---
kind: "range"
citation: "15 U.S.C. §§ 80a–53–80a–64"
title: "15"
from: "80a–53"
to: "80a–64"
count: 12
release: "119-102"
url: "https://uscodex.org/usc/15/80a-53..80a-64"
---

# §80a–53. Election to be regulated as business development company

- (a) **Eligibility—** Any [company](/usc/15/80a–2.md?p=a-8) defined in section [80a–2(a)(48)(A)](/usc/15/80a–2.md?p=a-48-A) and [(B)](/usc/15/80a–2.md?p=a-48-B) of this title may elect to be subject to the provisions of [sections 80a–54 through 80a–64](/usc/15/80a–54..80a–64.md) of this title by filing with the [Commission](/usc/15/80a–2.md?p=a-7) a notification of election, if such [company](/usc/15/80a–2.md?p=a-8)—
  - (1) has a class of its [equity securities](/usc/15/9041.md?p=6) registered under [section 78l](/usc/15/78l.md) of this title; or
  - (2) has filed a [registration statement](/usc/15/77b.md?p=a-8) pursuant to [section 78l](/usc/15/78l.md) of this title for a class of its [equity securities](/usc/15/9041.md?p=6).
- (b) **Form and manner of notification; effect—** The [Commission](/usc/15/80a–2.md?p=a-7) may, by rule, prescribe the form and manner in which notification of election under this section shall be given. A [business development company](/usc/15/80a–2.md?p=a-48) shall be deemed to be subject to [sections 80a–54 through 80a–64](/usc/15/80a–54..80a–64.md) of this title upon receipt by the [Commission](/usc/15/80a–2.md?p=a-7) of such notification of election.
- (c) **Revocation or withdrawal of election—** Whenever the [Commission](/usc/15/80a–2.md?p=a-7) finds, on its own motion or upon [application](/usc/15/77ccc.md?p=8), that a [business development company](/usc/15/80a–2.md?p=a-48) which has filed a notification of election pursuant to [subsection (a)](#a) of this section has ceased to engage in business, the [Commission](/usc/15/80a–2.md?p=a-7) shall so declare by [order](/usc/15/8702.md?p=14) revoking such [company](/usc/15/80a–2.md?p=a-8)’s election. Any [business development company](/usc/15/80a–2.md?p=a-48) may voluntarily withdraw its election under [subsection (a)](#a) by filing a notice of withdrawal of election with the [Commission](/usc/15/80a–2.md?p=a-7), in a form and manner which the [Commission](/usc/15/80a–2.md?p=a-7) may, by rule, prescribe. Such withdrawal shall be effective immediately upon receipt by the [Commission](/usc/15/80a–2.md?p=a-7).

# §80a–54. Acquisition of assets by business development companies

- (a) **Permissible assets; percentage—** It shall be unlawful for a [business development company](/usc/15/80a–2.md?p=a-48) to acquire any assets (other than those described in [paragraphs (1) through (7)](#1..7) of this subsection) unless, at the time the acquisition is made, assets described in [paragraphs (1) through (6)](#a-1..a-6) below represent at least 70 per centum of the value of its total assets (other than assets described in [paragraph (7)](#a-7) below):
  - (1) [securities](/usc/15/80a–2.md?p=a-36) purchased, in transactions not involving any public offering or in such other transactions as the [Commission](/usc/15/80a–2.md?p=a-7) may, by rule, prescribe if it finds that enforcement of this subchapter and of the Securities Act of 1933 [[15 U.S.C. 77a](/usc/15/77a.md) et seq.] with respect to such transactions is not necessary in the public interest or for the protection of investors by reason of the small amount, or the limited nature of the public offering, involved in such transactions—
    - (A) from the [issuer](/usc/15/80a–2.md?p=a-22) of such [securities](/usc/15/80a–2.md?p=a-36), which [issuer](/usc/15/80a–2.md?p=a-22) is an [eligible portfolio company](/usc/15/80a–2.md?p=a-46), from any [person](/usc/15/80a–2.md?p=a-28) who is, or who within the preceding thirteen months has been, an affiliated [person](/usc/15/80a–2.md?p=a-28) of such [eligible portfolio company](/usc/15/80a–2.md?p=a-46), or from any other [person](/usc/15/80a–2.md?p=a-28), subject to such rules and regulations as the [Commission](/usc/15/80a–2.md?p=a-7) may prescribe as necessary or appropriate in the public interest or for the protection of investors; or
    - (B) from the [issuer](/usc/15/80a–2.md?p=a-22) of such [securities](/usc/15/80a–2.md?p=a-36), which [issuer](/usc/15/80a–2.md?p=a-22) is described in section [80a–2(a)(46)(A)](/usc/15/80a–2.md?p=a-46-A) and [(B)](/usc/15/80a–2.md?p=a-46-B) of this title but is not an [eligible portfolio company](/usc/15/80a–2.md?p=a-46) because it has issued a class of [securities](/usc/15/80a–2.md?p=a-36) with respect to which a member of a [national securities exchange](/usc/15/80a–2.md?p=a-26), [broker](/usc/15/80a–2.md?p=a-6), or [dealer](/usc/15/80a–2.md?p=a-11) may extend or maintain [credit](/usc/15/1679a.md?p=4) to or for a [customer](/usc/15/78c–5.md?p=g) pursuant to rules or regulations adopted by the [Board](/usc/15/205c.md?p=1) of Governors of the Federal Reserve System under [section 78g of this title](/usc/15/78g.md), or from any [person](/usc/15/80a–2.md?p=a-28) who is an officer or employee of such [issuer](/usc/15/80a–2.md?p=a-22), if—
      - (i) at the time of the [purchase](/usc/15/78c–5.md?p=g), the [business development company](/usc/15/80a–2.md?p=a-48) owns at least 50 per centum of—
        - (I) the greatest number of [equity securities](/usc/15/9041.md?p=6) of such [issuer](/usc/15/80a–2.md?p=a-22) and [securities](/usc/15/80a–2.md?p=a-36) convertible into or exchangeable for such [securities](/usc/15/80a–2.md?p=a-36); and
        - (II) the greatest amount of debt [securities](/usc/15/80a–2.md?p=a-36) of such [issuer](/usc/15/80a–2.md?p=a-22),

      held by such [business development company](/usc/15/80a–2.md?p=a-48) at any point in time during the period when such [issuer](/usc/15/80a–2.md?p=a-22) was an [eligible portfolio company](/usc/15/80a–2.md?p=a-46), except that options, warrants, and similar [securities](/usc/15/80a–2.md?p=a-36) which have by their terms expired and debt [securities](/usc/15/80a–2.md?p=a-36) which have been converted, or repaid or prepaid in the ordinary course of business or incident to a public offering of [securities](/usc/15/80a–2.md?p=a-36) of such [issuer](/usc/15/80a–2.md?p=a-22), shall not be considered to have been held by such [business development company](/usc/15/80a–2.md?p=a-48) for purposes of this requirement; and

