. Tenney, 
  Mr. Williams, Mr. Gottheimer, Mr. Messer, Mr. Meeks, Mr. Emmer, Mr. 
 Budd, Mr. Clay, Mr. Hultgren, Mr. Foster, Mr. Graves of Georgia, Mr. 
                       Fitzpatrick, and Mr. Heck

                             April 24, 2018

Committed to the Committee of the Whole House on the State of the Union 
                       and ordered to be printed

_______________________________________________________________________

                                 A BILL


 
     To amend the Investment Company Act of 1940 to change certain 
requirements relating to the capital structure of business development 
 companies, to direct the Securities and Exchange Commission to revise 
certain rules relating to business development companies, and for other 
                               purposes.


 


    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 Credit Availability 
Act''.

SEC. 2. EXPANDING ACCESS TO CAPITAL FOR BUSINESS DEVELOPMENT COMPANIES.

    (a) In General.--Section 61(a) of the Investment Company Act of 
1940 (15 U.S.C. 80a-60(a)) is amended--
            (1) by redesignating paragraphs (2) through (4) as 
        paragraphs (3) through (5), respectively; and
            (2) by striking paragraph (1) and inserting the following:
            ``(1) Except as provided in paragraph (2), the asset 
        coverage requirements of subparagraphs (A) and (B) of section 
        18(a)(1) (and any related rule promulgated under this Act) 
        applicable to business development companies shall be 200 
        percent.
            ``(2) The asset coverage requirements of subparagraphs (A) 
        and (B) of section 18(a)(1) and of subparagraphs (A) and (B) of 
        section 18(a)(2) (and any related rule promulgated under this 
        Act) applicable to a business development company shall be 150 
        percent if--
                    ``(A) within five business days of the approval of 
                the adoption of the asset coverage requirements 
                described in clause (ii), the business development 
                company discloses such approval and the date of its 
                effectiveness in a Form 8-K filed with the Commission 
                and in a notice on its website and discloses in its 
                periodic filings made under section 13(a) of the 
                Securities Exchange Act of 1934 (15 U.S.C. 78m(a))--
                            ``(i) the aggregate value of the senior 
                        securities issued by such company and the asset 
                        coverage percentage as of the date of such 
                        company's most recent financial statements; and
                            ``(ii) that such company has adopted the 
                        asset coverage requirements of this paragraph 
                        and the effective date of such requirements;
                    ``(B) with respect to a business development 
                company that issues equity securities that are 
                registered on a national securities exchange, the 
                periodic filings of the company under section 13(a) of 
                the Securities Exchange Act of 1934 (15 U.S.C. 78m(a)) 
                include disclosures reasonably designed to ensure that 
                shareholders are informed of--
                            ``(i) the amount of indebtedness and asset 
                        coverage ratio of the company, determined as of 
                        the date of the financial statements of the 
                        company dated on or most recently before the 
                        date of such filing; and
                            ``(ii) the principal risk factors 
                        associated with such indebtedness, to the 
                        extent such risk is incurred by the company; 
                        and
                    ``(C)(i) the application of this paragraph to the 
                company is approved by the required majority (as 
                defined in section 57(o)) of the directors of or 
                general partners of such company who are not interested 
                persons of the business development company, which 
                application shall become effective on the date that is 
                1 year after the date of the approval, and, with 
                respect to a business development company that issues 
                equity securities that are not registered on a national 
                securities exchange, the company extends, to each 
                person who is a shareholder as of the date of the 
                approval, an offer to repurchase the equity securities 
                held by such person as of such approval date, with 25 
                percent of such securities to be repurchased in each of 
                the four quarters following such approval date; or
                    ``(ii) the company obtains, at a special or annual 
                meeting of shareholders or partners at which a quorum 
                is present, the approval of more than 50 percent of the 
                votes cast of the application of this paragraph to the 
                company, which application shall become effective on 
                the date immediately after the date of the approval.''.
    (b) Conforming Amendments.--
            (1) Investment company act of 1940.--The Investment Company 
        Act of 1940 (15 U.S.C. 80a-1 et seq.) is amended--
                    (A) in section 57--
                            (i) in subsection (j)(1), by striking 
                        ``section 61(a)(3)(B)'' and inserting ``section 
                        61(a)(4)(B)''; and
                            (ii) in subsection (n)(2), by striking 
                        ``section 61(a)(3)(B)'' and inserting ``section 
                        61(a)(4)(B)''; and
                    (B) in section 63(3), by striking ``section 
                61(a)(3)'' and inserting ``section 61(a)(4)''.
            (2) Investment advisers act of 1940.--Section 205(b)(3) of 
        the Investment Advisers Act of 1940 (15 U.S.C. 80b-5(b)(3)) is 
        amended--
                    (A) by striking ``section 61(a)(3)(B)(iii)'' and 
                inserting ``section 61(a)(4)(B)(iii)''; and
                    (B) by striking ``section 61(a)(3)(B)'' and 
                inserting ``section 61(a)(4)(B)''.

SEC. 3. PARITY FOR BUSINESS DEVELOPMENT COMPANIES REGARDING OFFERING 
              AND PROXY RULES.

