[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[S. 2324 Introduced in Senate (IS)]

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115th CONGRESS
  2d Session
                                S. 2324

     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 SENATE OF THE UNITED STATES

                            January 18, 2018

Mr. Heller (for himself and Mr. Manchin) introduced the following bill; 
which was read twice and referred to the Committee on Banking, Housing, 
                           and Urban Affairs

_______________________________________________________________________

                                 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) not later than 5 business days after the date 
                on which those asset coverage requirements are approved 
                under subparagraph (D) of this paragraph, the business 
                development company discloses that the requirements 
                were approved, and the effective date of the approval, 
                in--
                            ``(i) any filing submitted to the 
                        Commission under section 13(a) or 15(d) of the 
                        Securities Exchange Act of 1934 (15 U.S.C. 
                        78m(a); 78o(d)); and
                            ``(ii) a notice on the website of the 
                        business development company;
                    ``(B) the business development company discloses, 
                in each periodic filing required under section 13(a) of 
                the Securities Exchange Act of 1934 (15 U.S.C. 
                78m(a))--
                            ``(i) the aggregate outstanding principal 
                        amount or liquidation preference, as 
                        applicable, of the senior securities issued by 
                        the business development company and the asset 
                        coverage percentage as of the date of the 
                        business development company's most recent 
                        financial statements included in that filing;
                            ``(ii) that the business development 
                        company, under subparagraph (D), has approved 
                        the asset coverage requirements under this 
                        paragraph; and
                            ``(iii) the effective date of the approval 
                        described in clause (ii);
                    ``(C) with respect to a business development 
                company that is an issuer of common equity securities, 
                each periodic filing of the company required under 
                section 13(a) of the Securities Exchange Act of 1934 
                (15 U.S.C. 78m(a)) includes disclosures that are 
                reasonably designed to ensure that shareholders are 
                informed of--
                            ``(i) the amount of senior securities (and 
                        the associated asset coverage ratios) of the 
                        company, determined as of the date of the most 
                        recent financial statements of the company 
                        included in that filing; and
                            ``(ii) the principal risk factors 
                        associated with the senior securities described 
                        in clause (i), to the extent that risk is 
                        incurred by the company; and
                    ``(D) the company--
                            ``(i)(I) through a vote of the required 
                        majority (as defined in section 57(o)), 
                        approves the application of this paragraph to 
                        the company, to become effective on the date 
                        that is 1 year after the date of the approval; 
                        or
                            ``(II) 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 for the application 
                        of this paragraph to the company, to become 
                        effective on the first day after the date of 
                        the approval; and
                            ``(ii) if the company is not an issuer of 
                        common equity securities that are listed on a 
                        national securities exchange, extends, to each 
                        person that is a shareholder as of the date of 
                        an approval described in subclause (I) or (II) 
                        of clause (i), as applicable, the opportunity 
                        (which may include a tender offer) to sell the 
                        securities held by that shareholder as of that 
                        applicable approval date, with 25 percent of 
                        those securities to be repurchased in each of 
                        the 4 calendar quarters following the calendar 
                        quarter in which that applicable approval date 
                        takes place.''.
    (b) Conforming Amendments.--
            (1) 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)''.
            (2) 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 (15 U.S.C. 80a-56)--
                            (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) (15 U.S.C. 80a-62(3)), by 
                striking ``section 61(a)(3)'' and inserting ``section 
                61(a)(4)''.