      - (ii) the [business development company](/usc/15/80a–2.md?p=a-48) is one of the 20 largest holders of record of such [issuer](/usc/15/80a–2.md?p=a-22)’s outstanding [voting securities](/usc/15/80a–2.md?p=a-42);
  - (2) [securities](/usc/15/80a–2.md?p=a-36) of any [eligible portfolio company](/usc/15/80a–2.md?p=a-46) with respect to which the [business development company](/usc/15/80a–2.md?p=a-48) satisfies the requirements of [section 80a–2(a)(46)(C)(ii) of this title](/usc/15/80a–2.md?p=a-46-C-ii);
  - (3) [securities](/usc/15/80a–2.md?p=a-36) purchased in transactions not involving any public offering from an [issuer](/usc/15/80a–2.md?p=a-22) described in sections [80a–2(a)(46)(A)](/usc/15/80a–2.md?p=a-46-A) and [(B)](/usc/15/80a–2.md?p=a-46-B) of this title or from a [person](/usc/15/80a–2.md?p=a-28) who is, or who within the preceding thirteen months has been, an affiliated [person](/usc/15/80a–2.md?p=a-28) of such [issuer](/usc/15/80a–2.md?p=a-22), or from any [person](/usc/15/80a–2.md?p=a-28) in transactions incident thereto, if such [securities](/usc/15/80a–2.md?p=a-36) were—
    - (A) issued by an [issuer](/usc/15/80a–2.md?p=a-22) that is, or was immediately prior to the [purchase](/usc/15/78c–5.md?p=g) of its [securities](/usc/15/80a–2.md?p=a-36) by the [business development company](/usc/15/80a–2.md?p=a-48), in bankruptcy proceedings, subject to [reorganization](/usc/15/80a–2.md?p=a-33) under the supervision of a court of competent jurisdiction, or subject to a plan or arrangement resulting from such bankruptcy proceedings or [reorganization](/usc/15/80a–2.md?p=a-33);
    - (B) issued by an [issuer](/usc/15/80a–2.md?p=a-22) pursuant to or in consummation of such a plan or arrangement; or
    - (C) issued by an [issuer](/usc/15/80a–2.md?p=a-22) that, immediately prior to the [purchase](/usc/15/78c–5.md?p=g) of such [issuer](/usc/15/80a–2.md?p=a-22)’s [securities](/usc/15/80a–2.md?p=a-36) by the [business development company](/usc/15/80a–2.md?p=a-48), was not in bankruptcy proceedings but was unable to meet its obligations as they came due without material assistance other than conventional lending or financing arrangements;
  - (4) [securities](/usc/15/80a–2.md?p=a-36) of [eligible portfolio companies](/usc/15/80a–2.md?p=a-46) purchased from any [person](/usc/15/80a–2.md?p=a-28) in transactions not involving any public offering, if there is no ready market for such [securities](/usc/15/80a–2.md?p=a-36) and if immediately prior to such [purchase](/usc/15/78c–5.md?p=g) the [business development company](/usc/15/80a–2.md?p=a-48) owns at least 60 per centum of the outstanding [equity securities](/usc/15/9041.md?p=6) of such [issuer](/usc/15/80a–2.md?p=a-22) (giving effect to all [securities](/usc/15/80a–2.md?p=a-36) presently convertible into or exchangeable for [equity securities](/usc/15/9041.md?p=6) of such [issuer](/usc/15/80a–2.md?p=a-22) as if such [securities](/usc/15/80a–2.md?p=a-36) were so converted or exchanged);
  - (5) [securities](/usc/15/80a–2.md?p=a-36) received in [exchange](/usc/15/80a–2.md?p=a-14) for or distributed on or with respect to [securities](/usc/15/80a–2.md?p=a-36) described in [paragraphs (1) through (4)](#1..4) of this subsection, or pursuant to the exercise of options, warrants, or rights relating to [securities](/usc/15/80a–2.md?p=a-36) described in such paragraphs;
  - (6) cash, cash items, [Government securities](/usc/15/80a–2.md?p=a-16), or high quality debt [securities](/usc/15/80a–2.md?p=a-36) maturing in one year or less from the time of investment in such high quality debt [securities](/usc/15/80a–2.md?p=a-36); and
  - (7) office furniture and equipment, interests in real estate and leasehold improvements and facilities maintained to conduct the business operations of the [business development company](/usc/15/80a–2.md?p=a-48), deferred organization and operating expenses, and other noninvestment assets necessary and appropriate to its operations as a [business development company](/usc/15/80a–2.md?p=a-48), including notes of indebtedness of [directors](/usc/15/80a–2.md?p=a-12), officers, employees, and general partners held by a [business development company](/usc/15/80a–2.md?p=a-48) as payment for [securities](/usc/15/80a–2.md?p=a-36) of such [company](/usc/15/80a–2.md?p=a-8) issued in connection with an executive compensation plan described in [section 80a–56(j) of this title](/usc/15/80a–56.md?p=j).
- (b) **Valuation of assets—** For purposes of this section, the value of a [business development company](/usc/15/80a–2.md?p=a-48)’s assets shall be determined as of the date of the most recent financial statements filed by such [company](/usc/15/80a–2.md?p=a-8) with the [Commission](/usc/15/80a–2.md?p=a-7) pursuant to [section 78m of this title](/usc/15/78m.md), and shall be determined no less frequently than annually.

# §80a–55. Qualifications of directors

- (a) **Non-interested persons—** A majority of a [business development company](/usc/15/80a–2.md?p=a-48)’s [directors](/usc/15/80a–2.md?p=a-12) or general partners shall be [persons](/usc/15/80a–2.md?p=a-28) who are not interested [persons](/usc/15/80a–2.md?p=a-28) of such [company](/usc/15/80a–2.md?p=a-8).
- (b) **Vacancies; suspension of provisions—** If, by reason of the death, disqualification, or bona fide resignation of any [director](/usc/15/80a–2.md?p=a-12) or general partner, a [business development company](/usc/15/80a–2.md?p=a-48) does not meet the requirements of [subsection (a)](#a) of this section, or the requirements of [section 80a–15(f)(1) of this title](/usc/15/80a–15.md?p=f-1) with respect to [directors](/usc/15/80a–2.md?p=a-12), the operation of such provisions shall be suspended for a period of 90 days or for such longer period as the [Commission](/usc/15/80a–2.md?p=a-7) may prescribe, upon its own motion or by [order](/usc/15/8702.md?p=14) upon [application](/usc/15/77ccc.md?p=8), as not inconsistent with the protection of investors.

