IB 
Union Calendar No. 388 
114TH CONGRESS 
2D SESSION 
H. R. 3868 
[Report No. 114–508] 
To amend the Investment Company Act of 1940 to remove certain restrictions 
on the ability of business development companies to own securities of 
investment advisers and certain financial companies, 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 2, 2015 
Mr. MULVANEY introduced the following bill; which was referred to the 
Committee on Financial Services 
APRIL 19, 2016 
Additional sponsors: Mr. STIVERS, Mr. SHERMAN, Mr. SCHWEIKERT, Mr. 
PITTENGER, Mr. KILDEE, and Mr. DOLD 
APRIL 19, 2016 
Reported with an amendment, committed to the Committee of the Whole 
House on the State of the Union, and ordered to be printed 
[Strike out all after the enacting clause and insert the part printed in italic] 
[For text of introduced bill, see copy of bill as introduced on November 2, 2015] 
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A BILL 
To amend the Investment Company Act of 1940 to remove 
certain restrictions on the ability of business development 
companies to own securities of investment advisers and 
certain financial companies, to change certain require-
ments relating to the capital structure of business devel-
opment companies, to direct the Securities and Exchange 
Commission to revise certain rules relating to business 
development companies, and for other purposes. 
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Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Small Business Credit 
Availability Act’’. 
SEC. 2. BUSINESS DEVELOPMENT COMPANY OWNERSHIP 
OF SECURITIES OF INVESTMENT ADVISERS 
AND CERTAIN FINANCIAL COMPANIES. 
(a) IN GENERAL.— 
(1) IN GENERAL.—Not later than 1 year after 
the date of enactment of this Act, the Securities and 
Exchange Commission shall promulgate regulations to 
codify the order in Investment Company Act Release 
No. 30024, dated March 30, 2012. If the Commission 
fails to complete the regulations as required by this 
subsection, a business development company shall be 
entitled to treat such regulations as having been com-
pleted in accordance with the actions required to be 
taken by the Commission until such time as such reg-
ulations are completed by the Commission. 
(2) RULE OF CONSTRUCTION.—Nothing in this 
subsection shall prevent the Commission from issuing 
rules to address potential conflicts of interest between 
business development companies and investment ad-
visers. 
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(b) PERMISSIBLE ASSETS OF AN ELIGIBLE PORTFOLIO 
COMPANY.—Section 55 of the Investment Company Act of 
1940 (15 U.S.C. 80a–54) is amended by adding at the end 
the following: 
‘‘(c) SECURITIES DEEMED TO BE PERMISSIBLE AS-
SETS.—Notwithstanding subsection (a), securities that 
would be described in paragraphs (1) through (6) of such 
subsection except that the issuer is a company described in 
paragraph (2), (3), (4), (5), (6), or (9) of section 3(c) may 
be deemed to be assets described in paragraphs (1) through 
(6) of subsection (a) to the extent necessary for the sum of 
the assets to equal 70 percent of the value of a business de-
velopment company’s total assets (other than assets de-
scribed in paragraph (7) of subsection (a)), provided that 
the aggregate value of such securities counting toward such 
70 percent shall not exceed 20 percent of the value of the 
business development company’s total assets.’’. 
SEC. 3. EXPANDING ACCESS TO CAPITAL FOR BUSINESS DE-
VELOPMENT COMPANIES. 
(a) IN GENERAL.—Section 61(a) of the Investment 
Company Act of 1940 (15 U.S.C. 80a–60(a)) is amended— 
(1) by redesignating paragraphs (2) through (4) 
as paragraphs (3) through (5), respectively; 
(2) by striking paragraph (1) and inserting the 
following: 
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‘‘(1) Except as provided in paragraph (2), the 
asset coverage requirements of subparagraphs (A) and 
(B) of section 18(a)(1) (and any related rule promul-
gated under this Act) applicable to business develop-
ment companies shall be 200 percent. 
