
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 15USC682]

 
                      TITLE 15--COMMERCE AND TRADE
 
             CHAPTER 14B--SMALL BUSINESS INVESTMENT PROGRAM
 
              SUBCHAPTER III--INVESTMENT DIVISION PROGRAMS
 
               Part A--Small Business Investment Companies
 
Sec. 682. Capital requirements


(a) Amount

                           (1) In general

        Except as provided in paragraph (2), the private capital of each 
    licensee shall be not less than--
            (A) $5,000,000; or
            (B) $10,000,000, with respect to each licensee authorized or 
        seeking authority to issue participating securities to be 
        purchased or guaranteed by the Administration under this 
        chapter.

                            (2) Exception

        The Administrator may, in the discretion of the Administrator 
    and based on a showing of special circumstances and good cause, 
    permit the private capital of a licensee authorized or seeking 
    authorization to issue participating securities to be purchased or 
    guaranteed by the Administration to be less than $10,000,000, but 
    not less than $5,000,000, if the Administrator determines that such 
    action would not create or otherwise contribute to an unreasonable 
    risk of default or loss to the Federal Government.

                            (3) Adequacy

        In addition to the requirements of paragraph (1), the 
    Administrator shall--
            (A) determine whether the private capital of each licensee 
        is adequate to assure a reasonable prospect that the licensee 
        will be operated soundly and profitably, and managed actively 
        and prudently in accordance with its articles; and
            (B) determine that the licensee will be able \1\ both prior 
        to licensing and prior to approving any request for financing, 
        to make periodic payments on any debt of the company which is 
        interest bearing and shall take into consideration the income 
        which the company anticipates on its contemplated investments, 
        the experience of the company's owners and managers, the history 
        of the company as an entity, if any, and the company's financial 
        resources.
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    \1\ So in original. Probably should be followed by a comma.
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               (4) Exemption from capital requirements

        The Administrator may, in the discretion of the Administrator, 
    approve leverage for any licensee licensed under subsection (c) or 
    (d) of section 681 of this title before September 30, 1996, that 
    does not meet the capital requirements of paragraph (1), if--
            (A) the licensee certifies in writing that not less than 50 
        percent of the aggregate dollar amount of its financings after 
        September 30, 1996, will be provided to smaller enterprises; and
            (B) the Administrator determines that such action would not 
        create or otherwise contribute to an unreasonable risk of 
        default or loss to the United States Government.

(b) Financial institution investments

                          (1) Certain banks

        Notwithstanding the provisions of section 1845(a)(1) \2\ of 
    title 12, any national bank, or any member bank of the Federal 
    Reserve System or nonmember insured bank to the extent permitted 
    under applicable State law, may invest in any 1 or more small 
    business investment companies, or in any entity established to 
    invest solely in small business investment companies, except that in 
    no event shall the total amount of such investments of any such bank 
    exceed 5 percent of the capital and surplus of the bank.
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    \2\ See References in Text note below.
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                  (2) Certain savings associations

        Notwithstanding any other provision of law, any Federal savings 
    association may invest in any one or more small business investment 
    companies, or in any entity established to invest solely in small 
    business investment companies, except that in no event may the total 
    amount of such investments by any such Federal savings association 
    exceed 5 percent of the capital and surplus of the Federal savings 
    association.

(c) Diversification of ownership

    The Administrator shall ensure that the management of each licensee 
licensed after September 30, 1996, is sufficiently diversified from and 
unaffiliated with the ownership of the licensee in a manner that ensures 
independence and objectivity in the financial management and oversight 
of the investments and operations of the licensee.

(Pub. L. 85-699, title III, Sec. 302, Aug. 21, 1958, 72 Stat. 692; Pub. 
L. 86-502, Sec. 5, June 11, 1960, 74 Stat. 196; Pub. L. 87-341, Sec. 3, 
Oct. 3, 1961, 75 Stat. 752; Pub. L. 88-273, Sec. 2, Feb. 28, 1964, 78 
Stat. 146; Pub. L. 90-104, title II, Secs. 203(a), 204, Oct. 11, 1967, 
81 Stat. 269, 270; Pub. L. 94-305, title I, Secs. 106(e), 107, June 4, 
1976, 90 Stat. 666; Pub. L. 95-89, title II, Sec. 210, Aug. 4, 1977, 91 
Stat. 558; Pub. L. 95-507, title I, Sec. 105, Oct. 24, 1978, 92 Stat. 
1758; Pub. L. 102-366, title IV, Secs. 406(a), 409, Sept. 4, 1992, 106 
Stat. 1015, 1017; Pub. L. 104-208, div. D, title II, Sec. 208(c), Sept. 
30, 1996, 110 Stat. 3009-742; Pub. L. 105-135, title II, Sec. 215(a), 
Dec. 2, 1997, 111 Stat. 2601; Pub. L. 106-554, Sec. 1(a)(9) [title IV, 
Sec. 403], Dec. 21, 2000, 114 Stat. 2763, 2763A-690.)