# §80a–56. Transactions with certain affiliates

- (a) **Transactions involving controlling or closely affiliated persons—** It shall be unlawful for any [person](/usc/15/80a–2.md?p=a-28) who is related to a [business development company](/usc/15/80a–2.md?p=a-48) in a manner described in [subsection (b)](#b) of this section, acting as principal—
  - (1) knowingly to sell any [security](/usc/15/80a–2.md?p=a-36) or other property to such [business development company](/usc/15/80a–2.md?p=a-48) or to any [company](/usc/15/80a–2.md?p=a-8) controlled by such [business development company](/usc/15/80a–2.md?p=a-48), unless such sale involves solely (A) [securities](/usc/15/80a–2.md?p=a-36) of which the buyer is the [issuer](/usc/15/80a–2.md?p=a-22), or (B) [securities](/usc/15/80a–2.md?p=a-36) of which the seller is the [issuer](/usc/15/80a–2.md?p=a-22) and which are part of a general offering to the holders of a class of its [securities](/usc/15/80a–2.md?p=a-36);
  - (2) knowingly to [purchase](/usc/15/78c–5.md?p=g) from such [business development company](/usc/15/80a–2.md?p=a-48) or from any [company](/usc/15/80a–2.md?p=a-8) controlled by such [business development company](/usc/15/80a–2.md?p=a-48), any [security](/usc/15/80a–2.md?p=a-36) or other property (except [securities](/usc/15/80a–2.md?p=a-36) of which the seller is the [issuer](/usc/15/80a–2.md?p=a-22));
  - (3) knowingly to borrow money or other property from such [business development company](/usc/15/80a–2.md?p=a-48) or from any [company](/usc/15/80a–2.md?p=a-8) controlled by such [business development company](/usc/15/80a–2.md?p=a-48) (unless the [borrower](/usc/15/697f.md?p=e-2) is controlled by the lender), except as permitted in [section 80a–21(b)](/usc/15/80a–21.md?p=b) or [section 80a–61 of this title](/usc/15/80a–61.md); or
  - (4) knowingly to effect any transaction in which such [business development company](/usc/15/80a–2.md?p=a-48) or a [company](/usc/15/80a–2.md?p=a-8) controlled by such [business development company](/usc/15/80a–2.md?p=a-48) is a joint or a joint and several participant with such [person](/usc/15/80a–2.md?p=a-28) in contravention of such rules and regulations as the [Commission](/usc/15/80a–2.md?p=a-7) may prescribe for the purpose of limiting or preventing participation by such [business development company](/usc/15/80a–2.md?p=a-48) or controlled [company](/usc/15/80a–2.md?p=a-8) on a basis less advantageous than that of such [person](/usc/15/80a–2.md?p=a-28), except that nothing contained in this paragraph shall be deemed to preclude any [person](/usc/15/80a–2.md?p=a-28) from acting as manager of any underwriting syndicate or other group in which such [business development company](/usc/15/80a–2.md?p=a-48) or controlled [company](/usc/15/80a–2.md?p=a-8) is a participant and receiving compensation therefor.
- (b) **Controlling or closely affiliated persons—** The provisions of [subsection (a)](#a) of this section shall apply to the following [persons](/usc/15/80a–2.md?p=a-28):
  - (1) Any [director](/usc/15/80a–2.md?p=a-12), officer, employee, or member of an [advisory board](/usc/15/80a–2.md?p=a-1) of a [business development company](/usc/15/80a–2.md?p=a-48) or any [person](/usc/15/80a–2.md?p=a-28) (other than the [business development company](/usc/15/80a–2.md?p=a-48) itself) who is, within the meaning of [section 80a–2(a)(3)(C) of this title](/usc/15/80a–2.md), an affiliated [person](/usc/15/80a–2.md?p=a-28) of any such [person](/usc/15/80a–2.md?p=a-28) specified in this paragraph.
  - (2) Any [investment adviser](/usc/15/6102.md?p=d-2-B-ii) or promoter of, general partner in, principal underwriter for, or [person](/usc/15/80a–2.md?p=a-28) directly or indirectly either controlling, controlled by, or under common [control](/usc/15/80a–2.md?p=a-9) with, a [business development company](/usc/15/80a–2.md?p=a-48) (except the [business development company](/usc/15/80a–2.md?p=a-48) itself and any [person](/usc/15/80a–2.md?p=a-28) who, if it were not directly or indirectly controlled by the [business development company](/usc/15/80a–2.md?p=a-48), would not be directly or indirectly under the [control](/usc/15/80a–2.md?p=a-9) of a [person](/usc/15/80a–2.md?p=a-28) who [controls](/usc/15/80a–2.md?p=a-9) the [business development company](/usc/15/80a–2.md?p=a-48)), or any [person](/usc/15/80a–2.md?p=a-28) who is, within the meaning of section [80a–2(a)(3)(C)](/usc/15/80a–2.md) or [(D)](/usc/15/80a–2.md) of this title, an affiliated [person](/usc/15/80a–2.md?p=a-28) of any such [person](/usc/15/80a–2.md?p=a-28) specified in this paragraph.
- (c) **Exemption orders—** Notwithstanding paragraphs [(1)](#a-1), [(2)](#a-2), and [(3)](#a-3) of subsection (a), any [person](/usc/15/80a–2.md?p=a-28) may file with the [Commission](/usc/15/80a–2.md?p=a-7) an [application](/usc/15/77ccc.md?p=8) for an [order](/usc/15/8702.md?p=14) exempting a proposed transaction of the [applicant](/usc/15/7a.md?p=3) from one or more provisions of such paragraphs. The [Commission](/usc/15/80a–2.md?p=a-7) shall grant such [application](/usc/15/77ccc.md?p=8) and issue such [order](/usc/15/8702.md?p=14) of exemption if evidence establishes that—
  - (1) the terms of the proposed transaction, including the consideration to be paid or received, are reasonable and fair and do not involve overreaching of the [business development company](/usc/15/80a–2.md?p=a-48) or its shareholders or partners on the part of any [person](/usc/15/80a–2.md?p=a-28) concerned;
  - (2) the proposed transaction is consistent with the policy of the [business development company](/usc/15/80a–2.md?p=a-48) as recited in the filings made by such [company](/usc/15/80a–2.md?p=a-8) with the [Commission](/usc/15/80a–2.md?p=a-7) under the Securities Act of 1933 [[15 U.S.C. 77a](/usc/15/77a.md) et seq.], its [registration statement](/usc/15/77b.md?p=a-8) and reports filed under the [Securities](/usc/15/80a–2.md?p=a-36) Exchange Act of 1934 [[15 U.S.C. 78a](/usc/15/78a.md) et seq.], and its reports to shareholders or partners; and
  - (3) the proposed transaction is consistent with the general purposes of this subchapter.
- (d) **Transactions involving noncontrolling shareholders or affiliated persons—** It shall be unlawful for any [person](/usc/15/80a–2.md?p=a-28) who is related to a [business development company](/usc/15/80a–2.md?p=a-48) in the manner described in [subsection (e)](#e) of this section and who is not subject to the prohibitions of [subsection (a)](#a) of this section, acting as principal—
  - (1) knowingly to sell any [security](/usc/15/80a–2.md?p=a-36) or other property to such [business development company](/usc/15/80a–2.md?p=a-48) or to any [company](/usc/15/80a–2.md?p=a-8) controlled by such [business development company](/usc/15/80a–2.md?p=a-48), unless such sale involves solely (A) [securities](/usc/15/80a–2.md?p=a-36) of which the buyer is the [issuer](/usc/15/80a–2.md?p=a-22), or (B) [securities](/usc/15/80a–2.md?p=a-36) of which the seller is the [issuer](/usc/15/80a–2.md?p=a-22) and which are part of a general offering to the holders of a class of its [securities](/usc/15/80a–2.md?p=a-36);
  - (2) knowingly to [purchase](/usc/15/78c–5.md?p=g) from such [business development company](/usc/15/80a–2.md?p=a-48) or from any [company](/usc/15/80a–2.md?p=a-8) controlled by such [business development company](/usc/15/80a–2.md?p=a-48), any [security](/usc/15/80a–2.md?p=a-36) or other property (except [securities](/usc/15/80a–2.md?p=a-36) of which the seller is the [issuer](/usc/15/80a–2.md?p=a-22));
  - (3) knowingly to borrow money or other property from such [business development company](/usc/15/80a–2.md?p=a-48) or from any [company](/usc/15/80a–2.md?p=a-8) controlled by such [business development company](/usc/15/80a–2.md?p=a-48) (unless the [borrower](/usc/15/697f.md?p=e-2) is controlled by the lender), except as permitted in [section 80a–21(b) of this title](/usc/15/80a–21.md?p=b); or
  - (4) knowingly to effect any transaction in which such [business development company](/usc/15/80a–2.md?p=a-48) or a [company](/usc/15/80a–2.md?p=a-8) controlled by such [business development company](/usc/15/80a–2.md?p=a-48) is a joint or a joint and several participant with such affiliated [person](/usc/15/80a–2.md?p=a-28) in contravention of such rules and regulations as the [Commission](/usc/15/80a–2.md?p=a-7) may prescribe for the purpose of limiting or preventing participation by such [business development company](/usc/15/80a–2.md?p=a-48) or controlled [company](/usc/15/80a–2.md?p=a-8) on a basis less advantageous than that of such affiliated [person](/usc/15/80a–2.md?p=a-28), except that nothing contained in this paragraph shall be deemed to preclude any [person](/usc/15/80a–2.md?p=a-28) from acting as manager of any underwriting syndicate or other group in which such [business development company](/usc/15/80a–2.md?p=a-48) or controlled [company](/usc/15/80a–2.md?p=a-8) is a participant and receiving compensation therefor.
- (e) **Noncontrolling shareholders or affiliated persons; executive officer—** The provisions of [subsection (d)](#d) of this section shall apply to the following [persons](/usc/15/80a–2.md?p=a-28):
  - (1) Any [person](/usc/15/80a–2.md?p=a-28) (A) who is, within the meaning of [section 80a–2(a)(3)(A) of this title](/usc/15/80a–2.md), an affiliated [person](/usc/15/80a–2.md?p=a-28) of a [business development company](/usc/15/80a–2.md?p=a-48), (B) who is an [executive officer](#e) or a [director](/usc/15/80a–2.md?p=a-12) of, or general partner in, any such affiliated [person](/usc/15/80a–2.md?p=a-28), or (C) who directly or indirectly either [controls](/usc/15/80a–2.md?p=a-9), is controlled by, or is under common [control](/usc/15/80a–2.md?p=a-9) with, such affiliated [person](/usc/15/80a–2.md?p=a-28).
  - (2) Any [person](/usc/15/80a–2.md?p=a-28) who is an affiliated [person](/usc/15/80a–2.md?p=a-28) of a [director](/usc/15/80a–2.md?p=a-12), officer, employee, [investment adviser](/usc/15/6102.md?p=d-2-B-ii), member of an [advisory board](/usc/15/80a–2.md?p=a-1) or promoter of, principal underwriter for, general partner in, or an affiliated [person](/usc/15/80a–2.md?p=a-28) of any [person](/usc/15/80a–2.md?p=a-28) directly or indirectly either controlling or under common [control](/usc/15/80a–2.md?p=a-9) with a [business development company](/usc/15/80a–2.md?p=a-48) (except the [business development company](/usc/15/80a–2.md?p=a-48) itself and any [person](/usc/15/80a–2.md?p=a-28) who, if it were not directly or indirectly controlled by the [business development company](/usc/15/80a–2.md?p=a-48), would not be directly or indirectly under the [control](/usc/15/80a–2.md?p=a-9) of a [person](/usc/15/80a–2.md?p=a-28) who [controls](/usc/15/80a–2.md?p=a-9) the [business development company](/usc/15/80a–2.md?p=a-48)).

