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SEC Eases Business Development Companies' Investment Requirements

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  • Baker, John
    The Securities and Exchange Commission has adopted rule amendments to increase the range of eligible portfolio companies in which business development
    Message 1 of 1 , Nov 4, 2006
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      The Securities and Exchange Commission has adopted rule amendments to increase the range of eligible portfolio companies in which business development companies may invest and has proposed further liberalization. Release No. IC-27538, 71 Fed. Reg. 64086 (Oct. 25, 2006) (adopting release); Release No. IC-27539, 71 Fed. Reg. 64093 (Oct. 25, 2006) (proposing release). Business development companies are a kind of closed-end investment company that is intended to be a financing source for companies that may have difficulty accessing the capital markets; they are exempt from many provisions of the Investment Company Act of 1940, but are required to invest most of their assets in eligible portfolio companies. The new rules, which have an effective date of November 30, 2006, provide that eligible portfolio companies generally include U.S. companies that are not listed on a securities exchange. The SEC also proposed a rule amendment that would make small listed companies eligible portfolio companies; comments are due by January 2, 2007. The SEC's press release, with links to the adopting and proposing releases, is available at

      http://www.sec.gov/news/press/2006/2006-181.htm


      John M. Baker <JMB@...>
      Stradley Ronon Stevens & Young, LLP http://www.stradley.com
      1220 19th Street NW, Suite 600
      Washington DC 20036
      202.419.8413
      202.822.0140 fax
      FundLaw Listowner http://groups.yahoo.com/group/fundlaw
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