[House Report 114-660]
[From the U.S. Government Publishing Office]


114th Congress    }                                     {       Report
                        HOUSE OF REPRESENTATIVES
 2d Session       }                                     {      114-660

======================================================================


 
              SUPPORTING AMERICA'S INNOVATORS ACT OF 2016

                                _______
                                

  July 5, 2016.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

Mr. Hensarling, from the Committee on Financial Services, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 4854]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Financial Services, to whom was referred 
the bill (H.R. 4854) to amend the Investment Company Act of 
1940 to expand the investor limitation for qualifying venture 
capital funds under an exemption from the definition of an 
investment company, having considered the same, report 
favorably thereon with an amendment and recommend that the bill 
as amended do pass.
    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Supporting America's Innovators Act of 
2016''.

SEC. 2. INVESTOR LIMITATION FOR QUALIFYING VENTURE CAPITAL FUNDS.

  Section 3(c)(1) of the Investment Company Act of 1940 (15 U.S.C. 80a-
3(c)(1)) is amended--
          (1) by inserting after ``one hundred persons'' the following: 
        ``(or, with respect to a qualifying venture capital fund, 250 
        persons)''; and
          (2) by adding at the end the following:
                  ``(C) The term `qualifying venture capital fund' 
                means any venture capital fund (as defined pursuant to 
                section 203(l)(1) of the Investment Advisers Act of 
                1940 (15 U.S.C. 80b-3(l)(1)) with no more than 
                $10,000,000 in invested capital, as such dollar amount 
                is annually adjusted by the Commission to reflect the 
                change in the Consumer Price Index for All Urban 
                Consumers published by the Bureau of Labor Statistics 
                of the Department of Labor.''.

                          Purpose and Summary

    Introduced by Representative McHenry on March 23, 2016, 
H.R. 4854, the ``Supporting America's Innovators Act of 2016,'' 
increases the limit on the number of individuals who can invest 
in certain venture capital funds before those funds must 
register as ``investment companies'' with the Securities and 
Exchange Commission (SEC) under the Investment Company Act of 
1940 (Investment Company Act). Section 3(c)(1) of the 
Investment Company Act sets forth exemptions from the 
definition of ``investment company.'' Currently, the Investment 
Company Act limits the number of investors in the fund to 100 
for the fund to be exempt from SEC registration.
    H.R. 4854 amends this cap to allow 250 investors in a 
``qualified venture capital fund'' to be exempt from SEC 
registration. H.R. 4854 generally defines a ``qualifying 
venture capital fund'' to be any venture capital fund that does 
not purchase more than $10,000,000 in invested capital of any 
one issuer, adjusted for inflation. Thus, for example, H.R. 
4854 would permit angel funds--which run syndicates that allow 
accredited investors to participate in investing in startups--
to obtain funds from a greater number of investors. As a 
result, investors will benefit from new investment 
opportunities that otherwise they would not have access to, 
while providing critical funding to startups to enable them to 
grow and succeed.

                  Background and Need for Legislation

    Access to financial capital--whether via equity or debt--is 
vital for entrepreneurs seeking to start, operate and expand 
innovative businesses. At the same time, gaining access to this 
investment capital is an enduring challenge for many small 
businesses. The financial crisis made access to capital 
increasingly more difficult from historically typical resources 
such as institutional banks and various capital market players. 
While conditions have improved somewhat in recent years, many 
entrepreneurs continue to struggle with accessing the capital 
they need to grow and sustain their businesses.
    Prior to the Jumpstart Our Business Startups (JOBS) Act, a 
privately-held company would have to register with the SEC once 
the company had 500 investors. To provide privately-held 
companies with additional regulatory flexibility, Title V of 
the JOBS Act raised the cap for privately-held companies to 
2,000 investors. However, the JOBS Act did not amend the 
Investment Company Act's 100-investor threshold for investors 
acting as a coordinated group, where it has been since 1940. As 
noted by Kevin Laws of AngelList in his written testimony 
before the Subcommittee on Capital Markets and Government 
Sponsored Enterprises, ``with online fundraising and general 
solicitation becoming more common because of the JOBS Act, 
companies are bumping up against the limit more frequently. The 
[current] limit . . . now acts as a brake on the amount of 
money the company wanted to raise, leaving tens of millions of 
dollars on the table that did not go into startups.''
    H.R. 4854 is an important complement to Title V of the JOBS 
Act. As the JOBS Act permitted up to 2,000 individuals to 
invest in private companies without triggering SEC 
registration, H.R. 4854 allows qualified venture capital funds 
to obtain the backing of up to 250 individuals without having 
to register under the Investment Company Act, which in turn 
promotes capital formation at the earliest stages of a 
business's life-cycle.