  For purposes of this subsection, the term “executive officer” means the president, secretary, treasurer, any vice president in charge of a principal business function, and any other [person](/usc/15/80a–2.md?p=a-28) who performs similar policymaking functions.

- (f) **Approval of proposed transactions—** Notwithstanding [subsection (d)](#d) of this section, a [person](/usc/15/80a–2.md?p=a-28) described in [subsection (e)](#e) may engage in a proposed transaction described in [subsection (d)](#d) if such proposed transaction is approved by the [required majority](#o) (as defined in [subsection (o)](#o)) of the [directors](/usc/15/80a–2.md?p=a-12) of or general partners in the [business development company](/usc/15/80a–2.md?p=a-48) on the basis that—
  - (1) the terms thereof, including the consideration to be paid or received, are reasonable and fair to the shareholders or partners of the [business development company](/usc/15/80a–2.md?p=a-48) and do not involve overreaching of such [company](/usc/15/80a–2.md?p=a-8) or its shareholders or partners on the part of any [person](/usc/15/80a–2.md?p=a-28) concerned;
  - (2) the proposed transaction is consistent with the interests of the shareholders or partners of the [business development company](/usc/15/80a–2.md?p=a-48) and is consistent with the policy of such [company](/usc/15/80a–2.md?p=a-8) as recited in filings made by such [company](/usc/15/80a–2.md?p=a-8) with the [Commission](/usc/15/80a–2.md?p=a-7) under the Securities Act of 1933 [[15 U.S.C. 77a](/usc/15/77a.md) et seq.], its [registration statement](/usc/15/77b.md?p=a-8) and reports filed under the [Securities](/usc/15/80a–2.md?p=a-36) Exchange Act of 1934 [[15 U.S.C. 78a](/usc/15/78a.md) et seq.], and its reports to shareholders or partners; and
  - (3) the [directors](/usc/15/80a–2.md?p=a-12) or general partners record in their minutes and preserve in their records, for such periods as if such records were required to be maintained pursuant to [section 80a–30(a) of this title](/usc/15/80a–30.md?p=a), a description of such transaction, their findings, the information or materials upon which their findings were based, and the basis therefor.
- (g) **Transactions in the ordinary course of business—** Notwithstanding subsection [(a)](#a) or [(d)](#d), a [person](/usc/15/80a–2.md?p=a-28) may, in the ordinary course of business, sell to or [purchase](/usc/15/78c–5.md?p=g) from any [company](/usc/15/80a–2.md?p=a-8) merchandise or may enter into a lessor-lessee relationship with any [person](/usc/15/80a–2.md?p=a-28) and furnish the services incident thereto.
- (h) **Inquiry procedures—** The [directors](/usc/15/80a–2.md?p=a-12) of or general partners in any [business development company](/usc/15/80a–2.md?p=a-48) shall adopt, and periodically review and update as appropriate, procedures reasonably designed to ensure that reasonable inquiry is made, prior to the consummation of any transaction in which such [business development company](/usc/15/80a–2.md?p=a-48) or a [company](/usc/15/80a–2.md?p=a-8) controlled by such [business development company](/usc/15/80a–2.md?p=a-48) proposes to participate, with respect to the possible involvement in the transaction of [persons](/usc/15/80a–2.md?p=a-28) described in subsections [(b)](#b) and [(e)](#e) of this section.
- (i) **Rules and regulations of Commission—** Until the adoption by the [Commission](/usc/15/80a–2.md?p=a-7) of rules or regulations under subsections [(a)](#a) and [(d)](#d) of this section, the rules and regulations of the [Commission](/usc/15/80a–2.md?p=a-7) under subsections (a) and (d) of [section 80a–17 of this title](/usc/15/80a–17.md) applicable to registered closed-end [investment companies](/usc/15/77z–2.md?p=i-2) shall be deemed to apply to transactions subject to subsections [(a)](#a) and [(d)](#d) of this section. Any rules or regulations adopted by the [Commission](/usc/15/80a–2.md?p=a-7) to implement this section shall be no more restrictive than the rules or regulations adopted by the [Commission](/usc/15/80a–2.md?p=a-7) under subsections (a) and (d) of [section 80a–17 of this title](/usc/15/80a–17.md) that are applicable to all registered closed-end [investment companies](/usc/15/77z–2.md?p=i-2).
- (j) **Warrants, options, and rights to purchase voting securities; loans to facilitate executive compensation plans—** Notwithstanding subsections [(a)](#a) and [(d)](#d) of this section, any [director](/usc/15/80a–2.md?p=a-12), officer, or employee of, or general partner in, a [business development company](/usc/15/80a–2.md?p=a-48) may—
  - (1) acquire warrants, options, and rights to [purchase](/usc/15/78c–5.md?p=g) [voting securities](/usc/15/80a–2.md?p=a-42) of such [business development company](/usc/15/80a–2.md?p=a-48), and [securities](/usc/15/80a–2.md?p=a-36) issued upon the exercise or conversion thereof, pursuant to an executive compensation plan offered by such [company](/usc/15/80a–2.md?p=a-8) which meets the requirements of [section 80a–60(a)(4)(B) of this title](/usc/15/80a–60.md?p=a-4-B); and
  - (2) borrow money from such [business development company](/usc/15/80a–2.md?p=a-48) for the purpose of purchasing [securities](/usc/15/80a–2.md?p=a-36) issued by such [company](/usc/15/80a–2.md?p=a-8) pursuant to an executive compensation plan, if each such loan—
    - (A) has a term of not more than ten years;
    - (B) becomes due within a reasonable time, not to exceed sixty days, after the termination of such [person](/usc/15/80a–2.md?p=a-28)’s employment or service;
    - (C) bears interest at no less than the prevailing rate applicable to 90-day United States Treasury bills at the time the loan is made;
    - (D) at all times is fully collateralized (such collateral may include any [securities](/usc/15/80a–2.md?p=a-36) issued by such [business development company](/usc/15/80a–2.md?p=a-48)); and
    - (E)
      - (i) in the case of a loan to any officer or employee of such [business development company](/usc/15/80a–2.md?p=a-48) (including any officer or employee who is also a [director](/usc/15/80a–2.md?p=a-12) of such [company](/usc/15/80a–2.md?p=a-8)), is approved by the [required majority](#o) (as defined in [subsection (o)](#o)) of the [directors](/usc/15/80a–2.md?p=a-12) of or general partners in such [company](/usc/15/80a–2.md?p=a-8) on the basis that the loan is in the best interests of such [company](/usc/15/80a–2.md?p=a-8) and its shareholders or partners; or
      - (ii) in the case of a loan to any [director](/usc/15/80a–2.md?p=a-12) of such [business development company](/usc/15/80a–2.md?p=a-48) who is not also an officer or employee of such [company](/usc/15/80a–2.md?p=a-8), or to any general partner in such [company](/usc/15/80a–2.md?p=a-8), is approved by [order](/usc/15/8702.md?p=14) of the [Commission](/usc/15/80a–2.md?p=a-7), upon [application](/usc/15/77ccc.md?p=8), on the basis that the terms of the loan are fair and reasonable and do not involve overreaching of such [company](/usc/15/80a–2.md?p=a-8) or its shareholders or partners.
- (k) **Restriction on brokerage commissions—** It shall be unlawful for any [person](/usc/15/80a–2.md?p=a-28) described in [subsection (l)](#l)—
  - (1) acting as agent, to accept from any source any compensation (other than a regular salary or wages from the [business development company](/usc/15/80a–2.md?p=a-48)) for the [purchase](/usc/15/78c–5.md?p=g) or sale of any property to or for such [business development company](/usc/15/80a–2.md?p=a-48) or any controlled [company](/usc/15/80a–2.md?p=a-8) thereof, except in the course of such [person](/usc/15/80a–2.md?p=a-28)’s business as an underwriter or [broker](/usc/15/80a–2.md?p=a-6); or
  - (2) acting as [broker](/usc/15/80a–2.md?p=a-6), in connection with the sale of [securities](/usc/15/80a–2.md?p=a-36) to or by the [business development company](/usc/15/80a–2.md?p=a-48) or any controlled [company](/usc/15/80a–2.md?p=a-8) thereof, to receive from any source a [commission](/usc/15/80a–2.md?p=a-7), fee, or other remuneration for effecting such transaction which exceeds—
    - (A) the usual and customary [broker](/usc/15/80a–2.md?p=a-6)’s [commission](/usc/15/80a–2.md?p=a-7) if the sale is effected on a [securities](/usc/15/80a–2.md?p=a-36) [exchange](/usc/15/80a–2.md?p=a-14);
    - (B) 2 per centum of the sales price if the sale is effected in connection with a secondary distribution of such [securities](/usc/15/80a–2.md?p=a-36); or
    - (C) 1 per centum of the [purchase](/usc/15/78c–5.md?p=g) or sale price of such [securities](/usc/15/80a–2.md?p=a-36) if the sale is otherwise effected,