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

    (a) Definitions.--In this section--
            (1) the term ``business development company'' has the 
        meaning given the term in section 2(a) of the Investment 
        Company Act of 1940 (15 U.S.C. 80a-2(a));
            (2) the term ``Commission'' means the Securities and 
        Exchange Commission;
            (3) the term ``Form N-2'' means the form described in 
        section 239.14 of title 17, Code of Federal Regulations;
            (4) the term ``Form S-3'' means the form described in 
        section 239.13 of title 17, Code of Federal Regulations; and
            (5) the term ``Schedule 14A'' means the information 
        required under section 240.14a-101 of title 17, Code of Federal 
        Regulations.
    (b) Revision to Rules.--
            (1) In general.--Not later than 1 year after the date of 
        enactment of this Act, the Commission shall make the revisions 
        described in paragraph (2) to allow a business development 
        company that has filed an election under 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)).
            (2) Required revisions.--The revisions described in this 
        paragraph are revisions to--
                    (A) section 230.405 of title 17, Code of Federal 
                Regulations--
                            (i) to remove the exclusion of a business 
                        development company from the definition of the 
                        term ``well-known seasoned issuer'' under that 
                        section; and
                            (ii) to add a registration statement filed 
                        on Form N-2 to the definition of the term 
                        ``automatic shelf registration statement'' 
                        under that section;
                    (B) sections 230.168 and 230.169 of title 17, Code 
                of Federal Regulations, to remove the exclusion of a 
                business development company from an issuer that is 
                eligible for the exemptions under those sections;
                    (C) section 230.163 of title 17, Code of Federal 
                Regulations, to remove a business development company 
                from the list of issuers that are ineligible for the 
                exemption under that section;
                    (D) section 230.163A of title 17, Code of Federal 
                Regulations, to remove the communications made by a 
                business development company from the list of 
                communications that are ineligible for the exemption 
                under that section;
                    (E) section 230.134 of title 17, Code of Federal 
                Regulations, to remove the exclusion of a communication 
                relating to a business development company from the 
                application of that section;
                    (F) sections 230.138 and 230.139 of title 17, Code 
                of Federal Regulations, to specifically include a 
                business development company as an issuer to which 
                those sections apply;
                    (G) section 230.156 of title 17, Code of Federal 
                Regulations, to provide that nothing in that section 
                may be construed to prevent a business development 
                company from qualifying for an exemption under section 
                230.168 or 230.169 of title 17, Code of Federal 
                Regulations, as amended by the Commission in accordance 
                with the requirements of this section;
                    (H) section 230.164 of title 17, Code of Federal 
                Regulations, to remove a business development company 
                from the list of issuers that are excluded under that 
                section;
                    (I) section 230.433 of title 17, Code of Federal 
                Regulations, to specifically include a business 
                development company that is a well-known seasoned 
                issuer as an issuer to which that section applies;
                    (J) section 230.415 of title 17, Code of Federal 
                Regulations to state that the registration for 
                securities under section 230.415(a)(1)(x) of title 17, 
                Code of Federal Regulations, includes securities 
                registered on Form N-2 by a business development 
                company that would otherwise meet the eligibility 
                requirements of Form S-3;
                    (K) section 230.497 of title 17, Code of Federal 
                Regulations, to include a process for a business 
                development company to file a form of prospectus in the 
                same manner as the process for filing a form of 
                prospectus under section 230.424(b) of title 17, Code 
                of Federal Regulations;
                    (L) sections 230.172 and 230.173 of title 17, Code 
                of Federal Regulations, to remove the exclusion of an 
                offering of a business development company from the 
                application of those sections;
                    (M) section 230.418 of title 17, Code of Federal 
                Regulations, to provide that a business development 
                company that would otherwise meet the eligibility 
                requirements of Form S-3 shall be exempt from paragraph 
                (a)(3) of that section;
                    (N) Schedule 14A to revise item 13(b)(1) of that 
                Schedule to include a business development company that 
                would otherwise meet the requirements of note E of that 
                Schedule as an issuer to which that item applies;
                    (O) section 243.103 of title 17, Code of Federal 
                Regulations, to provide that paragraph (a) of that 
                section applies for the purposes of Form N-2; and
                    (P) item 34 on Form N-2 to require a business 
                development company to provide undertakings that are no 
                more restrictive than the undertakings that are 
                required of a registrant under section 229.512 of title 
                17, Code of Federal Regulations.
    (c) 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 the reports and documents filed 
        by the business development company under the Securities 
        Exchange Act of 1934 (15 U.S.C. 78a et seq.) into the 
        registration statement of the business development company 
        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.
    (d) Treatment if Revisions Not Completed in Timely Manner.--If the 
Commission fails to complete the revisions required under subsections 
(b) and (c) by the dates described in those subsections, a business 
development company, during the period beginning on the date that is 1 
day after 1 year after the date of enactment of this Act and ending on 
the date that the Commission completes those revisions, may deem those 
revisions to have been completed in accordance with the actions 
required to be taken by the Commission under those subsections.
    (e) Rules of Construction.--
            (1) Treatment of successor regulations and forms.--Any 
        reference in this section to a regulation or form shall be 
        construed as a reference to--
                    (A) that regulation or form, as in effect on the 
                day before the date of enactment of this Act; or
                    (B) any successor to that regulation or form.
            (2) Distribution of sales material.--Nothing in this 
        section, or in the amendments made pursuant to the requirements 
        of this section, may be construed to prevent a business 
        development company from distributing sales material under 
        section 230.482 of title 17, Code of Federal Regulations.
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