I 

116TH CONGRESS 

2D SESSION H. R. 8786 

To amend the Investment Company Act of 1940 to prohibit limitations 

on closed-end companies investing in private funds, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

NOVEMBER 19, 2020 

Mr. GONZALEZ of Ohio introduced the following bill; which was referred to 

the Committee on Financial Services 

A BILL 

To amend the Investment Company Act of 1940 to prohibit 

limitations on closed-end companies investing in private 

funds, 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 ‘‘Increasing Investor 

5 Opportunities Act’’. 

6 SEC. 2. CLOSED-END COMPANY AUTHORITY TO INVEST IN 

7 PRIVATE FUNDS. 

8 (a) IN GENERAL.—Section 5 of the Investment Com9 pany Act of 1940 (15 U.S.C. 80a–5) is amended by add10 ing at the end the following: 


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1 ‘‘(d) CLOSED-END COMPANY AUTHORITY TO INVEST

2 IN PRIVATE FUNDS.— 

3 ‘‘(1) IN GENERAL.—The Commission may not 

4 limit a closed-end company from investing any or all 

5 of the company’s assets in private funds solely or 

6 primarily because of the private funds’ status as pri7 vate funds. 

8 ‘‘(2) APPLICATION.—Notwithstanding section 

9 6(f), this subsection shall also apply to a closed-end 

10 company that elects to be treated as a business de11 velopment company.’’. 

12 (b) DEFINITION OF PRIVATE FUND.— 

13 (1) INVESTMENT COMPANY ACT OF 1940.—Sec14 tion 2(a) of the Investment Company Act of 1940 

15 (15 U.S.C. 80a–2(a)) is amended by adding at the 

16 end the following: 

17 ‘‘(55) The term ‘private fund’ means an issuer 

18 that would be an investment company but for para19 graph (1) or (7) of section 3(c).’’. 

20 (2) INVESTMENT ADVISERS ACT OF 1940.—The 

21 first paragraph (29) (relating to ‘‘private fund’’) of 

22 section 202(a) of the Investment Advisers Act of 

23 1940 (15 U.S.C. 80b–2(a)) is amended to read as 

24 follows: 


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1 ‘‘(29) The term ‘private fund’ has the meaning 

2 given that term under section 2(a) of the Investment 

3 Company Act of 1940.’’. 

4 (c) TREATMENT BY NATIONAL SECURITIES EX5 CHANGES.—Section 6(b) of the Securities Exchange Act 

6 of 1934 (15 U.S.C. 78f(b)) is amended by adding at the 

7 end the following: 

8 ‘‘(11)(A) The rules of the exchange do not pro9 hibit the listing or trading of securities of a closed10 end company solely or primarily by reason of the 

11 amount of the company’s investment of assets in pri12 vate funds. 

13 ‘‘(B) In this paragraph— 

14 ‘‘(i) the term ‘closed-end company’ has the 

15 meaning given that term under section 5(a) of 

16 the Investment Company Act of 1940, and in17 cludes a closed-end company that elects to be 

18 treated as a business development company 

19 under section 6(f) of such Act; and 

20 ‘‘(ii) the term ‘private fund’ has the mean21 ing given that term under section 2(a) of the 

22 Investment Company Act of 1940.’’. 

23 (d) INVESTMENT LIMITATION.—Section 3(c) of the 

24 Investment Company Act of 1940 (15 U.S.C. 80a–3(c)) 

25 is amended— 


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1 (1) in paragraph (1), by striking ‘‘subpara2 graphs (A)(i) and (B)(i)’’ and inserting ‘‘subpara3 graphs (A)(i), (B)(i), and (C)’’; and 

4 (2) in paragraph (7)(D), by striking ‘‘subpara5 graphs (A)(i) and (B)(i)’’ and inserting ‘‘subpara6 graphs (A)(i), (B)(i), and (C)’’. 

7 (e) EFFECTIVE DATE.—The amendments made by 

8 this section shall take effect after the end of the 2-year 

9 period beginning on the date of enactment of this Act, or 

10 such earlier date as the Securities and Exchange Commis11 sion may determine is necessary or appropriate in the pub12 lic interest or for the protection of investors, upon notifica13 tion of the Congress and the public. 

Æ 


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