  unless the [Commission](/usc/15/80a–2.md?p=a-7), by rules and regulations or [order](/usc/15/8702.md?p=14) in the public interest and consistent with the protection of investors, permits a larger [commission](/usc/15/80a–2.md?p=a-7).

- (l) **Persons subject to brokerage commission restrictions—** The provisions of [subsection (k)](#k) of this section shall apply to the following [persons](/usc/15/80a–2.md?p=a-28):
  - (1) Any affiliated [person](/usc/15/80a–2.md?p=a-28) of a [business development company](/usc/15/80a–2.md?p=a-48).
  - (2)
    - (A) Any [person](/usc/15/80a–2.md?p=a-28) who is, within the meaning of section [80a–2(a)(3)(B)](/usc/15/80a–2.md), [(C)](/usc/15/80a–2.md), or [(D)](/usc/15/80a–2.md) of this title, an affiliated [person](/usc/15/80a–2.md?p=a-28) of any [director](/usc/15/80a–2.md?p=a-12), officer, employee, or member of an [advisory board](/usc/15/80a–2.md?p=a-1) of the [business development company](/usc/15/80a–2.md?p=a-48).
    - (B) Any [person](/usc/15/80a–2.md?p=a-28) who is, within the meaning of section [80a–2(a)(3)(A)](/usc/15/80a–2.md), [(B)](/usc/15/80a–2.md), [(C)](/usc/15/80a–2.md), or [(D)](/usc/15/80a–2.md) of this title, an affiliated [person](/usc/15/80a–2.md?p=a-28) of any [investment adviser](/usc/15/6102.md?p=d-2-B-ii) of, general partner in, or [person](/usc/15/80a–2.md?p=a-28) directly or indirectly either controlling, controlled by, or under common [control](/usc/15/80a–2.md?p=a-9) with, the [business development company](/usc/15/80a–2.md?p=a-48).
    - (C) Any [person](/usc/15/80a–2.md?p=a-28) who is, within the meaning of [section 80a–2(a)(3)(C) of this title](/usc/15/80a–2.md), an affiliated [person](/usc/15/80a–2.md?p=a-28) of any [person](/usc/15/80a–2.md?p=a-28) who is an affiliated [person](/usc/15/80a–2.md?p=a-28) of the [business development company](/usc/15/80a–2.md?p=a-48) within the meaning of [section 80a–2(a)(3)(A) of this title](/usc/15/80a–2.md).
- (m) **Receipt of fee or salary from transaction participant—** For purposes of subsections [(a)](#a) and [(d)](#d), a [person](/usc/15/80a–2.md?p=a-28) who is a [director](/usc/15/80a–2.md?p=a-12), officer, or employee of a party to a transaction and who receives his usual and ordinary fee or salary for usual and customary services as a [director](/usc/15/80a–2.md?p=a-12), officer, or employee from such party shall not be deemed to have a financial interest or to participate in the transaction solely by reason of his receipt of such fee or salary.
- (n) **Profit-sharing plans—**
  - (1) Notwithstanding [subsection (a)(4)](#a-4) of this section, a [business development company](/usc/15/80a–2.md?p=a-48) may establish and maintain a profit-sharing plan for its [directors](/usc/15/80a–2.md?p=a-12), officers, employees, and general partners and such [directors](/usc/15/80a–2.md?p=a-12), officers, employees, and general partners may participate in such profit-sharing plan, if—
    - (A)
      - (i) in the case of a profit-sharing plan for officers and employees of the [business development company](/usc/15/80a–2.md?p=a-48) (including any officer or employee who is also a [director](/usc/15/80a–2.md?p=a-12) of such [company](/usc/15/80a–2.md?p=a-8)), such profit-sharing plan is approved by the [required majority](#o) (as defined in [subsection (o)](#o)) of the [directors](/usc/15/80a–2.md?p=a-12) of or general partners in such [company](/usc/15/80a–2.md?p=a-8) on the basis that such plan is reasonable and fair to the shareholders or partners of such [company](/usc/15/80a–2.md?p=a-8), does not involve overreaching of such [company](/usc/15/80a–2.md?p=a-8) or its shareholders or partners on the part of any [person](/usc/15/80a–2.md?p=a-28) concerned, and is consistent with the interests of the shareholders or partners of such [company](/usc/15/80a–2.md?p=a-8); or
      - (ii) in the case of a profit-sharing plan which includes one or more [directors](/usc/15/80a–2.md?p=a-12) of the [business development company](/usc/15/80a–2.md?p=a-48) who are not also officers or employees of such [company](/usc/15/80a–2.md?p=a-8), or one or more general partners in such [company](/usc/15/80a–2.md?p=a-8), such profit-sharing plan is approved by [order](/usc/15/8702.md?p=14) of the [Commission](/usc/15/80a–2.md?p=a-7), upon [application](/usc/15/77ccc.md?p=8), on the basis that such plan is reasonable and fair to the shareholders or partners of such [company](/usc/15/80a–2.md?p=a-8), does not involve overreaching of such [company](/usc/15/80a–2.md?p=a-8) or its shareholders or partners on the part of any [person](/usc/15/80a–2.md?p=a-28) concerned, and is consistent with the interests of the shareholders or partners of such [company](/usc/15/80a–2.md?p=a-8); and
    - (B) the aggregate amount of benefits which would be paid or accrued under such plan shall not exceed 20 per centum of the [business development company](/usc/15/80a–2.md?p=a-48)’s net income after taxes in any fiscal year.
  - (2) This subsection may not be used where the [business development company](/usc/15/80a–2.md?p=a-48) has outstanding any stock option, warrant, or right issued as part of an executive compensation plan, including a plan pursuant to [section 80a–60(a)(4)(B) of this title](/usc/15/80a–60.md?p=a-4-B), or has an [investment adviser](/usc/15/6102.md?p=d-2-B-ii) registered or required to be registered under subchapter II of this chapter.
- (o) **Required majority for approval of proposed transactions—** The term “required majority”, when used with respect to the approval of a proposed transaction, plan, or arrangement, means both a majority of a [business development company](/usc/15/80a–2.md?p=a-48)’s [directors](/usc/15/80a–2.md?p=a-12) or general partners who have no financial interest in such transaction, plan, or arrangement and a majority of such [directors](/usc/15/80a–2.md?p=a-12) or general partners who are not interested [persons](/usc/15/80a–2.md?p=a-28) of such [company](/usc/15/80a–2.md?p=a-8).

# §80a–57. Changes in investment policy


No [business development company](/usc/15/80a–2.md?p=a-48) shall, unless authorized by the vote of a majority of its outstanding [voting securities](/usc/15/80a–2.md?p=a-42) or partnership interests, change the nature of its business so as to cease to be, or to withdraw its election as, a [business development company](/usc/15/80a–2.md?p=a-48).


