BDC CIVILITE 2014

BDC are permitted subject to approval by a required majority of the BDC’s directors as speciied in the 1940 Act A second-tier afiliate of a BDC may be a close afiliate or a remote afiliate depending on various factors The Speciic Question The staff was recently asked whether a certain second-tier afiliate of a BDC may be

business development company (“BDC”) is a special closed-end investment vehicle that is registered under the Investment Company Act of 1940 (“1940 Act”) and used to facilitate capital formation by smaller U S companies There are approximately 45 publicly traded BDCs operating today with approximately $15 billion in capital

BDC’s independent directors (depending on the exchange) ! The non-management or “independent directors” of the BDC must hold regularly scheduled executive sessions ! The BDC must adopt a code of business conduct and ethics various committee charters and in the case of NYSE-listed BDCs corporate governance guidelines

SEC in 2014 Broadly these relate to: modifying conditions on exemptive applications seeking relief to exclude the debt of wholly-owned Small Business Investment Company subsidiaries from the BDC parent’s asset-coverage requirements under the ‘40-Act to only those SBIC subsidiaries that have

status subjects the BDC to Section 55 through 65 of the 1940 Act The 1940 Act also sets forth specific criteria that require a BDC to maintain at least 70 of its investments in eligible assets before investing in non-eligible assets A BDC is subject to certain ongoing requirements of the 1940 Act For example under Section 56(a) of the 1940