                                Hearings

    The Committee on Financial Services' Subcommittee on 
Capital Markets and Government Sponsored Enterprises held a 
hearing examining matters relating to H.R. 4854 on April 14, 
2016.

                        Committee Consideration

    The Committee on Financial Services met in open session on 
June 15 and June 16, 2016. An amendment in the nature of a 
substitute offered by Mr. McHenry and Ms. Waters was agreed to 
by voice vote. The Committee ordered H.R. 4854 to be reported 
favorably to the House, as amended, by a recorded vote of 57 
yeas to 2 nays (recorded vote no. FC-110), a quorum being 
present.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. The 
sole record vote in committee was a motion by Chairman 
Hensarling to report the bill favorably to the House as 
amended. That motion was agreed to by a recorded vote of 57 
yeas to 2 nays (Record vote no. FC-110), a quorum being 
present.


                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the findings and recommendations of 
the committee based on oversight activities under clause 
2(b)(1) of rule X of the Rules of the House of Representatives, 
are incorporated in the descriptive portions of this report.

                    Performance Goals and Objectives

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the Committee states that H.R. 4854 
will provide for greater investment opportunities for investors 
and promote capital formation by amending the Investment 
Company Act of 1940 to raise the exemption from registration 
from 100 to 250 persons for a qualifying venture capital fund.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee adopts as its 
own the estimate of new budget authority, entitlement 
authority, or tax expenditures or revenues contained in the 
cost estimate prepared by the Director of the Congressional 
Budget Office pursuant to section 402 of the Congressional 
Budget Act of 1974.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                 Congressional Budget Office Estimates

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, July 1, 2016.
Hon. Jeb Hensarling,
Chairman; Committee on Financial Services,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 4854, the 
Supporting America's Innovators Act of 2016.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Stephen 
Rabent.
            Sincerely,
                                                        Keith Hall.
    Enclosure.

H.R. 4854--Supporting America's Innovators Act of 2016

    Under current law, the Securities and Exchange Commission 
(SEC) exempts certain issuers of securities from the 
requirement to register as an investment company. H.R. 4854 
would expand that exemption to include a broader set of 
issuers.
    On the basis of information from the SEC about the level of 
effort needed to implement the changes in the bill, CBO 
estimates that implementing H.R. 4854 would have no significant 
effect on the agency's costs or operations, because only a 
relatively small number of companies could qualify for the 
broader exemption. Moreover, the SEC is authorized to collect 
fees sufficient to offset its annual appropriation; therefore, 
CBO estimates that the net effect on discretionary spending 
would be negligible, assuming appropriations actions consistent 
with that authority. Enacting H.R. 4854 would not affect direct 
spending or revenues; therefore, pay-as-you-go procedures do 
not apply.
    CBO estimates that enacting H.R. 4854 would not increase 
net direct spending or on-budget deficits in any of the four 
consecutive 10-year periods beginning in 2027.
    H.R. 4854 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would not affect the budgets of state, local, or tribal 
governments.
    The CBO staff contact for this estimate is Stephen Rabent. 
The estimate was approved by H. Samuel Papenfuss, Deputy 
Assistant Director for Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates reform 
Act.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of the section 
102(b)(3) of the Congressional Accountability Act.

