Summary: H.R.6723 — 96th Congress (1979-1980)All Information (Except Text)

There is one summary for H.R.6723. Bill summaries are authored by CRS.

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Introduced in House (03/06/1980)

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 involving securities bearing a legend stating that such securities may not be sold or transferred except to accredited investors provided all purchasers of such securities are accredited investors or persons the issuer reasonably believes to be accredited investors and there is no general advertising or solicitation in connection with the transaction. 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 a transaction not involving an underwriter, any resale of: (1) securities bearing such a restrictive legend sold to accredited investors or persons reasonably believed to be accredited investors; and (2) securities acquired in a private offering by a venture capital company which is an affiliate of the issuer and which has been the beneficial owner of such securities for at least five years. Empowers the Securities and Exchange Commission to limit the availability of such exemption for venture capital companies.

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) primarily engage in activities such as providing capital to industry, financing promotional enterprises, purchasing securities for which no ready market exists, or reorganizing companies; and (2) have at least 80 percent of their assets (excluding Government securities, short-term paper, and cash) in securities obtained in connection with a private offering, resale of restricted securities, or corporate reorganization.

Exempts from regulation as an investment company, any venture capital company which has operated as such for at least three years and which: (1) is a reporting company under the Securities Exchange Act of 1934; (2) has outstanding securities beneficially owned by more than 100 persons, but only for a period of 180 days; or (3) presently proposes to make a public offering of its securities for 180 days after filing its registration statement and 60 days following its effective date or withdrawal, whichever last occurs.

Requires such venture capital companies to have disinterested directors or voting partnership advisers in order to qualify for the exemption provided by this title. Requires such companies to dispose of their securities only in the manner permitted under the Securities Act of 1933 for securities acquired in a private offering. Places restrictions on dealings between the insiders of a venture capital company and the businesses in which it invests.

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 shareholders, partners, and owners of venture capital companies from the clients of an investment adviser in determining the adviser's entitlement to an exemption from registration for having fewer than 15 clients.

Establishes a private right of action for damages or injunctive relief for persons injured by a willfull violation of the Investment Advisers Act of 1940 or the regulations promulgated thereunder.

Title III: Effective Date and Miscellaneous Provisions - States that this Act shall take effect upon its enactment.

Directs the Securities and Exchange Commission to promulgate regulations to implement this Act within 180 days of its enactment.