I 

115TH CONGRESS 

1ST SESSION H. R. 4267 

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 

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. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Small Business Credit 

5 Availability Act’’. 


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1 SEC. 2. EXPANDING ACCESS TO CAPITAL FOR BUSINESS DE2 VELOPMENT COMPANIES. 

3 (a) IN GENERAL.—Section 61(a) of the Investment 

4 Company Act of 1940 (15 U.S.C. 80a–60(a)) is amend5 ed— 

6 (1) by redesignating paragraphs (2) through 

7 (4) as paragraphs (3) through (5), respectively; and 

8 (2) by striking paragraph (1) and inserting the 

9 following: 

10 ‘‘(1) Except as provided in paragraph (2), the 

11 asset coverage requirements of subparagraphs (A) 

12 and (B) of section 18(a)(1) (and any related rule 

13 promulgated under this Act) applicable to business 

14 development companies shall be 200 percent. 

15 ‘‘(2) The asset coverage requirements of sub16 paragraphs (A) and (B) of section 18(a)(1) and of 

17 subparagraphs (A) and (B) of section 18(a)(2) (and 

18 any related rule promulgated under this Act) appli19 cable to a business development company shall be 

20 150 percent if— 

21 ‘‘(A) within five business days of the ap22 proval of the adoption of the asset coverage re23 quirements described in clause (ii), the business 

24 development company discloses such approval 

25 and the date of its effectiveness in a Form 8– 

26 K filed with the Commission and in a notice on 


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1 its website and discloses in its periodic filings 

2 made under section 13(a) of the Securities Ex3 change Act of 1934 (15 U.S.C. 78m(a))— 

4 ‘‘(i) the aggregate value of the senior 

5 securities issued by such company and the 

6 asset coverage percentage as of the date of 

7 such company’s most recent financial 

8 statements; and 

9 ‘‘(ii) that such company has adopted 

10 the asset coverage requirements of this 

11 paragraph and the effective date of such 

12 requirements; 

13 ‘‘(B) with respect to a business develop14 ment company that issues equity securities that 

15 are registered on a national securities exchange, 

16 the periodic filings of the company under sec17 tion 13(a) of the Securities Exchange Act of 

18 1934 (15 U.S.C. 78m(a)) include disclosures 

19 reasonably designed to ensure that shareholders 

20 are informed of— 

21 ‘‘(i) the amount of indebtedness and 

22 asset coverage ratio of the company, deter23 mined as of the date of the financial state24 ments of the company dated on or most re25 cently before the date of such filing; and 


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1 ‘‘(ii) the principal risk factors associ2 ated with such indebtedness, to the extent 

3 such risk is incurred by the company; and 

4 ‘‘(C)(i) the application of this paragraph to 

5 the company is approved by the required major6 ity (as defined in section 57(o)) of the directors 

7 of or general partners of such company who are 

8 not interested persons of the business develop9 ment company, which application shall become 

10 effective on the date that is 1 year after the 

11 date of the approval, and, with respect to a 

12 business development company that issues eq13 uity securities that are not registered on a na14 tional securities exchange, the company extends, 

15 to each person who is a shareholder as of the 

16 date of the approval, an offer to repurchase the 

17 equity securities held by such person as of such 

18 approval date, with 25 percent of such securi19 ties to be repurchased in each of the four quar20 ters following such approval date; or 

21 ‘‘(ii) the company obtains, at a special or 

22 annual meeting of shareholders or partners at 

23 which a quorum is present, the approval of 

24 more than 50 percent of the votes cast of the 

25 application of this paragraph to the company, 


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1 which application shall become effective on the 

2 date immediately after the date of the ap3 proval.’’. 

4 (b) CONFORMING AMENDMENTS.— 

5 (1) INVESTMENT COMPANY ACT OF 1940.—The 

6 Investment Company Act of 1940 (15 U.S.C. 80a– 

7 1 et seq.) is amended— 

8 (A) in section 57— 

9 (i) in subsection (j)(1), by striking 

10 ‘‘section 61(a)(3)(B)’’ and inserting ‘‘sec11 tion 61(a)(4)(B)’’; and 

12 (ii) in subsection (n)(2), by striking 

13 ‘‘section 61(a)(3)(B)’’ and inserting ‘‘sec14 tion 61(a)(4)(B)’’; and 

15 (B) in section 63(3), by striking ‘‘section 

16 61(a)(3)’’ and inserting ‘‘section 61(a)(4)’’. 

17 (2) INVESTMENT ADVISERS ACT OF 1940.—Sec18 tion 205(b)(3) of the Investment Advisers Act of 

19 1940 (15 U.S.C. 80b–5(b)(3)) is amended— 

20 (A) by striking ‘‘section 61(a)(3)(B)(iii)’’ 

21 and inserting ‘‘section 61(a)(4)(B)(iii)’’; and 

22 (B) by striking ‘‘section 61(a)(3)(B)’’ and 

23 inserting ‘‘section 61(a)(4)(B)’’. 