                         Earmark Identification

    H.R. 4854 does not contain any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9 of rule XXI.

                    Duplication of Federal Programs

    Pursuant to section 3(g) of H. Res. 5, 114th Cong. (2015), 
the Committee states that no provision of H.R. 4854 establishes 
or reauthorizes a program of the Federal Government known to be 
duplicative of another Federal program, a program that was 
included in any report from the Government Accountability 
Office to Congress pursuant to section 21 of Public Law 111-
139, or a program related to a program identified in the most 
recent Catalog of Federal Domestic Assistance.

                   Disclosure of Directed Rulemaking

    Pursuant to section 3(i) of H. Res. 5, 114th Cong. (2015), 
the Committee states that H.R. 4854 contains no directed 
rulemaking.

             Section-by-Section Analysis of the Legislation


Section 1: Short title

    This section cites H.R. 4854 as the ``Supporting America's 
Innovators Act of 2016.''

Section 2: Investor limitation for qualifying venture capital funds

    This section amends Section 3(c)(1) of the Investment 
Company Act of 1940 by increasing the exemption for a company 
to register as an investment fund from 100 to 250 investors. 
The section also defines the term ``qualifying venture capital 
fund'' to mean any venture capital fund that does not purchase 
more than $10,000,000 in invested capital of any one issuer, 
adjusted for inflation.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (new matter is 
printed in italic and existing law in which no change is 
proposed is shown in roman):

