WASHINGTON--(EON: Enhanced Online News)--The Small Business Investor Alliance (SBIA), the leading association for lower middle market private equity funds and investors, today announced that it has secured 24 signatories to the letter it submitted to the Securities & Exchange Commission requesting that current regulations imposed on Business Development Companies (BDCs) be modernized.
“BDCs will flourish under a regulatory playing field that is consistent and level with other public companies. Unlocking these regulatory barriers by streamlining SEC filings and improving our ability to grow will only increase capital access to our nation’s small and medium sized businesses”
The SBIA is working closely with Congress to revitalize the existing regulatory framework that restricts the ability of BDCs to effectively raise and deploy capital in the nation’s emerging growth companies. On Sept. 11, 2013, the SBIA and Sutherland Asbill & Brennan, a leading law firm serving BDCs, hosted 220 senior private equity executives and industry professionals at its 11th annual Business Development Company (BDC) Roundtable in Washington to discuss the burdensome regulatory environment in which BDCs operate as compared with other publicly-traded companies.
“Arcane regulations make it very difficult for the BDC industry to support our nation’s small and medium-sized businesses that are often unable to access traditional bank loan and equity markets for financing. We have identified several problematic areas within the existing regulatory framework that will allow this market segment to play the vital job creation and economic role Congress envisioned when it established the BDC program in 1980,” said Brett Palmer, President of the SBIA.
“BDCs will flourish under a regulatory playing field that is consistent and level with other public companies. Unlocking these regulatory barriers by streamlining SEC filings and improving our ability to grow will only increase capital access to our nation’s small and medium sized businesses,” said Curtis Hartman, Senior Managing Director at Main Street Capital and the Chair of the BDC Committee at the Small Business Investor Alliance.
The signatories to the SBIA letter represent more than half of the total BDC community.
The SBIA and BDC industry are requesting that regulatory modernization be made a major agenda item at the SEC’s Forum on Small Business Capital Formation in November and in the coming years. Market participants are asking the SEC to implement the following measures to improve the investment capability of BDCs:
- Allow BDCs to incorporate already-filed information by reference into current registration statements with the Commission as other public companies do;
- Allow BDCs to file automatic shelf registration statements and therefore be afforded ready access to the capital markets by permitting qualification for BDCs under the definition of “Well-Known Seasoned Issuer” (WKSI) as other public companies do;
- Permit BDCs to release factual and forward-looking business information by using free-writing prospectuses as other public companies do;
- Allow BDC to communicate with investors more freely during the preparation and filing periods for registration statements as other public companies do;
- Allow broker-dealers and other providers of market research more flexibility to disseminate research, thereby providing more information to the market and shareholders;
- Provide a safe harbor to BDCs for disseminating additional information during an offering, as other public companies do;
- Allow a BDC to file a shelf registration statement for continuous or delayed offerings on the same form used by other public companies;
- Synchronize BDC prospectus filing requirements with those of other public companies, which Congress contemplated in 1980 when the BDC model was created; and
- Provide regulatory parity by relieving BDCs of the requirement to provide written confirmations of sales, notifications of allocation, and deliveries of securities.
- Allow preferred stock to be treated as equity, not debt.
- Permit BDCS to own or acquire securities or other interests in registered investment advisers or other advisers to investment companies.
- Immediately engage the BDC industry to review and propose changes to the asset coverage ratio under which BDCs must operate.
The SBIA has been playing a pivotal role in promoting the growth and vitality of the private equity industry for more than 50 years. SBIA works on behalf of its members as a tireless advocate for policies that promote competitive markets and robust domestic investment for growing of small businesses.
About the Small Business Investor Alliance (SBIA)
The Small Business Investor Alliance (SBIA) is the premier organization of lower middle market private equity funds and investors. SBIA members provide vital capital to small businesses nationwide, resulting in economic growth and job creation. SBIA has been playing a pivotal role in promoting the growth and vitality of the private equity industry for more than 50 years. For more information, visit www.sbia.org or call 202-628-5055.