II 

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. 

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) not later than 5 business days after 

22 the date on which those asset coverage require23 ments are approved under subparagraph (D) of 

24 this paragraph, the business development com25 pany discloses that the requirements were apVerDate Sep 11 2014 04:19 Jan 19, 2018 Jkt 079200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S2324.IS S2324

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1 proved, and the effective date of the approval, 

2 in— 

3 ‘‘(i) any filing submitted to the Com4 mission under section 13(a) or 15(d) of the 

5 Securities Exchange Act of 1934 (15 

6 U.S.C. 78m(a); 78o(d)); and 

7 ‘‘(ii) a notice on the website of the 

8 business development company; 

9 ‘‘(B) the business development company 

10 discloses, in each periodic filing required under 

11 section 13(a) of the Securities Exchange Act of 

12 1934 (15 U.S.C. 78m(a))— 

13 ‘‘(i) the aggregate outstanding prin14 cipal amount or liquidation preference, as 

15 applicable, of the senior securities issued 

16 by the business development company and 

17 the asset coverage percentage as of the 

18 date of the business development com19 pany’s most recent financial statements in20 cluded in that filing; 

21 ‘‘(ii) that the business development 

22 company, under subparagraph (D), has ap23 proved the asset coverage requirements 

24 under this paragraph; and 


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1 ‘‘(iii) the effective date of the approval 

2 described in clause (ii); 

3 ‘‘(C) with respect to a business develop4 ment company that is an issuer of common eq5 uity securities, each periodic filing of the com6 pany required under section 13(a) of the Secu7 rities Exchange Act of 1934 (15 U.S.C. 

8 78m(a)) includes disclosures that are reason9 ably designed to ensure that shareholders are 

10 informed of— 

11 ‘‘(i) the amount of senior securities 

12 (and the associated asset coverage ratios) 

13 of the company, determined as of the date 

14 of the most recent financial statements of 

15 the company included in that filing; and 

16 ‘‘(ii) the principal risk factors associ17 ated with the senior securities described in 

18 clause (i), to the extent that risk is in19 curred by the company; and 

20 ‘‘(D) the company— 

21 ‘‘(i)(I) through a vote of the required 

22 majority (as defined in section 57(o)), ap23 proves the application of this paragraph to 

24 the company, to become effective on the 


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1 date that is 1 year after the date of the 

2 approval; or 

3 ‘‘(II) obtains, at a special or annual 

4 meeting of shareholders or partners at 

5 which a quorum is present, the approval of 

6 more than 50 percent of the votes cast for 

7 the application of this paragraph to the 

8 company, to become effective on the first 

9 day after the date of the approval; and 

10 ‘‘(ii) if the company is not an issuer 

11 of common equity securities that are listed 

12 on a national securities exchange, extends, 

13 to each person that is a shareholder as of 

14 the date of an approval described in sub15 clause (I) or (II) of clause (i), as applica16 ble, the opportunity (which may include a 

17 tender offer) to sell the securities held by 

18 that shareholder as of that applicable ap19 proval date, with 25 percent of those secu20 rities to be repurchased in each of the 4 

21 calendar quarters following the calendar 

22 quarter in which that applicable approval 

23 date takes place.’’. 

24 (b) CONFORMING AMENDMENTS.— 


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1 (1) INVESTMENT ADVISERS ACT OF 1940.—Sec2 tion 205(b)(3) of the Investment Advisers Act of 

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

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

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

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

7 inserting ‘‘section 61(a)(4)(B)’’. 

8 (2) INVESTMENT COMPANY ACT OF 1940.—The 

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

10 1 et seq.) is amended— 

11 (A) in section 57 (15 U.S.C. 80a–56)— 

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

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

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

16 ‘‘section 61(a)(3)(B)’’ and inserting ‘‘sec17 tion 61(a)(4)(B)’’; and 

18 (B) in section 63(3) (15 U.S.C. 80a– 

19 62(3)), by striking ‘‘section 61(a)(3)’’ and in20 serting ‘‘section 61(a)(4)’’. 

21 SEC. 3. PARITY FOR BUSINESS DEVELOPMENT COMPANIES 

22 REGARDING OFFERING AND PROXY RULES. 

23 (a) DEFINITIONS.—In this section— 

24 (1) the term ‘‘business development company’’ 

25 has the meaning given the term in section 2(a) of 


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1 the Investment Company Act of 1940 (15 U.S.C. 

2 80a–2(a)); 

3 (2) the term ‘‘Commission’’ means the Securi4 ties and Exchange Commission; 

5 (3) the term ‘‘Form N–2’’ means the form de6 scribed in section 239.14 of title 17, Code of Federal 

7 Regulations; 

8 (4) the term ‘‘Form S–3’’ means the form de9 scribed in section 239.13 of title 17, Code of Federal 

10 Regulations; and 

11 (5) the term ‘‘Schedule 14A’’ means the infor12 mation required under section 240.14a–101 of title 

13 17, Code of Federal Regulations. 

14 (b) REVISION TO RULES.— 

15 (1) IN GENERAL.—Not later than 1 year after 

16 the date of enactment of this Act, the Commission 

17 shall make the revisions described in paragraph (2) 

18 to allow a business development company that has 

19 filed an election under section 54 of the Investment 

20 Company Act of 1940 (15 U.S.C. 80a–53) to use 

21 the securities offering and proxy rules that are avail22 able to other issuers that are required to file reports 

23 under section 13(a) or section 15(d) of the Securi24 ties Exchange Act of 1934 (15 U.S.C. 78m(a); 

25 78o(d)). 