                       References in Text

    For definition of ``this chapter'', referred to in subsec. 
(a)(1)(B), see References in Text note set out under section 661 of this 
title.
    Subsection (d) of section 681 of this title, referred to in subsec. 
(a)(4), was repealed by Pub. L. 104-208, div. D, title II, 
Sec. 208(b)(3)(A), Sept. 30, 1996, 110 Stat. 3009-742.
    Section 1845(a)(1) of title 12, referred to in subsec. (b)(1), was 
repealed by Pub. L. 89-485, Sec. 9, July 1, 1966, 80 Stat. 240. See 
section 371c of Title 12, Banks and Banking.

                          Codification

    September 30, 1996, referred to in subsecs. (a)(4) and (c), was in 
the original ``the date of enactment of the Small Business Program 
Improvement Act of 1996'', which was translated as meaning the date of 
enactment of the Small Business Programs Improvement Act of 1996, to 
reflect the probable intent of Congress.


                               Amendments

    2000--Subsec. (b). Pub. L. 106-554 inserted subsec. heading, 
designated existing provisions as par. (1), inserted par. heading, and 
added par. (2).
    1997--Subsec. (b). Pub. L. 105-135 substituted ``any national bank, 
or any member bank of the Federal Reserve System or nonmember insured 
bank to the extent permitted under applicable State law, may invest in 
any 1 or more small business investment companies, or in any entity 
established to invest solely in small business investment companies, 
except that in no event shall the total amount of such investments of 
any such bank exceed 5 percent of the capital and surplus of the bank.'' 
for ``shares of stock in small business investment companies shall be 
eligible for purchase by national banks, and shall be eligible for 
purchase by other member banks of the Federal Reserve System and 
nonmember insured banks to the extent permitted under applicable State 
law; except that in no event may any such bank acquire shares in any 
small business investment company if, upon the making of that 
acquisition, the aggregate amount of shares in small business investment 
companies then held by the bank would exceed 5 percent of its capital 
and surplus.''
    1996--Subsec. (a). Pub. L. 104-208, Sec. 208(c)(1), inserted heading 
and substituted pars. (1) to (3)(A) and ``determine that the licensee 
will be able'' in par. (3)(B) for ``The combined private paid-in capital 
and paid-in surplus of any company licensed pursuant to section 681(c) 
and (d) of this title shall not be less than $150,000: Provided, 
however, That the combined private paid-in capital and paid-in surplus 
of any company licensed on or after October 1, 1992 pursuant to section 
681(c) of this title shall be not less than $2,500,000 and pursuant to 
section 681(d) of this title shall be not less than $1,500,000. In all 
cases, such capital and surplus shall be adequate to assure a reasonable 
prospect that the company will be operated soundly and profitably, and 
managed actively and prudently in accordance with its articles. The 
Administration shall also determine the ability of the company,''.
    Subsec. (a)(4). Pub. L. 104-208, Sec. 208(c)(2), added par. (4).
    Subsec. (c). Pub. L. 104-208, Sec. 208(c)(3), inserted heading and 
amended text of subsec. (c) generally. Prior to amendment, text read as 
follows: ``The aggregate amount of shares in any such company or 
companies which may be owned or controlled by any stockholder, or by any 
group or class of stockholders, may be limited by the Administration.''
    1992--Subsec. (a). Pub. L. 102-366 substituted ``1992 pursuant to 
section 681(c) of this title shall be not less than $2,500,000 and 
pursuant to section 681(d) of this title shall be not less than 
$1,500,000'' for ``1979 pursuant to section 681(c) and (d) of this title 
shall be not less than $500,000'' and inserted at end ``The 
Administration shall also determine the ability of the company, both 
prior to licensing and prior to approving any request for financing, to 
make periodic payments on any debt of the company which is interest 
bearing and shall take into consideration the income which the company 
anticipates on its contemplated investments, the experience of the 
company's owners and managers, the history of the company as an entity, 
if any, and the company's financial resources.''
    1978--Subsec. (a). Pub. L. 95-507 provided that the combined private 
paid-in capital and paid-in surplus of any company licensed on or after 
Oct. 1, 1979 pursuant to section 681(c) and (d) of this title would not 
