
From the U.S. Code Online via GPO Access
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[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 15USC80a-54]

 
                      TITLE 15--COMMERCE AND TRADE
 
              CHAPTER 2D--INVESTMENT COMPANIES AND ADVISERS
 
                   SUBCHAPTER I--INVESTMENT COMPANIES
 
Sec. 80a-54. Acquisition of assets by business development 
        companies
        

(a) Permissible assets; percentage

    It shall be unlawful for a business development company 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) through (6) below represent at least 70 per 
centum of the value of its total assets (other than assets described in 
paragraph (7) below):
        (1) securities purchased, in transactions not involving any 
    public offering or in such other transactions as the Commission may, 
    by rule, prescribe if it finds that enforcement of this subchapter 
    and of the Securities Act of 1933 [15 U.S.C. 77a 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 of such securities, which issuer is an 
        eligible portfolio company, from any person who is, or who 
        within the preceding thirteen months has been, an affiliated 
        person of such eligible portfolio company, 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; or
            (B) from the issuer of such securities, which issuer is 
        described in section 80a-2(a)(46)(A) and (B) of this title but 
        is not an eligible portfolio company because it has issued a 
        class of securities with respect to which a member of a national 
        securities exchange, broker, or dealer 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, or from any person who is an 
        officer or employee of such issuer, if--
                (i) at the time of the purchase, the business 
            development company owns at least 50 per centum of--
                    (I) the greatest number of equity securities of such 
                issuer and securities convertible into or exchangeable 
                for such securities; and
                    (II) the greatest amount of debt securities of such 
                issuer,

          held by such business development company at any point in time 
            during the period when such issuer was an eligible portfolio 
            company, except that options, warrants, and similar 
            securities which have by their terms expired and debt 
            securities which have been converted, or repaid or prepaid 
            in the ordinary course of business or incident to a public 
            offering of securities of such issuer, shall not be 
            considered to have been held by such business development 
            company for purposes of this requirement; and
                (ii) the business development company is one of the 20 
            largest holders of record of such issuer's outstanding 
            voting securities;

        (2) securities of any eligible portfolio company with respect to 
    which the business development company satisfies the requirements of 
    section 80a-2(a)(46)(C)(ii) of this title;
        (3) securities purchased in transactions not involving any 
    public offering from an issuer described in sections 80a-2(a)(46)(A) 
    and (B) of this title or from a person who is, or who within the 
    preceding thirteen months has been, an affiliated person of such 
    issuer, or from any person in transactions incident thereto, if such 
    securities were--
            (A) issued by an issuer that is, or was immediately prior to 
        the purchase of its securities by the business development 
        company, in bankruptcy proceedings, subject to reorganization 
        under the supervision of a court of competent jurisdiction, or 
        subject to a plan or arrangement resulting from such bankruptcy 
        proceedings or reorganization;
            (B) issued by an issuer pursuant to or in consummation of 
        such a plan or arrangement; or
            (C) issued by an issuer that, immediately prior to the 
        purchase of such issuer's securities by the business development 
        company, 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 of eligible portfolio companies purchased from 
    any person in transactions not involving any public offering, if 
    there is no ready market for such securities and if immediately 
    prior to such purchase the business development company owns at 
    least 60 per centum of the outstanding equity securities of such 
    issuer (giving effect to all securities presently convertible into 
    or exchangeable for equity securities of such issuer as if such 
    securities were so converted or exchanged);
        (5) securities received in exchange for or distributed on or 
    with respect to securities described in paragraphs (1) through (4) 
    of this subsection, or pursuant to the exercise of options, 
    warrants, or rights relating to securities described in such 
    paragraphs;
        (6) cash, cash items, Government securities, or high quality 
    debt securities maturing in one year or less from the time of 
    investment in such high quality debt securities; 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, deferred 
    organization and operating expenses, and other noninvestment assets 
    necessary and appropriate to its operations as a business 
    development company, including notes of indebtedness of directors, 
    officers, employees, and general partners held by a business 
    development company as payment for securities of such company issued 
    in connection with an executive compensation plan described in 
    section 80a-56(j) of this title.

(b) Valuation of assets

    For purposes of this section, the value of a business development 
company's assets shall be determined as of the date of the most recent 
financial statements filed by such company with the Commission pursuant 
to section 78m of this title, and shall be determined no less frequently 
than annually.

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

                       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, as amended, which is 
classified generally to subchapter I (Sec. 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''.

                  Section Referred to in Other Sections

    This section is referred to in sections 80a-2, 80a-6, 80a-53, 80a-
60, 80b-2 of this title.
