An act to amend the Federal securities laws to provide incentives for small business investment, and for other purposes.

Summary

Small Business Investment Incentive Act of 1980 - Title I: Amendments to the Securities Act of 1933 - Amends the Securities Act of 1933 to include within the private offering exemption from full registration any transaction: (1) which is solely with accredited investors or persons the issuer believes to be accredited investors; (2) involving a security bearing a legend stating that such security may not be sold without compliance with the registration requirements or exemptions of such Act; and (3) for which there is no general advertising or solicitation. Defines the term "accredited investor" to include banks, insurance companies, registered investment companies, licensed small business investment companies, venture capital companies, any fund, trust, or account administered by a bank or insurance company, and any purchaser of $100,000 or more of the issuer's securities. Exempts from registration, as an action not involving an underwriter, any resale of a security to an accredited investor or a person the seller reasonably believes to be an accredited investor. Title II: Amendments to the Investment Company Act of 1940 and the Investment Advisers Act of 1940 - Amends the Investment Company Act of 1940 to define a "venture capital company" to include companies which: (1) are predominantly engaged in one or more of the businesses of (a) providing capital and managerial assistance to new businesses, businesses in need of reorganization, or businesses which cannot obtain capital from public markets on fair terms, (b) purchasing securities for which there is no ready market, (c) purchasing securities or assets to effect reorganizations which establish independent businesses, (d) acting as a small business investment company, or (e) a related business or activity as determined by the Commission; and (2) have at least 80 percent of their assets (excluding equipment and real estate maintained to conduct business operations, deferred operating expenses, and other property and assets necessary to its operation) in (a) securities obtained in a private offering or treated for purposes of resale as having been obtained in a private offering, (b) securities obtained in a corporate reorganization, or (c) Government securities, short-term paper, and cash items. Defines a private venture capital company to include companies: (1) which are predominantly engaged in such businesses; (2) which have at least 60 percent of their assets in such securities; and (3) the securities of which are issued only in transactions included within the private offering exemption from full registration of the Securities Act of 1933. Exempts from regulation as an investment company any venture capital company which has operated as such for at least three years or any private venture capital company, if such an eligible company: (1) has each class of its equity securities registered pursuant to the Securities Exchange Act of 1934; or (2) has outstanding securities beneficially owned by more than 100 persons, but only for a period of 180 days. Declares that for purposes of such Act, the beneficial ownership by a company of more than ten percent of the voting securities of an issuer shall be deemed to be ownership by one person if at the time the securities are purchased: (1) the value of all securities of all issuers which are exempt from regulation as investment companies owned by such company does not exceed ten percent of the value of the company's total assets; or (2) such company is a general partner, promoter, or investment adviser of such issuer. Requires the majority of the directors of an eligible venture capital company to be disinterested persons in order for such company to qualify for the exemption provided by this title. Places restrictions on dealings between the insiders of such a company and the businesses in which it invests. Authorizes the Commission to require eligible venture capital companies to comply with specified provisions of the Investment Company Act of 1940 pertaining to the custody of securities and fidelity bonding and indemnification. Prohibits any director, controlling person, or adviser of such a company from engaging in any fraudulent or deceptive act in connection with the purchase or sale of any security held by that company. Directs each eligible venture capital company to maintain such records as the Commission requires. Authorizes the Commission to require such a company to supply an annual statement summarizing the risks involved in investing in the securities held by such company to its shareholders, any registered broker or dealer upon request, and purchasers of such securities. Establishes a private right of action for damages or injunctive relief for persons injured by a willful violation of the restrictions or reporting requirements applicable to eligible venture capital companies under this Act. Authorizes the Commission to: (1) order an eligible company to comply with the requirements set forth in this title upon finding on the record that such company has failed to satisfy such requirements; and (2) prohibit any person from serving as an employee, officer, depositor, principal underwriter, or adviser for any eligible company if it finds, after an opportunity for hearing, that such person (a) made a misleading statement or report to the Commission, (b) willfully violated or contributed to a violation of the Securities Act of 1933, the Securities Exchange Act of 1934, or the Investment Advisers Act of 1940, (c) has been convicted within ten years of a felony or misdemeanor involving the purchase or sale of any security, or (d) is enjoined from acting in such capacity. Permits a venture capital company to register as an investment company, though it would be entitled to an exemption under this Act, provided it is not a personal holding company as defined in the Internal Revenue Code of 1954. Amends the Investment Advisers Act of 1940 to exclude as clients of an investment adviser, for purposes of determining the adviser's entitlement to an exemption from registration, any shareholder, partner, or beneficial owner of any company which is either an eligible venture capital company or a private company (as defined in this Act) unless either of such companies is a client of such investment adviser separate from its status as a shareholder, partner, or beneficial owner. Title III: Effective Date and Miscellaneous Provisions - States that this Act shall take effect upon its enactment. Authorizes and directs the Commission to study the effects of the exemption from regulation for eligible venture capital companies set forth by this Act and to report its findings to Congress.

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Documents

5 official files

• Public Law (PDF)

  Public Law · EN · 22 October 1980

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• Passed Senate amended

  summary · EN · 25 September 1980

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• Passed House amended

  summary · EN · 23 September 1980

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• Reported to House with amendment(s)

  summary · EN · 17 September 1980

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• Introduced in House

  summary · EN · 12 June 1980

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