# §80a–58. Incorporation of subchapter provisions


Notwithstanding the exemption set forth in [section 80–6(f) of this title](https://uscode.house.gov/view.xhtml?req=(/us/usc/t15/s80–6/f)), sections [80a–1](/usc/15/80a–1.md), [80a–2](/usc/15/80a–2.md), [80a–3](/usc/15/80a–3.md), [80a–4](/usc/15/80a–4.md), [80a–5](/usc/15/80a–5.md), [80a–6](/usc/15/80a–6.md), [80a–9](/usc/15/80a–9.md), [80a–10(f)](/usc/15/80a–10.md?p=f), [80a–15(a)](/usc/15/80a–15.md?p=a), [(c)](/usc/15/80a–15.md?p=c), and [(f)](/usc/15/80a–15.md?p=f), [80a–16(b)](/usc/15/80a–16.md), [80a–17(f) through (j)](/usc/15/80a–17.md?p=f..j), [80a–19(a)](/usc/15/80a–19.md?p=a), [80a–20(b)](/usc/15/80a–20.md?p=b), [80a–31(a)](/usc/15/80a–31.md?p=a) and [(c)](/usc/15/80a–31.md?p=c), [80a–32 through 80a–46](/usc/15/80a–32..80a–46.md), and [80a–48 through 80a–52](/usc/15/80a–48..80a–52.md) of this title shall apply to a [business development company](/usc/15/80a–2.md?p=a-48) to the same extent as if it were a registered closed-end [investment company](/usc/15/77z–2.md?p=i-2).


# §80a–59. Functions and activities of business development companies


Notwithstanding the exemption set forth in [section 80a–6(f) of this title](/usc/15/80a–6.md?p=f), [section 80a–12 of this title](/usc/15/80a–12.md) shall apply to a [business development company](/usc/15/80a–2.md?p=a-48) to the same extent as if it were a registered closed-end [investment company](/usc/15/77z–2.md?p=i-2), except that the [Commission](/usc/15/80a–2.md?p=a-7) shall not prescribe any rule, regulation, or [order](/usc/15/8702.md?p=14) pursuant to [section 80a–12(a)(1) of this title](/usc/15/80a–12.md?p=a-1) governing the circumstances in which a [business development company](/usc/15/80a–2.md?p=a-48) may borrow from a bank in [order](/usc/15/8702.md?p=14) to [purchase](/usc/15/78c–5.md?p=g) any [security](/usc/15/80a–2.md?p=a-36).


# §80a–60. Capital structure

- (a) **Exceptions for business development company—** Notwithstanding the exemption set forth in [section 80a–6(f) of this title](/usc/15/80a–6.md?p=f), [section 80a–18 of this title](/usc/15/80a–18.md) shall apply to a [business development company](/usc/15/80a–2.md?p=a-48) to the same extent as if it were a registered closed-end [investment company](/usc/15/77z–2.md?p=i-2), except as follows:
  - (1) Except as provided in [paragraph (2)](#a-2), the asset coverage requirements of subparagraphs (A) and (B) of [section 80a–18(a)(1) of this title](/usc/15/80a–18.md?p=a-1) (and any related rule promulgated under this subchapter) applicable to [business development companies](/usc/15/80a–2.md?p=a-48) shall be 200 percent.
  - (2) The asset coverage requirements of subparagraphs (A) and (B) of [section 80a–18(a)(1) of this title](/usc/15/80a–18.md?p=a-1) and of subparagraphs (A) and (B) of [section 80a–18(a)(2) of this title](/usc/15/80a–18.md?p=a-2) (and any related rule promulgated under this subchapter) applicable to a [business development company](/usc/15/80a–2.md?p=a-48) shall be 150 percent if—
    - (A) not later than 5 business days after the date on which those asset coverage requirements are approved under subparagraph (D) of this paragraph, the [business development company](/usc/15/80a–2.md?p=a-48) discloses that the requirements were approved, and the effective date of the approval, in—
      - (i) any filing submitted to the [Commission](/usc/15/80a–2.md?p=a-7) under section [78m(a)](/usc/15/78m.md?p=a) or [78o(d)](/usc/15/78o.md?p=d) of this title; and
      - (ii) a notice on the website of the [business development company](/usc/15/80a–2.md?p=a-48);
    - (B) the [business development company](/usc/15/80a–2.md?p=a-48) discloses, in each periodic filing required under [section 78m(a) of this title](/usc/15/78m.md?p=a)—
      - (i) the aggregate outstanding principal amount or liquidation preference, as applicable, of the senior [securities](/usc/15/80a–2.md?p=a-36) issued by the [business development company](/usc/15/80a–2.md?p=a-48) and the asset coverage percentage as of the date of the [business development company](/usc/15/80a–2.md?p=a-48)’s most recent financial statements included in that filing;
      - (ii) that the [business development company](/usc/15/80a–2.md?p=a-48), under [subparagraph (D)](#a-2-D), has approved the asset coverage requirements under this paragraph; and
      - (iii) the effective date of the approval described in [clause (ii)](#a-2-B-ii);
    - (C) with respect to a [business development company](/usc/15/80a–2.md?p=a-48) that is an [issuer](/usc/15/80a–2.md?p=a-22) of common [equity securities](/usc/15/9041.md?p=6), each periodic filing of the [company](/usc/15/80a–2.md?p=a-8) required under [section 78m(a) of this title](/usc/15/78m.md?p=a) includes disclosures that are reasonably designed to ensure that shareholders are informed of—
      - (i) the amount of senior [securities](/usc/15/80a–2.md?p=a-36) (and the associated asset coverage ratios) of the [company](/usc/15/80a–2.md?p=a-8), determined as of the date of the most recent financial statements of the [company](/usc/15/80a–2.md?p=a-8) included in that filing; and
      - (ii) the principal risk factors associated with the senior [securities](/usc/15/80a–2.md?p=a-36) described in [clause (i)](#a-2-C-i), to the extent that risk is incurred by the [company](/usc/15/80a–2.md?p=a-8); and
    - (D) the [company](/usc/15/80a–2.md?p=a-8)—
      - (i)
        - (I) through a vote of the required majority (as defined in [section 80a–56(o)](/usc/15/80a–56.md?p=o) of this title), approves the [application](/usc/15/77ccc.md?p=8) of this paragraph to the [company](/usc/15/80a–2.md?p=a-8), to become effective on the date that is 1 year after the date of the approval; or
        - (II) 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 for the [application](/usc/15/77ccc.md?p=8) of this paragraph to the [company](/usc/15/80a–2.md?p=a-8), to become effective on the first day after the date of the approval; and
      - (ii) if the [company](/usc/15/80a–2.md?p=a-8) is not an [issuer](/usc/15/80a–2.md?p=a-22) of common [equity securities](/usc/15/9041.md?p=6) that are listed on a [national securities exchange](/usc/15/80a–2.md?p=a-26), extends, to each [person](/usc/15/80a–2.md?p=a-28) that is a shareholder as of the date of an approval described in subclause [(I)](#a-2-D-i-I) or [(II)](#a-2-D-i-II) of clause (i), as applicable, the opportunity (which may include a tender offer) to sell the [securities](/usc/15/80a–2.md?p=a-36) held by that shareholder as of that applicable approval date, with 25 percent of those [securities](/usc/15/80a–2.md?p=a-36) to be repurchased in each of the 4 calendar quarters following the calendar quarter in which that applicable approval date takes place.
  - (3) Notwithstanding [section 80a–18(c) of this title](/usc/15/80a–18.md?p=c), a [business development company](/usc/15/80a–2.md?p=a-48) may issue more than one class of senior [security](/usc/15/80a–2.md?p=a-36) representing indebtedness.
  - (4) Notwithstanding [section 80a–18(d) of this title](/usc/15/80a–18.md?p=d)—
    - (A) a [business development company](/usc/15/80a–2.md?p=a-48) may issue warrants, options, or rights to subscribe or convert to [voting securities](/usc/15/80a–2.md?p=a-42) of such [company](/usc/15/80a–2.md?p=a-8), accompanied by [securities](/usc/15/80a–2.md?p=a-36), if—
      - (i) such warrants, options, or rights expire by their terms within ten years;
      - (ii) such warrants, options, or rights are not separately transferable unless no class of such warrants, options, or rights and the [securities](/usc/15/80a–2.md?p=a-36) accompanying them has been publicly distributed;
      - (iii) the exercise or conversion price is not less than the current market value at the date of issuance, or if no such market value exists, the current net asset value of such [voting securities](/usc/15/80a–2.md?p=a-42); and
      - (iv) the proposal to issue such [securities](/usc/15/80a–2.md?p=a-36) is authorized by the shareholders or partners of such [business development company](/usc/15/80a–2.md?p=a-48), and such issuance is approved by the required majority (as defined in [section 80a–56(o)](/usc/15/80a–56.md?p=o) of this title) of the [directors](/usc/15/80a–2.md?p=a-12) of or general partners in such [company](/usc/15/80a–2.md?p=a-8) on the basis that such issuance is in the best interests of such [company](/usc/15/80a–2.md?p=a-8) and its shareholders or partners;
    - (B) a [business development company](/usc/15/80a–2.md?p=a-48) may issue, to its [directors](/usc/15/80a–2.md?p=a-12), officers, employees, and general partners, warrants, options, and rights to [purchase](/usc/15/78c–5.md?p=g) [voting securities](/usc/15/80a–2.md?p=a-42) of such [company](/usc/15/80a–2.md?p=a-8) pursuant to an executive compensation plan, if—
      - (i)
        - (I) in the case of warrants, options, or rights issued to any officer or employee of such [business development company](/usc/15/80a–2.md?p=a-48) (including any officer or employee who is also a [director](/usc/15/80a–2.md?p=a-12) of such [company](/usc/15/80a–2.md?p=a-8)), such [securities](/usc/15/80a–2.md?p=a-36) satisfy the conditions in clauses [(i)](#a-4-A-i), [(iii)](#a-4-A-iii), and [(iv)](#a-4-A-iv) of subparagraph (A); or (II) in the case of warrants, options, or rights issued to any [director](/usc/15/80a–2.md?p=a-12) of such [business development company](/usc/15/80a–2.md?p=a-48) who is not also an officer or employee of such [company](/usc/15/80a–2.md?p=a-8), or to any general partner in such [company](/usc/15/80a–2.md?p=a-8), the proposal to issue such [securities](/usc/15/80a–2.md?p=a-36) satisfies the conditions in clauses [(i)](#a-4-A-i) and [(iii)](#a-4-A-iii) of subparagraph (A), is authorized by the shareholders or partners of such [company](/usc/15/80a–2.md?p=a-8), and is approved by [order](/usc/15/8702.md?p=14) of the [Commission](/usc/15/80a–2.md?p=a-7), upon [application](/usc/15/77ccc.md?p=8), on the basis that the terms of the proposal are fair and reasonable and do not involve overreaching of such [company](/usc/15/80a–2.md?p=a-8) or its shareholders or partners;
      - (ii) such [securities](/usc/15/80a–2.md?p=a-36) are not transferable except for disposition by gift, will, or intestacy;
      - (iii) no [investment adviser](/usc/15/6102.md?p=d-2-B-ii) of such [business development company](/usc/15/80a–2.md?p=a-48) receives any compensation described in [section 80b–5(a)(1) of this title](/usc/15/80b–5.md?p=a-1), except to the extent permitted by paragraph (1) or (2) of [section 80b–5(b) of this title](/usc/15/80b–5.md?p=b); and
      - (iv) such [business development company](/usc/15/80a–2.md?p=a-48) does not have a profit-sharing plan described in [section 80a–56(n) of this title](/usc/15/80a–56.md?p=n); and
    - (C) a [business development company](/usc/15/80a–2.md?p=a-48) may issue warrants, options, or rights to subscribe to, convert to, or [purchase](/usc/15/78c–5.md?p=g) [voting securities](/usc/15/80a–2.md?p=a-42) not accompanied by [securities](/usc/15/80a–2.md?p=a-36), if—
      - (i) such warrants, options, or rights satisfy the conditions in clauses [(i)](#a-4-A-i) and [(iii)](#a-4-A-iii) of subparagraph (A); and
      - (ii) the proposal to issue such warrants, options, or rights is authorized by the shareholders or partners of such [business development company](/usc/15/80a–2.md?p=a-48), and such issuance is approved by the required majority (as defined in [section 80a–56(o)](/usc/15/80a–56.md?p=o) of this title) of the [directors](/usc/15/80a–2.md?p=a-12) of or general partners in such [company](/usc/15/80a–2.md?p=a-8) on the basis that such issuance is in the best interests of the [company](/usc/15/80a–2.md?p=a-8) and its shareholders or partners.

