§2009cc–8 Rural business investment companies

Summary

Sets rules for what a rural business investment company must be and how it must operate. The company must be a corporation, LLC, or limited partnership created under State law only to do the work allowed here. If it is a corporation it must exist at least 30 years unless owners end it sooner. If it is a limited partnership or LLC it must exist at least 10 years. It must have the powers needed to do its work. Its articles must name its purpose, its name, the area(s) where it will work, the location of its main office, and its share classes. The articles can include other rules that follow this subchapter and must be approved by the Secretary. Private capital must be at least $5,000,000, or $10,000,000 for companies issuing participating securities the Secretary may buy or guarantee. The Secretary can allow between $5,000,000 and $10,000,000 for special cases. Each company has 2 years to reach the capital rule. The Secretary will check that capital is enough and that the company will follow the rules. At least 75 percent of capital must go to rural business concerns, no more than 10 percent of investments may be in an area with a city over 150,000 and its adjacent urbanized area, it must focus on equity needs rather than competing with banks, and short-term non-equity deals under 5 years are allowed only to protect an existing investment. For licenses issued after May 13, 2002, management must be diversified and not tied to the owners so it stays independent.