S. 1808: Access to Small Business Investor Capital Act

This bill, titled the Access to Small Business Investor Capital Act, proposes changes related to how certain investment fees are reported by registered investment companies. Its main components are as follows:

1. Purpose of the Bill

The bill aims to simplify the financial reporting process for registered investment companies by allowing them to omit specific fees associated with investments in business development companies (BDCs) from their fee disclosures. This is intended to make it easier for these investment companies to attract investors and fund small businesses.

2. Definitions

• Acquired Fund: Refers to investment companies in which other investment companies invest, as defined in established regulatory forms.
• Acquired Fund Fees and Expenses: These are the fees and expenses disclosed in the fee table of investment company registration statements.
• Business Development Company (BDC): A type of investment company that is designed to help small and emerging businesses.
• Fee Table Disclosure: This refers to the specific disclosure format that must outline the fees and expenses associated with investments.
• Registered Investment Company: Any investment company that is registered with the Securities and Exchange Commission (SEC) under the Investment Company Act of 1940.

3. Proposed Changes

The bill allows registered investment companies to exclude from their calculations of acquired fund fees and expenses any fees related to their investments in business development companies. By doing so, these companies may present a more appealing cost structure to potential investors, as it could reduce the perceived expenses associated with their investment products.

4. Impact on Reporting

If this legislation passes, registered investment companies would have greater flexibility in their reporting obligations, potentially leading to:

• A simplified and possibly lower reported cost of investing for investors.
• A more favorable comparison with other investment options, as it reduces the complexity of the fee structures shown to investors.
• Encouragement for investment companies to invest in business development companies, potentially increasing capital flow to small businesses.

5. Oversight and Compliance

Despite the changes, the investment companies would still be required to comply with regulatory standards set by the SEC, ensuring that investor protection remains a priority. The omission of certain fees would need to be clearly disclosed in a manner consistent with regulatory requirements.

Relevant Companies

• MAIN: Main Street Capital Corporation is a business development company that could see a change in how its fees are reported by investment companies investing in it.
• HTGC: Hercules Capital, Inc. is another business development company that may be impacted through increased investments as reporting fees become more favorable.
• TPVG: TriplePoint Venture Growth BDC Corp. potentially would benefit as well, as omitted fees may lead to increased investments from registered investment companies.