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property transferred, and the privileges granted to it by law exercised and enjoyed;
(7) to establish branch offices or agencies subject to the approval of the Administration;
(8) to acquire, hold, operate, and dispose of any property (real, personal, or mixed) whenever necessary or appropriate to the carrying out of its lawful functions;
(9) to operate in such area or areas as may be specified in its articles of incorporation and approved by the Administration; and
(10) to exercise the other powers set forth in this chapter and such incidental powers as may reasonably be necessary to carry on the business for which the company is established.
Board of directors
(e) The board of directors of each small-business investment company shall consist of nine members who shall be elected annually by the holders of the shares of stock of the company. Pub. L. 85-699, Title III, § 301, Aug. 21, 1958, 72 Stat. 691; as amended June 11, 1960, Pub. L. 86-502, § 4, 74 Stat. 196.
Section 682. Capital stock and subordinated
debenturesAmount of paid-in capital and surplus; purchase of debentures by Administration.
(a) Each company authorized to operate under this chapter shall have a paid-in capital and surplus equal to at least $300,000. In order to facilitate the formation of small business investment companies, the Administration is authorized, notwithstanding any other provisions of law, to purchase the debentures of any such company in an amount equal to not more than $150,000. Any debentures purchased by the Administration under this subsection shall be subordinate to any other debenture bonds, promissory notes, or other obligations which may be issued by such companies, and shall be deemed a part of the capital and surplus of such companies for purposes of this section and sections 683 (b) and 686 of this title.
Sale of shares of stock to banking organizations
(b) Notwithstanding the provisions of section 6(a)(1) of the Bank Holding Company Act of 1956, shares of stock in small business investment companies shall be eligible for purchase by national banks, and shall be eligible for purchase by other member banks of the Federal Reserve System and non-member insured banks to the extent permitted under applicable State law; except that in no event shall any such bank hold shares in small business investment companies in an amount aggregating more than 1 percent of its capital and surplus.
Ownership or control of stock; limitation on
(c) The aggregate amount of shares in any such company or companies which may be owned or controlled by a stockholder, or by any group or class of stockholders, may be limited by the Administration. Pub. L. 85-699, Title III, § 302, Aug. 21, 1958, 72 Stat. 692; as amended June 11, 1960, Pub. L. 86-502, § 5, 74 Stat. 196.
Section 683. Borrowing power; purchase of obligations by
(a) Each small business investment company shall have authority to borrow money and to issue its debenture bonds, promissory notes, or other obligations under such general conditions and subject to such limitations and regulations as the Administration may prescribe.
(b) To encourage the formation and growth of small business investment companies, the Administration is authorized to lend funds to such companies through the purchase of their obligations which shall bear interest at such rate, and contain such other terms, as the Administration may fix. The total amount of obligations purchased and outstanding at any one time by the Administration under this subsection in any one company shall not exceed 50 percent of the paid-in capital and surplus of such company. Pub. L. 85-699, Title III, § 303, Aug. 21, 1958, 72 Stat. 692.
Section 684. Provisions of equity capital for small-business
(a) It shall be a function of each small business investment company to provide a source of equity capital for incorporated small-business concerns in such manner and under such terms as the small business investment company may fix in accordance with the regulations of the Administration.
(b) Before any capital is provided to a small-business concern under this section
(1) the company may require such concern to refinance any or all of its outstanding indebtedness so that the company is the only holder of any evidence of indebtedness of such concern; and
(2) except as provided in regulations issued by the Administration, such concern shall agree that it will not thereafter incur any indebtedness without first securing the approval of the company and giving the company the first opportunity to finance such indebtedness.
(c) Whenever a company provides capital to a small-business concern under this section, such concern shall have the right, exercisable in whole or in such part as such concern may elect, to become a stockholder-proprietor by investing in the capital stock of the company 5 per centum of the amount of the capital so provided, in accordance with regulations prescribed by the Administrator. Pub. L. 85-699, Title III, § 304, Aug. 21, 1958, 72 Stat. 693; as amended June 11, 1960, Pub. L. 86-502, § 6, 74 Stat, 196.
Section 685. Long-term loans to small-business concerns
(a) Each company is authorized to make loans, in the manner and subject to the conditions described in this section, to incorporated and unincorporated small-business concerns in order to provide such concerns with funds needed for sound financing, growth, modernization, and expansion.
Direct loans; loans on participation basis
(b) Loans made under this section may be made directly or in cooperation with other lending institutions through agreements to participate on an immediate or deferred basis. In agreements to participate in loans on a deferred basis under this subsection, the participation by the company shall not be in excess of 90 per centum of the balance of the loan outstanding at the time of disbursement.