be less than $500,000.
    1977--Subsec. (b). Pub. L. 95-89 inserted ``and'' between 
``capital'' and ``surplus''.
    1976--Subsec. (a). Pub. L. 94-305, Sec. 106(e), struck out ``of 
incorporation'' after ``its articles''.
    Subsec. (b). Pub. L. 94-305, Sec. 107, struck out provisions 
prohibiting the bank from acquiring shares in a small business 
investment company if the bank would hold 50 percent or more of any 
class of equity securities issued by that investment company and having 
actual or potential voting rights.
    1967--Subsec. (a). Pub. L. 90-104, Sec. 203(a), substituted small 
business investment company minimum capital requirement, a combined 
private paid-in capital and paid-in surplus, of $150,000 and adequate to 
assure reasonable prospect of sound and profitable company operations 
and active and prudent management in accordance with the articles of 
incorporation for former requirement of a paid-in capital and surplus 
equal to at least $300,000, and eliminated provisions for purchase of 
debentures of such companies in an amount not to exceed the lesser of 
$700,000 or the amount of paid-in capital and surplus of the company 
from other sources and for subordination of debentures (both 
incorporated in section 686(b) of this title), for such purchases by the 
Administration only during certain prescribed period, and deeming the 
debentures part of the capital and surplus for certain purposes.
    Subsec. (b). Pub. L. 90-104, Sec. 204, substituted prohibition 
against bank acquisition of small business investment company stock if, 
upon such acquisition, the aggregate amount of shares in such companies 
then held by the bank would exceed 5 percent of the capital and surplus, 
or the bank would hold 50 percent or more of any class of equity 
securities issued by that investment company and having actual or 
potential voting rights for former prohibition against holding of shares 
in an amount aggregating more than 2 percent of its capital and surplus.
    1964--Subsec. (a). Pub. L. 88-273 increased the limitation on 
Administration purchase of debentures from $400,000 to $700,000 and 
extended the period for such purchase from three years after date of 
issuance of license or date of enactment of Pub. L. 87-341, the Small 
Business Investment Act Amendments of 1961 (Oct. 3, 1961), whichever is 
later, to five years after date of issuance of license or date of 
enactment of Pub. L. 88-273, the Small Business Investment Act 
Amendments of 1963 (Feb. 28, 1964), whichever is later.
    1961--Subsec. (a). Pub. L. 87-341, Sec. 3(a), inserted ``and 
growth'', limited the purchase of debentures to the extent that 
necessary funds are not available to the company involved from private 
sources on reasonable terms, increased the amount of purchasable 
debentures to not more than the lesser of $400,000 or the paid-in 
capital and surplus of the company from other sources, and restricted 
such purchases to such period as may be fixed by the Administration, but 
not ending more than three years after the date of issuance of the 
company's license under section 681c of this title, or Oct. 3, 1961, 
whichever is later, and deleted provisions limiting purchase of 
debentures to $150,000.
    Subsec. (b). Pub. L. 87-341, Sec. 3(b), increased the maximum amount 
of shares a bank may hold in small business investment companies to 2 
percent of the capital and surplus.
    1960--Subsec. (b). Pub. L. 86-502 substituted ``Notwithstanding the 
provisions of section 1845(a)(1) of title 12, shares'' for ``Shares''.


                    Effective Date of 1997 Amendment

    Amendment by Pub. L. 105-135 effective Oct. 1, 1997, see section 3 
of Pub. L. 105-135, set out as a note under section 631 of this title.


                    Effective Date of 1967 Amendment

    Amendment by Pub. L. 90-104 effective 90 days after Oct. 11, 1967, 
see section 211 of Pub. L. 90-104, set out as a note under section 681 
of this title.


 Effect of Small Business Equity Enhancement Act of 1992 on Securities 
                                  Laws

    Nothing in amendment by Pub. L. 102-366 to be construed to affect 
applicability of securities laws or to otherwise supersede or limit 
jurisdiction of Securities and Exchange Commission, see section 418 of 
Pub. L. 102-366, set out as a note under section 661 of this title.

                  Section Referred to in Other Sections

    This section is referred to in sections 681, 683 of this title; 
title 42 section 9815.
