---
kind: "section"
citation: "15 U.S.C. § 80a–54"
title: "15"
title_heading: "Commerce and Trade"
number: "80a–54"
heading: "Acquisition of assets by business development companies"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/15/80a-54"
units:
  - "Chapter 2D — Investment Companies and Advisers"
  - "Subchapter I — Investment Companies"
---

# §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) of this subsection) unless, at the time the acquisition is made, assets described in paragraphs [(1)](#a-1) through [(6)](#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) 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 to or for a customer pursuant to rules or regulations adopted by the Board 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, 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/15/80a–2.md?p=a-36) 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) 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 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 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 the [business development company](/usc/15/80a–2.md?p=a-48) owns at least 60 per centum of the outstanding equity [securities](/usc/15/80a–2.md?p=a-36) 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/15/80a–2.md?p=a-36) 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) 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.

## Source credit

(Aug. 22, 1940, ch. 686, title I, § 55, as added Pub. L. 96–477, title I, § 105, Oct. 21, 1980, 94 Stat. 2278; amended Pub. L. 100–181, title VI, § 626, Dec. 4, 1987, 101 Stat. 1263; Pub. L. 104–290, title V, § 505, Oct. 11, 1996, 110 Stat. 3446.)

## Notes

### Editorial Notes

### References in Text

The Securities Act of 1933, referred to in subsec. (a)(1), is act May 27, 1933, ch. 38, title I, 48 Stat. 74, which is classified generally to subchapter I (§ 77a et seq.) of chapter 2A of this title. For complete classification of this Act to the Code, see section 77a of this title and Tables.

### Amendments

1996—Subsec. (a)(1)(A). Pub. L. 104–290 substituted “from any person” for “or from any person” and inserted before semicolon “, or from any other person, subject to such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors”.

1987—Subsec. (a)(1)(B). Pub. L. 100–181 substituted “described in section” for “described in sections”.