Maximum rate of interest
(c) The maximum rate of interest for the company's share of any loan made under this section shall be determined by the Administration.
(d) Any loan made under this section shall have a maturity not exceeding twenty years.
Soundness of loan; security
(e) Any loan made under this section shall be of such sound value, or so secured, as reasonably to assure repayment.
Extension or renewal
(f) Any company which has made a loan to a small-business concern under this section is authorized to extend the maturity of or renew such loan for additional periods, not exceeding ten years, if the company finds that such extension or renewal will aid in the orderly liquidation of such loan. Pub. L. 85-699, Title III, § 305, Aug. 21, 1958, 72 Stat. 693.
Section 686. Aggregate limitations on amount of assistance to any single enterprise.
Without the approval of the Administration, the aggregate amount of obligations and securities acquired and for which com
mitments may be issued by any small business investment company under the provisions of this chapter for any single enterprise shall not exceed 20 percent of the combined capital and surplus of such small business investment company authorized by this chapter. Pub. L. 85-699, Title III, § 306, Aug. 21, 1958, 72 Stat. 694.
Section 687. Operation and regulation of companies-Cooperation with banks and other financial institutions.
(a) Wherever practicable the operations of a small business investment company, including the generation of business, may be undertaken in cooperation with banks or other financial institutions, and any servicing or initial investigation required for loans or acquisitions of securities by the company under the provisions of this Act may be handled through such banks or other financial institutions on a fee basis. Any small business investment company may receive fees for services rendered to banks or other financial institutions,
Use of advisory services; depository or fiscal agent;
investment of funds
(b) Each small business investment company may make use, wherever practicable, of the advisory services of the Federal Reserve System and of the Department of Commerce which are available for and useful to industrial and commercial businesses, and may provide consulting and advisory services to a fee basis and have on its staff persons competent to provide such services. Any Federal Reserve bank is authorized to act as a depository or fiscal agent for any company organized under this Act. Such companies may invest funds not reasonably needed for their current operations in direct obligations of, or obligations guaranteed as to principal and interest by, the United States.
Rules and regulations; examination of companies; reports (c) The Administration is authorized to prescribe regulations governing the operations of small business investment companies and to carry out the provisions of this Act, in accordance with the purposes of this Act. Each small business investment company shall be subject to examinations made by direction of the Administration by examiners selected or approved by the Administration, and the cost of such examinations, including the compensation of the examiners, may in the discretion of the Administration be assessed against the company examined and when so assessed shall be paid by such company. Every such company shall make such reports to the Administration at such times and in such form as the Administration may require; except that the Administration is authorized to exempt from making such reports any such company
which is registered under the Investment Company Act of 1940 to the extent necessary to avoid duplication in reporting requirements.
Forfeiture of rights, privileges, and franchises;
(d) Should any small business investment company violate or fail to comply with any of the provisions of this Act or of regulations prescribed hereunder, all of its rights, privileges, and franchises derived therefrom may thereby be forfeited. Before any such company shall be declared dissolved, or its rights, privileges, and franchises forfeited, any noncompliance with or violation of this Act shall be determined and adjudged by a court of the United States of competent jurisdiction in a suit brought for that purpose in the district, territory, or other place subject to the jurisdiction of the United States, in which the principal office of such company is located. Any such suit shall be brought by the United States at the instance of the Administration or the Attorney General.
Restraining orders; jurisdiction
(e) Whenever in the judgment of the Administration any person has engaged or is about to engage in any acts or practices which constitute or will constitute a violation of any provision of this Act or of any regulation thereunder, the Administration may make application to the proper district court of the United States, or a United States court of any Territory or other place subject to the jurisdiction of the United States, for an order enjoining such acts or practices, or for an order enforcing compliance with such provision, or regulation, and such courts shall have jurisdiction of such actions and, upon a showing by the Administration that such person has engaged or is about to engage in any such acts or practices, a permanent or temporary injunction, restraining order, or other order, shall be granted without bond.
Extension of corporate existence
(f) Any small business investment company may at any time within the two years next previous to the date of the expiration of its corporate existence, by a vote of the shareholders owning two-thirds of its stock, apply to the Administration for approval to extend the period of its corporate existence for a term of not more than thirty years, and upon approval of the Administration, as provided in section 681 of this title, such company shall have its corporate existence extended for such approved period unless sooner dissolved by the act of the shareholders owning two-thirds of its stock, or by an Act of Congress, or unless it franchise becomes forfeited as herein provided.