§80a–62 Distribution and Repurchase of Securities

Summary

Treats a business development company like a registered closed-end investment company for the rules about selling and buying back its securities, but with three exceptions. First, the ban on certain transactions does not apply to a company that is wholly owned by, or controlled by, the business development company if, after it issues securities in exchange for property other than cash or marketable securities, it will not be an investment company. Second, the business development company may sell its common stock (or sell warrants, options, or rights to buy that stock) for less than the current net asset value if three things happen: holders of a majority of its voting shares—and a majority of the voting shares not held by affiliates—approved this policy at the last annual meeting within one year before the sale (approval not required for the company’s initial public offering); a required majority of the directors or general partners decide the sale is in the best interests of the company and its shareholders or partners; and that same required majority, after consulting any underwriter if there is one and immediately before seeking firm purchase commitments or issuing the securities, in good faith finds the sale price is at least roughly the market value minus any distributing commission or discount. Third, the company may sell common stock below net asset value when someone exercises a warrant, option, or right that was issued under the company’s permitted issuance rules.