                     INVESTMENT COMPANY ACT OF 1940


TITLE I--INVESTMENT COMPANIES

           *       *       *       *       *       *       *



                    definition of investment company

  Sec. 3. (a)(1) When used in this title, ``investment 
company'' means any issuer which--
          (A) is or holds itself out as being engaged 
        primarily, or proposes to engage primarily, in the 
        business of investing, reinvesting, or trading in 
        securities;
          (B) is engaged or proposes to engage in the business 
        of issuing face-amount certificates of the installment 
        type, or has been engaged in such business and has any 
        such certificate outstanding; or
          (C) is engaged or proposes to engage in the business 
        of investing, reinvesting, owning, holding, or trading 
        in securities, and owns or proposes to acquire 
        investment securities having a value exceeding 40 per 
        centum of the value of such issuer's total assets 
        (exclusive of Government securities and cash items) on 
        an unconsolidated basis.
  (2) As used in this section, ``investment securities'' 
includes all securities except (A) Government securities, (B) 
securities issued by employees' securities companies, and (C) 
securities issued by majority-owned subsidiaries of the owner 
which (i) are not investment companies, and (ii) are not 
relying on the exception from the definition of investment 
company in paragraph (1) or (7) of subsection (c).
  (b) Notwithstanding paragraph (1)(C) of subsection (a), none 
of the following persons is an investment company within the 
meaning of this title:
          (1) Any issuer primarily engaged, directly or through 
        a wholly-owned subsidiary or subsidiaries, in a 
        business or businesses other than that of investing, 
        reinvesting, owning, holding, or trading in securities.
          (2) Any issuer which the Commission, upon application 
        by such issuer, finds and by order declares to be 
        primarily engaged in a business or businesses other 
        than that of investing, reinvesting, owning, holding, 
        or trading in securities either directly or (A) through 
        majority-owned subsidiaries or (B) through controlled 
        companies conducting similar types of businesses. The 
        filing of an application under this paragraph in good 
        faith by an issuer other than a registered investment 
        company shall exempt the applicant for a period of 
        sixty days from all provisions of this title applicable 
        to investment companies as such. For cause shown, the 
        Commission by order may extend such period of exemption 
        for an additional period or periods. Whenever the 
        Commission, upon its own motion or upon application, 
        finds that the circumstances which gave rise to the 
        issuance of an order granting an application under this 
        paragraph no longer exist, the Commission shall by 
        order revoke such order.
          (3) Any issuer all the outstanding securities of 
        which (other than short-term paper and directors' 
        qualifying shares) are directly or indirectly owned by 
        a company excepted from the definition of investment 
        company by paragraph (1) or (2) of this subsection.
  (c) Notwithstanding subsection (a), none of the following 
persons is an investment company within the meaning of this 
title:
          (1) Any issuer whose outstanding securities (other 
        than short-term paper) are beneficially owned by not 
        more than one hundred persons (or, with respect to a 
        qualifying venture capital fund, 250 persons) and which 
        is not making and does not presently propose to make a 
        public offering of its securities. Such issuer shall be 
        deemed to be an investment company for purposes of the 
        limitations set forth in subparagraphs (A)(i) and 
        (B)(i) of section 12(d)(1) governing the purchase or 
        other acquisition by such issuer of any security issued 
        by any registered investment company and the sale of 
        any security issued by any registered open-end 
        investment company to any such issuer. For purposes of 
        this paragraph:
                  (A) Beneficial ownership by a company shall 
                be deemed to be beneficial ownership by one 
                person, except that, if the company owns 10 per 
                centum or more of the outstanding voting 
                securities of the issuer, and is or, but for 
                the exception provided for in this paragraph or 
                paragraph (7), would be an investment company, 
                the beneficial ownership shall be deemed to be 
                that of the holders of such company's 
                outstanding securities (other than short-term 
                paper).
                  (B) Beneficial ownership by any person who 
                acquires securities or interests in securities 
                of an issuer described in the first sentence of 
                this paragraph shall be deemed to be beneficial 
                ownership by the person from whom such transfer 
                was made, pursuant to such rules and 
                regulations as the Commission shall prescribe 
                as necessary or appropriate in the public 
                interest and consistent with the protection of 
                investors and the purposes fairly intended by 
                the policy and provisions of this title, where 
                the transfer was caused by legal separation, 
                divorce, death, or other involuntary event.
                  (C) The term ``qualifying venture capital 
                fund'' means any venture capital fund (as 
                defined pursuant to section 203(l)(1) of the 
                Investment Advisers Act of 1940 (15 U.S.C. 80b-
                3(l)(1)) with no more than $10,000,000 in 
                invested capital, as such dollar amount is 
