To require the Securities and Exchange Commission to revise the definition of a qualifying investment to include an equity security issued by a qualifying portfolio company, whether acquired directly from the company or in a secondary acquisition, for purposes of the exemption from registration for venture capital fund advisers under the Investment Advisers Act of 1940, and for other purposes.

Bill: 117-hr-4227
Sponsor: full_name: Rep. Hollingsworth, Trey [R-IN-9]
Introduced: 2021-06-29
Policy area: Finance and Financial Sector
Subjects: Administrative law and regulatory procedures

Financial services and investments

Securities

Securities and Exchange Commission (SEC)
Latest action: action_date: 2022-07-27
text: Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.

Summaries:
action_date: 2021-06-29
action_desc: Introduced in House
text: <p><strong>Developing and Empowering our Aspiring Leaders Act of 2021 </strong> </p> <p>This bill directs the Securities and Exchange Commission to revise venture capital investment regulations. Venture capital funds are exempt from certain regulations applicable to other investment firms, including those related to filings, audits, and restricted communications with investors. Under current law, non-qualifying investments&#8212;which include secondary transactions and investments in other venture capital funds&#8212;may comprise up to 20% of a venture capital fund. </p> <p>The bill allows investments acquired through secondary transactions or investments in other venture capital funds to be considered as qualifying investments for venture capital funds. However, for a private fund to qualify as a venture capital fund, the fund's investments must predominately (1) be acquired directly, or (2) be investments in other venture capital funds. </p>  <p>

action_date: 2022-07-26
action_desc: Passed House
text: <p><strong>Developing and Empowering our Aspiring Leaders Act of 2022 </strong> </p> <p>This bill directs the Securities and Exchange Commission (SEC) to revise venture capital investment regulations if the SEC determines such revisions would facilitate capital formation without compromising investor protection. Venture capital funds are exempt from certain regulations applicable to other investment firms, including those related to filings, audits, and restricted communications with investors. Under current law, non-qualifying investments&#8212;which include secondary transactions and investments in other venture capital funds&#8212;may comprise up to 20% of a venture capital fund. </p> <p>The bill allows, after SEC approval, investments acquired through secondary transactions or investments in other venture capital funds to be considered as qualifying investments for venture capital funds. However, for a private fund to qualify as a venture capital fund, the fund's investments must predominately be acquired directly from a qualifying portfolio company. </p>

tv_txt: I 117th CONGRESS 1st Session H. R. 4227 IN THE HOUSE OF REPRESENTATIVES June 29, 2021 Mr. Hollingsworth introduced the following bill; which was referred to the Committee on Financial Services A BILL To require the Securities and Exchange Commission to revise the definition of a qualifying investment, for purposes of the exemption from registration for venture capital fund advisers under the Investment Advisers Act of 1940, to include an equity security issued by a qualifying portfolio company and to include an investment in another venture capital fund, and for other purposes.

1. Short title This Act may be cited as the Developing and Empowering our Aspiring Leaders Act of 2021 . 2. Definitions Not later than the end of the 180-day period beginning on the date of the enactment of this Act, the Securities and Exchange Commission shall— (1) revise the definition of a qualifying investment under paragraph (c) of section 275.203(l)–1 of title 17, Code of Federal Regulations— (A) to include an equity security issued by a qualifying portfolio company, whether acquired directly from the company or in a secondary acquisition; and (B) to specify that an investment in another venture capital fund is a qualifying investment under such definition; and (2) revise paragraph (a) of such section to require, as a condition of a private fund qualifying as a venture capital fund under such paragraph, that the qualifying investments of the private fund are either— (A) predominantly qualifying investments that were acquired directly from a qualifying portfolio company; or (B) predominantly qualifying investments in another venture capital fund or other venture capital funds.

tv_txt: I 117th CONGRESS 2d Session H. R. 4227 IN THE HOUSE OF REPRESENTATIVES AN ACT To require the Securities and Exchange Commission to revise the definition of a qualifying investment to include an equity security issued by a qualifying portfolio company, whether acquired directly from the company or in a secondary acquisition, for purposes of the exemption from registration for venture capital fund advisers under the Investment Advisers Act of 1940, and for other purposes.

1. Short title This Act may be cited as the Developing and Empowering our Aspiring Leaders Act of 2022 . 2. Definitions Not later than the end of the 180-day period beginning on the date of the enactment of this Act, if the Securities and Exchange Commission determines the revisions would facilitate capital formation without compromising investor protection, the Commission shall— (1) revise the definition of a qualifying investment under paragraph (c) of section 275.203(l)–1 of title 17, Code of Federal Regulations, to include an equity security issued by a qualifying portfolio company, whether acquired directly from the company or in a secondary acquisition; and (2) revise paragraph (a) of such section to require, as a condition of a private fund qualifying as a venture capital fund under such paragraph, that the qualifying investments of the private fund are predominantly qualifying investments that were acquired directly from a qualifying portfolio company.

Passed the House of Representatives July 26, 2022. Cheryl L. Johnson, Clerk.

tv_txt: IIB 117th CONGRESS 2d Session H. R. 4227 IN THE SENATE OF THE UNITED STATES July 27, 2022 Received; read twice and referred to the Committee on Banking, Housing, and Urban Affairs AN ACT To require the Securities and Exchange Commission to revise the definition of a qualifying investment to include an equity security issued by a qualifying portfolio company, whether acquired directly from the company or in a secondary acquisition, for purposes of the exemption from registration for venture capital fund advisers under the Investment Advisers Act of 1940, and for other purposes.

1. Short title This Act may be cited as the Developing and Empowering our Aspiring Leaders Act of 2022 . 2. Definitions Not later than the end of the 180-day period beginning on the date of the enactment of this Act, if the Securities and Exchange Commission determines the revisions would facilitate capital formation without compromising investor protection, the Commission shall— (1) revise the definition of a qualifying investment under paragraph (c) of section 275.203(l)–1 of title 17, Code of Federal Regulations, to include an equity security issued by a qualifying portfolio company, whether acquired directly from the company or in a secondary acquisition; and (2) revise paragraph (a) of such section to require, as a condition of a private fund qualifying as a venture capital fund under such paragraph, that the qualifying investments of the private fund are predominantly qualifying investments that were acquired directly from a qualifying portfolio company.

Passed the House of Representatives July 26, 2022. Cheryl L. Johnson, Clerk.