    (a) Revision to Rules.--Not later than 1 year after the date of 
enactment of this Act, the Securities and Exchange Commission shall 
revise any rules to the extent necessary to allow a business 
development company that has filed an election pursuant to section 54 
of the Investment Company Act of 1940 (15 U.S.C. 80a-53) to use the 
securities offering and proxy rules that are available to other issuers 
that are required to file reports under section 13(a) or section 15(d) 
of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a); 78o(d)). Any 
action that the Commission takes pursuant to this subsection shall 
include the following:
            (1) The Commission shall revise rule 405 under the 
        Securities Act of 1933 (17 C.F.R. 230.405)--
                    (A) to remove the exclusion of a business 
                development company from the definition of a well-known 
                seasoned issuer provided by that rule; and
                    (B) to add registration statements filed on Form N-
                2 to the definition of automatic shelf registration 
                statement provided by that rule.
            (2) The Commission shall revise rules 168 and 169 under the 
        Securities Act of 1933 (17 C.F.R. 230.168 and 230.169) to 
        remove the exclusion of a business development company from an 
        issuer that can use the exemptions provided by those rules.
            (3) The Commission shall revise rules 163 and 163A under 
        the Securities Act of 1933 (17 C.F.R. 230.163 and 230.163A) to 
        remove a business development company from the list of issuers 
        that are ineligible to use the exemptions provided by those 
        rules.
            (4) The Commission shall revise rule 134 under the 
        Securities Act of 1933 (17 C.F.R. 230.134) to remove the 
        exclusion of a business development company from that rule.
            (5) The Commission shall revise rules 138 and 139 under the 
        Securities Act of 1933 (17 C.F.R. 230.138 and 230.139) to 
        specifically include a business development company as an 
        issuer to which those rules apply.
            (6) The Commission shall revise rule 164 under the 
        Securities Act of 1933 (17 C.F.R. 230.164) to remove a business 
        development company from the list of issuers that are excluded 
        from that rule.
            (7) The Commission shall revise rule 433 under the 
        Securities Act of 1933 (17 C.F.R. 230.433) to specifically 
        include a business development company that is a well-known 
        seasoned issuer as an issuer to which that rule applies.
            (8) The Commission shall revise rule 415 under the 
        Securities Act of 1933 (17 C.F.R. 230.415)--
                    (A) to state that the registration for securities 
                provided by that rule includes securities registered by 
                a business development company on Form N-2; and
                    (B) to provide an exception for a business 
                development company from the requirement that a Form N-
                2 registrant must furnish the undertakings required by 
                item 34.4 of Form N-2.
            (9) The Commission shall revise rule 497 under the 
        Securities Act of 1933 (17 C.F.R. 230.497) to include a process 
        for a business development company to file a form of prospectus 
        that is parallel to the process for filing a form of prospectus 
        under rule 424(b).
            (10) The Commission shall revise rules 172 and 173 under 
        the Securities Act of 1933 (17 C.F.R. 230.172 and 230.173) to 
        remove the exclusion of an offering of a business development 
        company from those rules.
            (11) The Commission shall revise rule 418 under the 
        Securities Act of 1933 (17 C.F.R. 230.418) to provide that a 
        business development company that would otherwise meet the 
        eligibility requirements of General Instruction I.A of Form S-3 
        shall be exempt from paragraph (a)(3) of that rule.
            (12) The Commission shall revise rule 14a-101 under the 
        Securities Exchange Act of 1934 (17 C.F.R. 240.14a-101) to 
        provide that a business development company that would 
        otherwise meet the requirements of General Instruction I.A of 
        Form S-3 shall be deemed to meet the requirements of Form S-3 
        for purposes of Schedule 14A.
            (13) The Commission shall revise rule 103 under Regulation 
        FD (17 C.F.R. 243.103) to provide that paragraph (a) of that 
        rule applies for purposes of Form N-2.
    (b) Revision to Form N-2.--Not later than 1 year after the date of 
enactment of this Act, the Commission shall revise Form N-2--
            (1) to include an item or instruction that is similar to 
        item 12 on Form S-3 to provide that a business development 
        company that would otherwise meet the requirements of Form S-3 
        shall incorporate by reference its reports and documents filed 
        under the Securities Exchange Act of 1934 into its registration 
        statement filed on Form N-2; and
            (2) to include an item or instruction that is similar to 
        the instruction regarding automatic shelf offerings by well-
        known seasoned issuers on Form S-3 to provide that a business 
        development company that is a well-known seasoned issuer may 
        file automatic shelf offerings on Form N-2.
    (c) Treatment if Revisions Not Completed in Timely Manner.--If the 
Commission fails to complete the revisions required by subsections (a) 
and (b) by the time required by such subsections, a business 
development company shall be entitled to treat such revisions as having 
been completed in accordance with the actions required to be taken by 
the Commission by such subsections until such time as such revisions 
are completed by the Commission.
    (d) Rule of Construction.--Any reference in this section to a rule 
or form means such rule or form or any successor rule or form.
                                                 Union Calendar No. 495

115th CONGRESS

  2d Session

                               H. R. 4267

                          [Report No. 115-646]

_______________________________________________________________________

                                 A BILL

     To amend the Investment Company Act of 1940 to change certain 
requirements relating to the capital structure of business development 
 companies, to direct the Securities and Exchange Commission to revise 
certain rules relating to business development companies, and for other 
                               purposes.

_______________________________________________________________________

                             April 24, 2018

Committed to the Committee of the Whole House on the State of the Union 
                       and ordered to be printed