SEC Permits BDCs to Sell Senior Securities and Invest Alongside Affiliates
The Securities and Exchange Commission announced temporary, conditional exemptive relief for business development companies.
The Securities and Exchange Commission announced temporary, conditional exemptive relief for business development companies (BDCs) to enable them to make additional investments in small- and medium-sized businesses, including those with operations affected by the coronavirus (COVID-19) pandemic.
BDCs were created to provide capital to smaller companies that may not have access to the capital markets. The latest relief will provide additional flexibility for BDCs to issue and sell senior securities in order to provide capital to these companies, and to participate in investments alongside certain private funds that are affiliated with the BDC.
“Many small- and medium-sized businesses across the country are struggling due to the effect of COVID-19, and today’s temporary, targeted action will enable BDCs to provide their businesses with additional financial support during these times,” said SEC chairman Jay Clayton. “The method for calculating the level of permitted financing and the other important conditions included in the order are designed to ensure that this temporary relief will both protect and benefit investors in the BDCs.”