‘‘(2) The asset coverage requirements of subpara-
graphs (A) and (B) of section 18(a)(1) and of sub-
paragraphs (A) and (B) of section 18(a)(2) (and any 
related rule promulgated under this Act) applicable to 
a business development company shall be 150 percent 
if— 
‘‘(A) within five business days of the ap-
proval of the adoption of the asset coverage re-
quirements described in clause (ii), the business 
development company discloses such approval 
and the date of its effectiveness in a Form 8–K 
filed with the Commission and in a notice on its 
website and discloses in its periodic filings made 
under section 13 of the Securities Exchange Act 
of 1934 (15 U.S.C. 78m)— 
‘‘(i) the aggregate value of the senior 
securities issued by such company and the 
asset coverage percentage as of the date of 
such company’s most recent financial state-
ments; and 
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‘‘(ii) that such company has adopted 
the asset coverage requirements of this sub-
paragraph and the effective date of such re-
quirements; 
‘‘(B) with respect to a business development 
company that issues equity securities that are 
registered on a national securities exchange, the 
periodic filings of the company under section 
13(a) of the Securities Exchange Act of 1934 (15 
U.S.C. 78m) include disclosures reasonably de-
signed to ensure that shareholders are informed 
of— 
‘‘(i) the amount of indebtedness and 
asset coverage ratio of the company, deter-
mined as of the date of the financial state-
ments of the company dated on or most re-
cently before the date of such filing; and 
‘‘(ii) the principal risk factors associ-
ated with such indebtedness, to the extent 
such risk is incurred by the company; and 
‘‘(C)(i) the application of this paragraph to 
the company is approved by the required major-
ity (as defined in section 57(o)) of the directors 
of or general partners of such company who are 
not interested persons of the business develop-
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ment company, which application shall become 
effective on the date that is 1 year after the date 
of the approval, and, with respect to a business 
development company that issues equity securi-
ties that are not registered on a national securi-
ties exchange, the company extends, to each per-
son who is a shareholder as of the date of the ap-
proval, an offer to repurchase the equity securi-
ties held by such person as of such approval date, 
with 25 percent of such securities to be repur-
chased in each of the four quarters following such 
approval date; or 
‘‘(ii) the company obtains, at a special or 
annual meeting of shareholders or partners at 
which a quorum is present, the approval of more 
than 50 percent of the votes cast of the applica-
tion of this paragraph to the company, which 
application shall become effective on the date im-
mediately after the date of the approval.’’; 
(3) in paragraph (3) (as redesignated), by in-
serting ‘‘or which is a stock, provided that all such 
stock is issued in accordance with paragraph (6)’’ 
after ‘‘indebtedness’’; 
(4) in subparagraph (A) of paragraph (4) (as re-
designated)— 
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(A) in the matter preceding clause (i), by 
striking ‘‘voting’’; and 
(B) by amending clause (iii) to read as fol-
lows: 
‘‘(iii) the exercise or conversion price 
at the date of issuance of such warrants, op-
tions, or rights is not less than— 
‘‘(I) the market value of the secu-
rities issuable upon the exercise of such 
warrants, options, or rights at the date 
of issuance of such warrants, options, 
or rights; or 
‘‘(II) if no such market value ex-
ists, the net asset value of the securities 
issuable upon the exercise of such war-
rants, options, or rights at the date of 
issuance of such warrants, options, or 
rights; and’’; and 
(5) by adding at the end the following: 
‘‘(6)(A) QUALIFIED INSTITUTIONAL BUYER.—Ex-
cept as provided in subparagraph (B), the following 
shall not apply to a senior security which is a stock 
and which is issued to and held by a qualified insti-
tutional buyer (as defined in section 3(a)(64) of the 
Securities Exchange Act of 1934): 
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‘‘(i) Subparagraphs (C) and (D) of section 
18(a)(2). 
‘‘(ii) Subparagraph (E) of section 18(a)(2), 
to the extent such subparagraph requires any 
priority over any other class of stock as to dis-
tribution of assets upon liquidation. 
‘‘(iii) With respect to a senior security 
which is a stock, subsections (c) and (i) of sec-
tion 18. 
‘‘(B) INDIVIDUAL
INVESTORS
WHO
ARE
NOT 
QUALIFIED
INSTITUTIONAL
BUYERS.—Subparagraph 
(A) shall not apply with respect to a senior security 
which is a stock and which is issued to a person who 
is not known by the business development company to 
be a qualified institutional buyer (as defined in sec-
tion 3(a) of the Securities Exchange Act of 1934). 
‘‘(7) RULE OF CONSTRUCTION.—Notwithstanding 
any other provision of law, any additional class of 
stock issued pursuant to this section must be issued 
in accordance with all investor protections contained 
in all applicable federal securities laws administered 
by the Commission.’’. 
(b) CONFORMING
AMENDMENTS.—The Investment 
Company Act of 1940 (15 U.S.C. 80a–1 et seq.) is amend-
ed— 
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(1) in section 57— 
(A) in subsection (j)(1), by striking ‘‘section 
61(a)(3)(B)’’ 
and 
inserting 
‘‘section 
61(a)(4)(B)’’; and 
(B) in subsection (n)(2), by striking ‘‘sec-
tion 
61(a)(3)(B)’’ 
and 
inserting 
‘‘section 
61(a)(4)(B)’’; and 
(2) in section 63(3), by striking ‘‘section 
61(a)(3)’’ and inserting ‘‘section 61(a)(4)’’. 
SEC. 4. PARITY FOR BUSINESS DEVELOPMENT COMPANIES 
REGARDING OFFERING AND PROXY RULES. 
(a) REVISION TO RULES.—Not later than 1 year after 
the date of enactment of this Act, the Securities and Ex-
change Commission shall revise any rules to the extent nec-
essary to allow a business development company that has 
filed an election pursuant to section 54 of the Investment 
Company Act of 1940 (15 U.S.C. 80a–53) to use the securi-
ties offering and proxy rules that are available to other 
issuers that are required to file reports under section 13 
or section 15(d) of the Securities Exchange Act of 1934 (15 
U.S.C. 78m; 78o(d)). Any action that the Commission takes 
pursuant to this subsection shall include the following: 
(1) The Commission shall revise rule 405 under 
the Securities Act of 1933 (17 C.F.R. 230.405)— 
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(A) to remove the exclusion of a business de-
velopment company from the definition of a 
well-known seasoned issuer provided by that rule; 
and 
(B) to add registration statements filed on 
Form N–2 to the definition of automatic shelf 
registration statement provided by that rule. 