    Notwithstanding this paragraph, the amount of [voting securities](/usc/15/80a–2.md?p=a-42) that would result from the exercise of all outstanding warrants, options, and rights at the time of issuance shall not exceed 25 per centum of the outstanding [voting securities](/usc/15/80a–2.md?p=a-42) of the [business development company](/usc/15/80a–2.md?p=a-48), except that if the amount of [voting securities](/usc/15/80a–2.md?p=a-42) that would result from the exercise of all outstanding warrants, options, and rights issued to such [company](/usc/15/80a–2.md?p=a-8)’s [directors](/usc/15/80a–2.md?p=a-12), officers, employees, and general partners pursuant to any executive compensation plan meeting the requirements of subparagraph (B) of this paragraph would exceed 15 per centum of the outstanding [voting securities](/usc/15/80a–2.md?p=a-42) of such [company](/usc/15/80a–2.md?p=a-8), then the total amount of [voting securities](/usc/15/80a–2.md?p=a-42) that would result from the exercise of all outstanding warrants, options, and rights at the time of issuance shall not exceed 20 per centum of the outstanding [voting securities](/usc/15/80a–2.md?p=a-42) of such [company](/usc/15/80a–2.md?p=a-8).

  - (5) For purposes of measuring the asset coverage requirements of [section 80a–18(a) of this title](/usc/15/80a–18.md?p=a), a senior [security](/usc/15/80a–2.md?p=a-36) created by the guarantee by a [business development company](/usc/15/80a–2.md?p=a-48) of indebtedness issued by another [company](/usc/15/80a–2.md?p=a-8) shall be the amount of the maximum potential liability less the fair market value of the net unencumbered assets (plus the indebtedness which has been guaranteed) available in the borrowing [company](/usc/15/80a–2.md?p=a-8) whose debts have been guaranteed, except that a guarantee issued by a [business development company](/usc/15/80a–2.md?p=a-48) of indebtedness issued by a [company](/usc/15/80a–2.md?p=a-8) which is a wholly-owned subsidiary of the [business development company](/usc/15/80a–2.md?p=a-48) and is licensed as a [small business](/usc/15/1691c–2.md?p=h-2) [investment company](/usc/15/77z–2.md?p=i-2) under the [Small Business](/usc/15/1691c–2.md?p=h-2) Investment Act of 1958 [[15 U.S.C. 661](/usc/15/661.md) et seq.] shall not be deemed to be a senior [security](/usc/15/80a–2.md?p=a-36) of such [business development company](/usc/15/80a–2.md?p=a-48) for purposes of [section 80a–18(a) of this title](/usc/15/80a–18.md?p=a) if the amount of the indebtedness at the time of its issuance by the borrowing [company](/usc/15/80a–2.md?p=a-8) is itself taken fully into [account](/usc/15/1681a.md?p=r-4) as a liability by such [business development company](/usc/15/80a–2.md?p=a-48), as if it were issued by such [business development company](/usc/15/80a–2.md?p=a-48), in determining whether such [business development company](/usc/15/80a–2.md?p=a-48), at that time, satisfies the asset coverage requirements of [section 80a–18(a) of this title](/usc/15/80a–18.md?p=a).
- (b) **Compliance—** A [business development company](/usc/15/80a–2.md?p=a-48) shall comply with the provisions of this section at the time it becomes subject to [sections 80a–54 through 80a–64](/usc/15/80a–54..80a–64.md) of this title, as if it were issuing a [security](/usc/15/80a–2.md?p=a-36) of each class which it has outstanding at such time.

# §80a–61. Loans


Notwithstanding the exemption set forth in [section 80a–6(f) of this title](/usc/15/80a–6.md?p=f), [section 80a–21 of this title](/usc/15/80a–21.md) shall apply to a [business development company](/usc/15/80a–2.md?p=a-48) to the same extent as if it were a registered closed-end [investment company](/usc/15/77z–2.md?p=i-2), except that nothing in that section shall be deemed to prohibit—

- (1) any loan to a [director](/usc/15/80a–2.md?p=a-12), officer, or employee of, or general partner in, a [business development company](/usc/15/80a–2.md?p=a-48) for the purpose of purchasing [securities](/usc/15/80a–2.md?p=a-36) of such [company](/usc/15/80a–2.md?p=a-8) as part of an executive compensation plan, if such loan meets the requirements of [section 80a–56(j) of this title](/usc/15/80a–56.md?p=j); or
- (2) any loan to a [company](/usc/15/80a–2.md?p=a-8) controlled by a [business development company](/usc/15/80a–2.md?p=a-48), which [companies](/usc/15/80a–2.md?p=a-8) could be deemed to be under common [control](/usc/15/80a–2.md?p=a-9) solely because a third [person](/usc/15/80a–2.md?p=a-28) [controls](/usc/15/80a–2.md?p=a-9) such [business development company](/usc/15/80a–2.md?p=a-48).