                annually adjusted by the Commission to reflect 
                the change in the Consumer Price Index for All 
                Urban Consumers published by the Bureau of 
                Labor Statistics of the Department of Labor.
          (2)(A) Any person primarily engaged in the business 
        of underwriting and distributing securities issued by 
        other persons, selling securities to customers, acting 
        as broker, and acting as market intermediary, or any 
        one or more of such activities, whose gross income 
        normally is derived principally from such business and 
        related activities.
          (B) For purposes of this paragraph--
                  (i) the term ``market intermediary'' means 
                any person that regularly holds itself out as 
                being willing contemporaneously to engage in, 
                and that is regularly engaged in, the business 
                of entering into transactions on both sides of 
                the market for a financial contract or one or 
                more such financial contracts; and
                  (ii) the term ``financial contract'' means 
                any arrangement that--
                          (I) takes the form of an individually 
                        negotiated contract, agreement, or 
                        option to buy, sell, lend, swap, or 
                        repurchase, or other similar 
                        individually negotiated transaction 
                        commonly entered into by participants 
                        in the financial markets;
                          (II) is in respect of securities, 
                        commodities, currencies, interest or 
                        other rates, other measures of value, 
                        or any other financial or economic 
                        interest similar in purpose or function 
                        to any of the foregoing; and
                          (III) is entered into in response to 
                        a request from a counter party for a 
                        quotation, or is otherwise entered into 
                        and structured to accommodate the 
                        objectives of the counter party to such 
                        arrangement.
          (3) Any bank or insurance company; any savings and 
        loan association, building and loan association, 
        cooperative bank, homestead association, or similar 
        institution, or any receiver, conservator, liquidator, 
        liquidating agent, or similar official or person 
        thereof or therefor; or any common trust fund or 
        similar fund maintained by a bank exclusively for the 
        collective investment and reinvestment of moneys 
        contributed thereto by the bank in its capacity as a 
        trustee, executor, administrator, or guardian, if--
                  (A) such fund is employed by the bank solely 
                as an aid to the administration of trusts, 
                estates, or other accounts created and 
                maintained for a fiduciary purpose;
                  (B) except in connection with the ordinary 
                advertising of the bank's fiduciary services, 
                interests in such fund are not--
                          (i) advertised; or
                          (ii) offered for sale to the general 
                        public; and
                  (C) fees and expenses charged by such fund 
                are not in contravention of fiduciary 
                principles established under applicable Federal 
                or State law.
          (4) Any person substantially all of whose business is 
        confined to making small loans, industrial banking, or 
        similar businesses.
          (5) Any person who is not engaged in the business of 
        issuing redeemable securities, face-amount certificates 
        of the installment type or periodic payment plan 
        certificates, and who is primarily engaged in one or 
        more of the following businesses: (A) Purchasing or 
        otherwise acquiring notes, drafts, acceptances, open 
        accounts receivable, and other obligations representing 
        part or all of the sales price of merchandise, 
        insurance, and services; (B) making loans to 
        manufacturers, wholesalers, and retailers of, and to 
        prospective purchasers of, specified merchandise, 
        insurance, and services; and (C) purchasing or 
        otherwise acquiring mortgages and other liens on and 
        interests in real estate.
          (6) Any company primarily engaged, directly or 
        through majority-owned subsidiaries, in one or more of 
        the businesses described in paragraphs (3), (4), and 
        (5), or in one or more of such businesses (from which 
        not less than 25 centum of such company's gross income 
        during its last fiscal year was derived) together with 
        an additional business or businesses other than 
        investing, reinvesting, owning, holding, or trading in 
        securities.
          (7)(A) Any issuer, the outstanding securities of 
        which are owned exclusively by persons who, at the time 
        of acquisition of such securities, are qualified 
        purchasers, and which is not making and does not at 
        that time propose to make a public offering of such 
        securities. Securities that are owned by persons who 
        received the securities from a qualified purchaser as a 
        gift or bequest, or in a case in which the transfer was 
        caused by legal separation, divorce, death, or other 
        involuntary event, shall be deemed to be owned by a 
        qualified purchaser, subject to such rules, 
        regulations, and orders as the Commission may prescribe 
        as necessary or appropriate in the public interest or 
        for the protection of investors.
          (B) Notwithstanding subparagraph (A), an issuer is 
