I 

113TH CONGRESS 

1ST SESSION H. R. 31 

To amend the Investment Company Act of 1940 to change the asset coverage 

ratio and treatment of preferred stock for business development companies, to allow business development companies to purchase, otherwise 

acquire, or hold certain securities, and to direct the Securities and 

Exchange Commission to revise rules under the Securities Act of 1933 

relating to business development companies. 

IN THE HOUSE OF REPRESENTATIVES 

JANUARY 3, 2013 

Ms. VELA ́ZQUEZ 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 

the asset coverage ratio and treatment of preferred stock 

for business development companies, to allow business 

development companies to purchase, otherwise acquire, 

or hold certain securities, and to direct the Securities 

and Exchange Commission to revise rules under the Securities Act of 1933 relating to business development 

companies. 

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


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1 SECTION 1. SHORT TITLE. 

2 This Act may be cited as the ‘‘Next Steps for Credit 

3 Availability Act’’. 

4 SEC. 2. AMENDMENTS TO PERMIT BUSINESS DEVELOP5 MENT COMPANIES TO OWN INVESTMENT AD6 VISERS. 

7 Section 60 of the Investment Company Act of 1940 

8 (15 U.S.C. 80a–59) is amended by striking ‘‘except that 

9 the Commission shall not’’ and inserting the following: 

10 ‘‘except that— 

11 ‘‘(1) section 12 shall not apply to the pur12 chasing, otherwise acquiring, or holding by a busi13 ness development company of any security issued by, 

14 or any other interest in the business of, any person 

15 who is an investment adviser registered under title 

16 II of this Act or who is an investment adviser to an 

17 investment company; and 

18 ‘‘(2) the Commission shall not’’. 

19 SEC. 3. AMENDMENTS TO EXPAND ACCESS TO CAPITAL FOR 

20 BUSINESS DEVELOPMENT COMPANIES. 

21 Section 61(a) of the Investment Company Act of 

22 1940 (15 U.S.C. 80a–60(a)) is amended— 

23 (1) in paragraph (1), by striking ‘‘200’’ and in24 serting ‘‘150’’; 

25 (2) in paragraph (2), by inserting ‘‘or which is 

26 a stock’’ after ‘‘indebtedness’’; and 


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1 (3) by inserting after paragraph (4) the fol2 lowing new paragraph: 

3 ‘‘(5) Section 18(a)(2) shall not apply to a busi4 ness development company.’’. 

5 SEC. 4. PARITY FOR BUSINESS DEVELOPMENT COMPANIES 

6 REGARDING OFFERING RULES. 

7 (a) REVISION TO RULES.—Not later than 180 days 

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

9 Exchange Commission shall revise any rules (or any suc10 cessor rules) to the extent necessary to allow a business 

11 development company that has filed an election pursuant 

12 to section 54 of the Investment Company Act of 1940 (15 

13 U.S.C. 80a–60(a)) to use the securities offering rules that 

14 are available to other issuers that are required to file re15 ports under section 13 or section 15(d) of the Securities 

16 Exchange Act of 1934 (Public Law 73–404; 48 Stat. 

17 881). Any action that the Commission takes pursuant to 

18 this subsection shall include the following: 

19 (1) The Commission shall revise rule 405 under 

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

21 (A) to remove the exclusion of a business 

22 development company from the definition of a 

23 well-known seasoned issuer provided by that 

24 rule; and 


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1 (B) to add registration statements filed on 

2 Form N–2 to the definition of ‘‘automatic shelf 

3 registration statement’’ provided by that rule. 

4 (2) The Commission shall revise rules 168 and 

5 169 under the Securities Act of 1933 (17 C.F.R. 

6 230.168 and 230.169) to remove the exclusion of a 

7 business development company from an issuer that 

8 can use the exemptions provided by those rules. 

9 (3) The Commission shall revise rules 163 and 

10 163A under the Securities Act of 1933 (17 C.F.R. 

11 230.163 and 230.163A) to remove a business devel12 opment company from the list of issuers that are in13 eligible to use the exemptions provided by those 

14 rules. 

15 (4) The Commission shall revise rule 134 under 

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

17 remove the exclusion of a business development com18 pany from that rule. 

19 (5) The Commission shall revise rules 138 and 

20 139 under the Securities Act of 1933 (17 C.F.R. 

21 230.138 and 230.139) to specifically include a busi22 ness development company as an issuer to which 

23 those rules apply. 

24 (6) The Commission shall revise rule 164 under 

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


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1 remove a business development company from the 

2 list of issuers that are excluded from that rule. 

3 (7) The Commission shall revise rule 433 under 

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

5 specifically include a business development company 

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

7 which that rule applies. 

8 (8) The Commission shall revise rule 415 under 

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

10 (A) to state that the registration for secu11 rities provided by that rule includes securities 

12 registered by a business development company 

13 on Form N–2; and 

14 (B) to provide an exception for a business 

15 development company from the requirement 

16 that a Form N–2 registrant must furnish the 

17 undertakings required by item 34.4 of Form N– 

18 2. 

19 (9) The Commission shall revise rule 497 under 

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

21 include a process for a business development com22 pany to file a form of prospectus that is parallel to 

23 the process for filing a form of prospectus under 

24 rule 424(b). 


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1 (10) The Commission shall revise rules 172 and 

2 173 under the Securities Act of 1933 (17 C.F.R. 

3 230.172 and 230.173) to remove the exclusion of an 

4 offering of a business development company from 

5 those rules. 

6 (b) REVISION TO FORM N–2.—The Commission shall 

7 revise Form N–2— 

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

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

10 business development company that meets the re11 quirements of Form S–3 shall incorporate by ref12 erence its reports and documents filed under the Se13 curities Exchange Act of 1934 into its registration 

14 statement filed on Form N–2; and 

15 (2) to include an instruction (that is similar to 

16 the instruction regarding automatic shelf offerings 

17 by well-known seasoned issuers on Form S–3) to 

18 provide that a business development company that is 

19 a well-known seasoned issuer may file automatic 

20 shelf offerings on Form N–2 (or any successor 

21 form). 

Æ 


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