# §80a–62. Distribution and repurchase of securities


Notwithstanding the exemption set forth in [section 80a–6(f) of this title](/usc/15/80a–6.md?p=f), [section 80a–23 of this title](/usc/15/80a–23.md) shall apply to a [business development company](/usc/15/80a–2.md?p=a-48) to the same extent as if it were a registered closed-end [investment company](/usc/15/77z–2.md?p=i-2), except as follows:

- (1) The prohibitions of [section 80a–23(a)(2) of this title](/usc/15/80a–23.md) shall not apply to any [company](/usc/15/80a–2.md?p=a-8) which (A) is a wholly-owned subsidiary of, or directly or indirectly controlled by, a [business development company](/usc/15/80a–2.md?p=a-48), and (B) immediately after the issuance of any of its [securities](/usc/15/80a–2.md?p=a-36) for property other than cash or [securities](/usc/15/80a–2.md?p=a-36), will not be an [investment company](/usc/15/77z–2.md?p=i-2) within the meaning of [section 80a–3(a) of this title](/usc/15/80a–3.md?p=a).
- (2) Notwithstanding the provisions of [section 80a–23(b) of this title](/usc/15/80a–23.md?p=b), a [business development company](/usc/15/80a–2.md?p=a-48) may sell any common stock of which it is the [issuer](/usc/15/80a–2.md?p=a-22) at a price below the current net asset value of such stock, and may sell warrants, options, or rights to acquire any such common stock at a price below the current net asset value of such stock, if—
  - (A) the holders of a majority of such [business development company](/usc/15/80a–2.md?p=a-48)’s outstanding [voting securities](/usc/15/80a–2.md?p=a-42), and the holders of a majority of such [company](/usc/15/80a–2.md?p=a-8)’s outstanding [voting securities](/usc/15/80a–2.md?p=a-42) that are not affiliated [persons](/usc/15/80a–2.md?p=a-28) of such [company](/usc/15/80a–2.md?p=a-8), approved such [company](/usc/15/80a–2.md?p=a-8)’s policy and practice of making such sales of [securities](/usc/15/80a–2.md?p=a-36) at the last annual meeting of shareholders or partners within one year immediately prior to any such sale, except that the shareholder approval requirements of this subparagraph shall not apply to the initial public offering by a [business development company](/usc/15/80a–2.md?p=a-48) of its [securities](/usc/15/80a–2.md?p=a-36);
  - (B) a required majority (as defined in [section 80a–56(o)](/usc/15/80a–56.md?p=o) of this title) of the [directors](/usc/15/80a–2.md?p=a-12) of or general partners in such [business development company](/usc/15/80a–2.md?p=a-48) have determined that any such sale would be in the best interests of such [company](/usc/15/80a–2.md?p=a-8) and its shareholders or partners; and
  - (C) a required majority (as defined in [section 80a–56(o)](/usc/15/80a–56.md?p=o) of this title) of the [directors](/usc/15/80a–2.md?p=a-12) of or general partners in such [business development company](/usc/15/80a–2.md?p=a-48), in consultation with the underwriter or underwriters of the offering if it is to be underwritten, have determined in good faith, and as of a time immediately prior to the first solicitation by or on behalf of such [company](/usc/15/80a–2.md?p=a-8) of firm commitments to [purchase](/usc/15/78c–5.md?p=g) such [securities](/usc/15/80a–2.md?p=a-36) or immediately prior to the issuance of such [securities](/usc/15/80a–2.md?p=a-36), that the price at which such [securities](/usc/15/80a–2.md?p=a-36) are to be sold is not less than a price which closely approximates the market value of those [securities](/usc/15/80a–2.md?p=a-36), less any distributing [commission](/usc/15/80a–2.md?p=a-7) or [discount](/usc/15/1602.md?p=q).
- (3) A [business development company](/usc/15/80a–2.md?p=a-48) may sell any common stock of which it is the [issuer](/usc/15/80a–2.md?p=a-22) at a price below the current net asset value of such stock upon the exercise of any warrant, option, or right issued in accordance with [section 80a–60(a)(4) of this title](/usc/15/80a–60.md?p=a-4).

# §80a–63. Accounts and records

- (a) **Exception for business development company—** Notwithstanding the exemption set forth in [section 80a–6(f) of this title](/usc/15/80a–6.md?p=f), [section 80a–30 of this title](/usc/15/80a–30.md) shall apply to a [business development company](/usc/15/80a–2.md?p=a-48) to the same extent as if it were a registered closed-end [investment company](/usc/15/77z–2.md?p=i-2), except that the reference to the financial statements required to be filed pursuant to [section 80a–29 of this title](/usc/15/80a–29.md) shall be construed to refer to the financial statements required to be filed by such [business development company](/usc/15/80a–2.md?p=a-48) pursuant to [section 78m of this title](/usc/15/78m.md).
- (b) **Risk factors statement; availability—**
  - (1) In addition to the requirements of [subsection (a)](#a), a [business development company](/usc/15/80a–2.md?p=a-48) shall file with the [Commission](/usc/15/80a–2.md?p=a-7) and supply annually to its shareholders a written statement, in such form and manner as the [Commission](/usc/15/80a–2.md?p=a-7) may, by rule, prescribe, describing the risk factors involved in an investment in the [securities](/usc/15/80a–2.md?p=a-36) of a [business development company](/usc/15/80a–2.md?p=a-48) due to the nature of such [company](/usc/15/80a–2.md?p=a-8)’s investment portfolio and capital structure, and shall supply copies of such statement to any [registered broker or dealer](/usc/15/78c.md?p=h-2) upon request.
  - (2) If the [Commission](/usc/15/80a–2.md?p=a-7) finds it is necessary or appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of this subchapter, the [Commission](/usc/15/80a–2.md?p=a-7) may also require, by rule, any [person](/usc/15/80a–2.md?p=a-28) who, acting as principal or agent, sells a [security](/usc/15/80a–2.md?p=a-36) of a [business development company](/usc/15/80a–2.md?p=a-48) to inform the purchaser of such [securities](/usc/15/80a–2.md?p=a-36), at or before the time of sale, of the existence of the risk statement prepared by such [business development company](/usc/15/80a–2.md?p=a-48) pursuant to this subsection, and make such risk statement available on request. The [Commission](/usc/15/80a–2.md?p=a-7), in making such rules and regulations, shall consider, among other matters, whether any such rule or regulation would impose any unreasonable burdens on such [brokers](/usc/15/80a–2.md?p=a-6) or [dealers](/usc/15/80a–2.md?p=a-11) or unreasonably impair the maintenance of fair and orderly markets.

# §80a–64. Preventing compliance with subchapter; liability of controlling persons


Notwithstanding the exemption set forth in [section 80a–6(f) of this title](/usc/15/80a–6.md?p=f), [section 80a–47 of this title](/usc/15/80a–47.md) shall apply to a [business development company](/usc/15/80a–2.md?p=a-48) to the same extent as if it were a registered closed-end [investment company](/usc/15/77z–2.md?p=i-2), except that the provisions of [section 80a–47(a) of this title](/usc/15/80a–47.md?p=a) shall not be construed to require any [company](/usc/15/80a–2.md?p=a-8) which is not an [investment company](/usc/15/77z–2.md?p=i-2) within the meaning of [section 80a–3(a) of this title](/usc/15/80a–3.md?p=a) to comply with the provisions of this subchapter which are applicable to a [business development company](/usc/15/80a–2.md?p=a-48) solely because such [company](/usc/15/80a–2.md?p=a-8) is a wholly-owned subsidiary of, or directly or indirectly controlled by, a [business development company](/usc/15/80a–2.md?p=a-48).