(2) The Commission shall revise rules 168 and 
169 under the Securities Act of 1933 (17 C.F.R. 
230.168 and 230.169) to remove the exclusion of a 
business development company from an issuer that 
can use the exemptions provided by those rules. 
(3) The Commission shall revise rules 163 and 
163A under the Securities Act of 1933 (17 C.F.R. 
230.163 and 230.163A) to remove a business develop-
ment company from the list of issuers that are ineli-
gible to use the exemptions provided by those rules. 
(4) The Commission shall revise rule 134 under 
the Securities Act of 1933 (17 C.F.R. 230.134) to re-
move the exclusion of a business development com-
pany from that rule. 
(5) The Commission shall revise rules 138 and 
139 under the Securities Act of 1933 (17 C.F.R. 
230.138 and 230.139) to specifically include a busi-
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ness development company as an issuer to which those 
rules apply. 
(6) The Commission shall revise rule 164 under 
the Securities Act of 1933 (17 C.F.R. 230.164) to re-
move a business development company from the list 
of issuers that are excluded from that rule. 
(7) The Commission shall revise rule 433 under 
the Securities Act of 1933 (17 C.F.R. 230.433) to spe-
cifically include a business development company that 
is a well-known seasoned issuer as an issuer to which 
that rule applies. 
(8) The Commission shall revise rule 415 under 
the Securities Act of 1933 (17 C.F.R. 230.415)— 
(A) to state that the registration for securi-
ties provided by that rule includes securities reg-
istered by a business development company on 
Form N–2; and 
(B) to provide an exception for a business 
development company from the requirement that 
a Form N–2 registrant must furnish the under-
takings required by item 34.4 of Form N–2. 
(9) The Commission shall revise rule 497 under 
the Securities Act of 1933 (17 C.F.R. 230.497) to in-
clude a process for a business development company 
to file a form of prospectus that is parallel to the 
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process for filing a form of prospectus under rule 
424(b). 
(10) The Commission shall revise rules 172 and 
173 under the Securities Act of 1933 (17 C.F.R. 
230.172 and 230.173) to remove the exclusion of an 
offering of a business development company from 
those rules. 
(11) The Commission shall revise rule 418 under 
the Securities Act of 1933 (17 C.F.R. 230.418) to pro-
vide that a business development company that would 
otherwise meet the eligibility requirements of General 
Instruction I.A of Form S–3 shall be exempt from 
paragraph (a)(3) of that rule. 
(12) The Commission shall revise rule 14a–101 
under the Securities Exchange Act of 1934 (17 C.F.R. 
240.14a–101) to provide that a business development 
company that would otherwise meet the requirements 
of General Instruction I.A of Form S–3 shall be 
deemed to meet the requirements of Form S–3 for 
purposes of Schedule 14A. 
(13) The Commission shall revise rule 103 under 
Regulation FD (17 C.F.R. 243.103) to provide that 
paragraph (a) of that rule applies for purposes of 
Form N–2. 
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(b) REVISION TO FORM N–2.—Not later than 1 year 
after the date of enactment of this Act, the Commission shall 
revise Form N–2— 
(1) to include an item or instruction that is 
similar to item 12 on Form S–3 to provide that a 
business development company that would otherwise 
meet the requirements of Form S–3 shall incorporate 
by reference its reports and documents filed under the 
Securities Exchange Act of 1934 into its registration 
statement filed on Form N–2; and 
(2) to include an item or instruction that is 
similar to the instruction regarding automatic shelf 
offerings by well-known seasoned issuers on Form S– 
3 to provide that a business development company 
that is a well-known seasoned issuer may file auto-
matic shelf offerings on Form N–2. 
(c) TREATMENT IF REVISIONS NOT COMPLETED IN 
TIMELY MANNER.—If the Commission fails to complete the 
revisions required by subsections (a) and (b) by the time 
required by such subsections, a business development com-
pany shall be entitled to treat such revisions as having been 
completed in accordance with the actions required to be 
taken by the Commission by such subsections until such 
time as such revisions are completed by the Commission. 
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(d) RULE OF CONSTRUCTION.—Any reference in this 
section to a rule or form means such rule or form or any 
successor rule or form. 
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Union Calendar No. 388 
114TH CONGRESS 
2D SESSION 
H. R. 3868 
[Report No. 114–508] 
A BILL 
To amend the Investment Company Act of 1940 to 
remove certain restrictions on the ability of busi-
ness development companies to own securities of 
investment advisers and certain financial compa-
nies, 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. 
APRIL 19, 2016 
Reported with an amendment, committed to the Com-
mittee of the Whole House on the State of the Union, 
and ordered to be printed 
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