        within the exception provided by this paragraph if--
                  (i) in addition to qualified purchasers, 
                outstanding securities of that issuer are 
                beneficially owned by not more than 100 persons 
                who are not qualified purchasers, if--
                          (I) such persons acquired any portion 
                        of the securities of such issuer on or 
                        before September 1, 1996; and
                          (II) at the time at which such 
                        persons initially acquired the 
                        securities of such issuer, the issuer 
                        was excepted by paragraph (1); and
                  (ii) prior to availing itself of the 
                exception provided by this paragraph--
                          (I) such issuer has disclosed to each 
                        beneficial owner, as determined under 
                        paragraph (1), that future investors 
                        will be limited to qualified 
                        purchasers, and that ownership in such 
                        issuer is no longer limited to not more 
                        than 100 persons; and
                          (II) concurrently with or after such 
                        disclosure, such issuer has provided 
                        each beneficial owner, as determined 
                        under paragraph (1), with a reasonable 
                        opportunity to redeem any part or all 
                        of their interests in the issuer, 
                        notwithstanding any agreement to the 
                        contrary between the issuer and such 
                        persons, for that person's 
                        proportionate share of the issuer's net 
                        assets.
          (C) Each person that elects to redeem under 
        subparagraph (B)(ii)(II) shall receive an amount in 
        cash equal to that person's proportionate share of the 
        issuer's net assets, unless the issuer elects to 
        provide such person with the option of receiving, and 
        such person agrees to receive, all or a portion of such 
        person's share in assets of the issuer. If the issuer 
        elects to provide such persons with such an 
        opportunity, disclosure concerning such opportunity 
        shall be made in the disclosure required by 
        subparagraph (B)(ii)(I).
          (D) An issuer that is excepted under this paragraph 
        shall nonetheless be deemed to be an investment company 
        for purposes of the limitations set forth in 
        subparagraphs (A)(i) and (B)(i) of section 12(d)(1) 
        relating to the purchase or other acquisition by such 
        issuer of any security issued by any registered 
        investment company and the sale of any security issued 
        by any registered open-end investment company to any 
        such issuer.
          (E) For purposes of determining compliance with this 
        paragraph and paragraph (1), an issuer that is 
        otherwise excepted under this paragraph and an issuer 
        that is otherwise excepted under paragraph (1) shall 
        not be treated by the Commission as being a single 
        issuer for purposes of determining whether the 
        outstanding securities of the issuer excepted under 
        paragraph (1) are beneficially owned by not more than 
        100 persons or whether the outstanding securities of 
        the issuer excepted under this paragraph are owned by 
        persons that are not qualified purchasers. Nothing in 
        this subparagraph shall be construed to establish that 
        a person is a bona fide qualified purchaser for 
        purposes of this paragraph or a bona fide beneficial 
        owner for purposes of paragraph (1).
          (8)
          (9) Any person substantially all of whose business 
        consists of owning or holding oil, gas, or other 
        mineral royalties or leases, or fractional interests 
        therein, or certificates of interest or participation 
        in or investment contracts relative to such royalties, 
        leases, or fractional interests.
          (10)(A) Any company organized and operated 
        exclusively for religious, educational, benevolent, 
        fraternal, charitable, or reformatory purposes--
                  (i) no part of the net earnings of which 
                inures to the benefit of any private 
                shareholder or individual; or
                  (ii) which is or maintains a fund described 
                in subparagraph (B).
          (B) For the purposes of subparagraph (A)(ii), a fund 
        is described in this subparagraph if such fund is a 
        pooled income fund, collective trust fund, collective 
        investment fund, or similar fund maintained by a 
        charitable organization exclusively for the collective 
        investment and reinvestment of one or more of the 
        following:
                  (i) assets of the general endowment fund or 
                other funds of one or more charitable 
                organizations;
                  (ii) assets of a pooled income fund;
                  (iii) assets contributed to a charitable 
                organization in exchange for the issuance of 
                charitable gift annuities;
                  (iv) assets of a charitable remainder trust 
                or of any other trust, the remainder interests 
                of which are irrevocably dedicated to any 
                charitable organization;
                  (v) assets of a charitable lead trust;
                  (vi) assets of a trust, the remainder 
                interests of which are revocably dedicated to 
                or for the benefit of 1 or more charitable 
                organizations, if the ability to revoke the 
                dedication is limited to circumstances 
                involving--
                          (I) an adverse change in the 
                        financial circumstances of a settlor or 
