The Securities and Exchange Commission voted to propose rule amendments to implement certain provisions of the Small Business Credit Availability Act and the Economic Growth, Regulatory Relief, and Consumer Protection Act. 

The proposal would improve access to capital and facilitate investor communications by business development companies and registered closed-end funds. Business development companies—or “BDCs”—are a type of closed-end fund established by Congress that primarily invest in small and developing companies.

The proposed amendments would modify the registration, communications, and offering processes available to BDCs and registered closed-end funds, building on offering practices that operating companies currently use. 

This congressional mandate recognizes the importance of an efficient and cost-effective approach for these funds to raise capital in our public markets, which should ultimately benefit investors in these funds, including Main Street investors,” said SEC Chairman Jay Clayton.  “Moreover, the proposed changes should provide business development companies and registered closed-end funds with a more flexible offering process and facilitate capital formation in our public markets.”

The Commission’s proposal would allow eligible funds to engage in a more streamlined registration process to sell securities in response to market opportunities. The proposed amendments also would allow BDCs and registered closed-end funds to use communications and prospectus delivery rules currently available to operating companies.

The proposal includes additional amendments designed to help implement the congressionally-mandated amendments by further harmonizing the disclosure and regulatory framework for these funds with that of operating companies and by providing tools to help investors assess these funds and their offerings. These proposed amendments include new periodic and current reporting requirements and new structured data requirements. The Commission also is proposing a modernized approach to registration fee payments for closed-end funds that operate as “interval funds.”

The proposal will have a 60-day public comment period following its publication in the Federal Register.