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1 SEC. 3. PARITY FOR BUSINESS DEVELOPMENT COMPANIES 

2 REGARDING OFFERING AND PROXY RULES. 

3 (a) REVISION TO RULES.—Not later than 1 year 

4 after the date of enactment of this Act, the Securities and 

5 Exchange Commission shall revise any rules to the extent 

6 necessary to allow a business development company that 

7 has filed an election pursuant to section 54 of the Invest8 ment Company Act of 1940 (15 U.S.C. 80a–53) to use 

9 the securities offering and proxy rules that are available 

10 to other issuers that are required to file reports under sec11 tion 13(a) or section 15(d) of the Securities Exchange Act 

12 of 1934 (15 U.S.C. 78m(a); 78o(d)). Any action that the 

13 Commission takes pursuant to this subsection shall in14 clude the following: 

15 (1) The Commission shall revise rule 405 under 

16 the Securities Act of 1933 (17 C.F.R. 230.405)— 

17 (A) to remove the exclusion of a business 

18 development company from the definition of a 

19 well-known seasoned issuer provided by that 

20 rule; and 

21 (B) to add registration statements filed on 

22 Form N–2 to the definition of automatic shelf 

23 registration statement provided by that rule. 

24 (2) The Commission shall revise rules 168 and 

25 169 under the Securities Act of 1933 (17 C.F.R. 

26 230.168 and 230.169) to remove the exclusion of a 


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1 business development company from an issuer that 

2 can use the exemptions provided by those rules. 

3 (3) The Commission shall revise rules 163 and 

4 163A under the Securities Act of 1933 (17 C.F.R. 

5 230.163 and 230.163A) to remove a business devel6 opment company from the list of issuers that are in7 eligible to use the exemptions provided by those 

8 rules. 

9 (4) The Commission shall revise rule 134 under 

10 the Securities Act of 1933 (17 C.F.R. 230.134) to 

11 remove the exclusion of a business development com12 pany from that rule. 

13 (5) The Commission shall revise rules 138 and 

14 139 under the Securities Act of 1933 (17 C.F.R. 

15 230.138 and 230.139) to specifically include a busi16 ness development company as an issuer to which 

17 those rules apply. 

18 (6) The Commission shall revise rule 164 under 

19 the Securities Act of 1933 (17 C.F.R. 230.164) to 

20 remove a business development company from the 

21 list of issuers that are excluded from that rule. 

22 (7) The Commission shall revise rule 433 under 

23 the Securities Act of 1933 (17 C.F.R. 230.433) to 

24 specifically include a business development company 


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1 that is a well-known seasoned issuer as an issuer to 

2 which that rule applies. 

3 (8) The Commission shall revise rule 415 under 

4 the Securities Act of 1933 (17 C.F.R. 230.415)— 

5 (A) to state that the registration for secu6 rities provided by that rule includes securities 

7 registered by a business development company 

8 on Form N–2; and 

9 (B) to provide an exception for a business 

10 development company from the requirement 

11 that a Form N–2 registrant must furnish the 

12 undertakings required by item 34.4 of Form N– 

13 2. 

14 (9) The Commission shall revise rule 497 under 

15 the Securities Act of 1933 (17 C.F.R. 230.497) to 

16 include a process for a business development com17 pany to file a form of prospectus that is parallel to 

18 the process for filing a form of prospectus under 

19 rule 424(b). 

20 (10) The Commission shall revise rules 172 and 

21 173 under the Securities Act of 1933 (17 C.F.R. 

22 230.172 and 230.173) to remove the exclusion of an 

23 offering of a business development company from 

24 those rules. 


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1 (11) The Commission shall revise rule 418 

2 under the Securities Act of 1933 (17 C.F.R. 

3 230.418) to provide that a business development 

4 company that would otherwise meet the eligibility re5 quirements of General Instruction I.A of Form S–3 

6 shall be exempt from paragraph (a)(3) of that rule. 

7 (12) The Commission shall revise rule 14a–101 

8 under the Securities Exchange Act of 1934 (17 

9 C.F.R. 240.14a–101) to provide that a business de10 velopment company that would otherwise meet the 

11 requirements of General Instruction I.A of Form S– 

12 3 shall be deemed to meet the requirements of Form 

13 S–3 for purposes of Schedule 14A. 

14 (13) The Commission shall revise rule 103 

15 under Regulation FD (17 C.F.R. 243.103) to pro16 vide that paragraph (a) of that rule applies for pur17 poses of Form N–2. 

18 (b) REVISION TO FORM N–2.—Not later than 1 year 

19 after the date of enactment of this Act, the Commission 

20 shall revise Form N–2— 

21 (1) to include an item or instruction that is 

22 similar to item 12 on Form S–3 to provide that a 

23 business development company that would otherwise 

24 meet the requirements of Form S–3 shall incor25 porate by reference its reports and documents filed 


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1 under the Securities Exchange Act of 1934 into its 

2 registration statement filed on Form N–2; and 

3 (2) to include an item or instruction that is 

4 similar to the instruction regarding automatic shelf 

5 offerings by well-known seasoned issuers on Form 

6 S–3 to provide that a business development company 

7 that is a well-known seasoned issuer may file auto8 matic shelf offerings on Form N–2. 

9 (c) TREATMENT IF REVISIONS NOT COMPLETED IN

10 TIMELY MANNER.—If the Commission fails to complete 

11 the revisions required by subsections (a) and (b) by the 

12 time required by such subsections, a business development 

13 company shall be entitled to treat such revisions as having 

14 been completed in accordance with the actions required to 

15 be taken by the Commission by such subsections until such 

16 time as such revisions are completed by the Commission. 

17 (d) RULE OF CONSTRUCTION.—Any reference in this 

18 section to a rule or form means such rule or form or any 

19 successor rule or form. 

Æ 


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