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1 (2) REQUIRED REVISIONS.—The revisions de2 scribed in this paragraph are revisions to— 

3 (A) section 230.405 of title 17, Code of 

4 Federal Regulations— 

5 (i) to remove the exclusion of a busi6 ness development company from the defini7 tion of the term ‘‘well-known seasoned 

8 issuer’’ under that section; and 

9 (ii) to add a registration statement 

10 filed on Form N–2 to the definition of the 

11 term ‘‘automatic shelf registration state12 ment’’ under that section; 

13 (B) sections 230.168 and 230.169 of title 

14 17, Code of Federal Regulations, to remove the 

15 exclusion of a business development company 

16 from an issuer that is eligible for the exemp17 tions under those sections; 

18 (C) section 230.163 of title 17, Code of 

19 Federal Regulations, to remove a business de20 velopment company from the list of issuers that 

21 are ineligible for the exemption under that sec22 tion; 

23 (D) section 230.163A of title 17, Code of 

24 Federal Regulations, to remove the communica25 tions made by a business development company 


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1 from the list of communications that are ineli2 gible for the exemption under that section; 

3 (E) section 230.134 of title 17, Code of 

4 Federal Regulations, to remove the exclusion of 

5 a communication relating to a business develop6 ment company from the application of that sec7 tion; 

8 (F) sections 230.138 and 230.139 of title 

9 17, Code of Federal Regulations, to specifically 

10 include a business development company as an 

11 issuer to which those sections apply; 

12 (G) section 230.156 of title 17, Code of 

13 Federal Regulations, to provide that nothing in 

14 that section may be construed to prevent a 

15 business development company from qualifying 

16 for an exemption under section 230.168 or 

17 230.169 of title 17, Code of Federal Regula18 tions, as amended by the Commission in accord19 ance with the requirements of this section; 

20 (H) section 230.164 of title 17, Code of 

21 Federal Regulations, to remove a business de22 velopment company from the list of issuers that 

23 are excluded under that section; 

24 (I) section 230.433 of title 17, Code of 

25 Federal Regulations, to specifically include a 


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1 business development company that is a well2 known seasoned issuer as an issuer to which 

3 that section applies; 

4 (J) section 230.415 of title 17, Code of 

5 Federal Regulations to state that the registra6 tion for securities under section 

7 230.415(a)(1)(x) of title 17, Code of Federal 

8 Regulations, includes securities registered on 

9 Form N–2 by a business development company 

10 that would otherwise meet the eligibility re11 quirements of Form S–3; 

12 (K) section 230.497 of title 17, Code of 

13 Federal Regulations, to include a process for a 

14 business development company to file a form of 

15 prospectus in the same manner as the process 

16 for filing a form of prospectus under section 

17 230.424(b) of title 17, Code of Federal Regula18 tions; 

19 (L) sections 230.172 and 230.173 of title 

20 17, Code of Federal Regulations, to remove the 

21 exclusion of an offering of a business develop22 ment company from the application of those 

23 sections; 

24 (M) section 230.418 of title 17, Code of 

25 Federal Regulations, to provide that a business 


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1 development company that would otherwise 

2 meet the eligibility requirements of Form S–3 

3 shall be exempt from paragraph (a)(3) of that 

4 section; 

5 (N) Schedule 14A to revise item 13(b)(1) 

6 of that Schedule to include a business develop7 ment company that would otherwise meet the 

8 requirements of note E of that Schedule as an 

9 issuer to which that item applies; 

10 (O) section 243.103 of title 17, Code of 

11 Federal Regulations, to provide that paragraph 

12 (a) of that section applies for the purposes of 

13 Form N–2; and 

14 (P) item 34 on Form N–2 to require a 

15 business development company to provide un16 dertakings that are no more restrictive than the 

17 undertakings that are required of a registrant 

18 under section 229.512 of title 17, Code of Fed19 eral Regulations. 

20 (c) REVISION TO FORM N–2.—Not later than 1 year 

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

22 shall revise Form N–2— 

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

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

25 business development company that would otherwise 


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1 meet the requirements of Form S–3 shall incor2 porate by reference the reports and documents filed 

3 by the business development company under the Se4 curities Exchange Act of 1934 (15 U.S.C. 78a et 

5 seq.) into the registration statement of the business 

6 development company filed on Form N–2; and 

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

8 similar to the instruction regarding automatic shelf 

9 offerings by well-known seasoned issuers on Form 

10 S–3 to provide that a business development company 

11 that is a well-known seasoned issuer may file auto12 matic shelf offerings on Form N–2. 

13 (d) TREATMENT IF REVISIONS NOT COMPLETED IN

14 TIMELY MANNER.—If the Commission fails to complete 

15 the revisions required under subsections (b) and (c) by the 

16 dates described in those subsections, a business develop17 ment company, during the period beginning on the date 

18 that is 1 day after 1 year after the date of enactment of 

19 this Act and ending on the date that the Commission com20 pletes those revisions, may deem those revisions to have 

21 been completed in accordance with the actions required to 

22 be taken by the Commission under those subsections. 

23 (e) RULES OF CONSTRUCTION.— 

24 (1) TREATMENT OF SUCCESSOR REGULATIONS

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1 ulation or form shall be construed as a reference 

2 to— 

3 (A) that regulation or form, as in effect on 

4 the day before the date of enactment of this 

5 Act; or 

6 (B) any successor to that regulation or 

7 form. 

8 (2) DISTRIBUTION OF SALES MATERIAL.— 

9 Nothing in this section, or in the amendments made 

10 pursuant to the requirements of this section, may be 

11 construed to prevent a business development com12 pany from distributing sales material under section 

13 230.482 of title 17, Code of Federal Regulations. 

Æ 


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