                        an income beneficiary of the trust;
                          (II) a change in the identity of the 
                        charitable organization or 
                        organizations having the remainder 
                        interest, provided that the new 
                        beneficiary is also a charitable 
                        organization; or
                          (III) both the changes described in 
                        subclauses (I) and (II);
                  (vii) assets of a trust not described in 
                clauses (i) through (v), the remainder 
                interests of which are revocably dedicated to a 
                charitable organization, subject to 
                subparagraph (C); or
                  (viii) such assets as the Commission may 
                prescribe by rule, regulation, or order in 
                accordance with section 6(c).
          (C) A fund that contains assets described in clause 
        (vii) of subparagraph (B) shall be excluded from the 
        definition of an investment company for a period of 3 
        years after the date of enactment of this subparagraph, 
        but only if--
                  (i) such assets were contributed before the 
                date which is 60 days after the date of 
                enactment of this subparagraph; and
                  (ii) such assets are commingled in the fund 
                with assets described in one or more of clauses 
                (i) through (vi) and (viii) of subparagraph 
                (B).
          (D) For purposes of this paragraph--
                  (i) a trust or fund is ``maintained'' by a 
                charitable organization if the organization 
                serves as a trustee or administrator of the 
                trust or fund or has the power to remove the 
                trustees or administrators of the trust or fund 
                and to designate new trustees or 
                administrators;
                  (ii) the term ``pooled income fund'' has the 
                same meaning as in section 642(c)(5) of the 
                Internal Revenue Code of 1986;
                  (iii) the term ``charitable organization'' 
                means an organization described in paragraphs 
                (1) through (5) of section 170(c) or section 
                501(c)(3) of the Internal Revenue Code of 1986;
                  (iv) the term ``charitable lead trust'' means 
                a trust described in section 170(f)(2)(B), 
                2055(e)(2)(B), or 2522(c)(2)(B) of the Internal 
                Revenue Code of 1986;
                  (v) the term ``charitable remainder trust'' 
                means a charitable remainder annuity trust or a 
                charitable remainder unitrust, as those terms 
                are defined in section 664(d) of the Internal 
                Revenue Code of 1986; and
                  (vi) the term ``charitable gift annuity'' 
                means an annuity issued by a charitable 
                organization that is described in section 
                501(m)(5) of the Internal Revenue Code of 1986.
          (11) Any employee's stock bonus, pension, or profit-
        sharing trust which meets the requirements for 
        qualification under section 401 of the Internal Revenue 
        Code of 1986; or any governmental plan described in 
        section 3(a)(2)(C) of the Securities Act of 1933; or 
        any collective trust fund maintained by a bank 
        consisting solely of assets of one or more of such 
        trusts, government plans, or church plans, companies or 
        accounts that are excluded from the definition of an 
        investment company under paragraph (14) of this 
        subsection; or any separate account the assets of which 
        are derived solely from (A) contributions under pension 
        or profit-sharing plans which meet the requirements of 
        section 401 of the Internal Revenue Code of 1986 or the 
        requirements for deduction of the employer's 
        contribution under section 404(a)(2) of such Code, (B) 
        contributions under governmental plans in connection 
        with which interests, participations, or securities are 
        exempted from the registration provisions of section 5 
        of the Securities Act of 1933 by section 3(a)(2)(C) of 
        such Act, and (C) advances made by an insurance company 
        in connection with the operation of such separate 
        account.
          (12) Any voting trust the assets of which consist 
        exclusively of securities of a single issuer which is 
        not an investment company.
          (13) Any security holders' protective committee or 
        similar issuer having outstanding and issuing no 
        securities other than certificates of deposit and 
        short-term paper.
          (14) Any church plan described in section 414(e) of 
        the Internal Revenue Code of 1986, if, under any such 
        plan, no part of the assets may be used for, or 
        diverted to, purposes other than the exclusive benefit 
        of plan participants or beneficiaries, or any company 
        or account that is--
                  (A) established by a person that is eligible 
                to establish and maintain such a plan under 
                section 414(e) of the Internal Revenue Code of 
                1986; and
                  (B) substantially all of the activities of 
                which consist of--
                          (i) managing or holding assets 
                        contributed to such church plans or 
                        other assets which are permitted to be 
                        commingled with the assets of church 
                        plans under the Internal Revenue Code 
                        of 1986; or
                          (ii) administering or providing 
                        benefits pursuant to church plans.

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