expedited in every way. The court may affirm, modify, or set aside the order of the Administration. If the court determines that the just and proper disposition of the case requires the taking of additional evidence, the court shall order the Administration to reopen the hearing for the taking of such evidence, in such manner and upon such terms and conditions as the court may deem proper. The Administration may modify its findings as to the facts, or make new findings, by reason of the additional evidence so taken, and it shall file its modified or new findings and the amendments, if any, of its order, with the record of such additional evidence. No objection to an order of the Administration shall be considered by the court unless such objection was urged before the Administration or, if it was not so urged, unless there were reasonable grounds for failure to do so. The judgment and decree of the court affirming, modifying, or setting aside any such order of the Administration shall be subject only to review by the Supreme Court of the United States upon certification or certiorari as provided in section 1254 of title 28, United States Code. (f) If any licensee against which an order is issued under this section fails to obey the order, the Administration may apply to the United States court of appeals, within the circuit where the licensee has its principal place of business, for the enforcement of the order, and shall file a transcript of the record upon which the order complained of was entered. Upon the filing of the application the court shall cause notice thereof to be served on the licensee. The evidence to be considered, the procedure to be followed, and the jurisdiction of the court shall be the same as is provided in subsection (e) for applications to set aside or modify orders. The proceedings in such cases shall be made a preferred cause and shall be expedited in every way. INVESTIGATIONS SEC. 310.23 The Administration may make such investigations as it 15 U.S.C. 687b. deems necessary to determine whether a licensee or any other 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 rule or regulation under this Act, or of any order issued under this Act. The Administration shall permit any person to file with it a statement in writing, under oath or otherwise as the Administration shall determine, as to all the facts and circumstances concerning the matter to be investigated. For the purpose of any investigation, the Administration is empowered to administer oaths and affirmations, subpena witnesses, compel their attendance, take evidence, and require the production of any books, papers, and documents which are relevant to the inquiry. Such attendance of witnesses and the production of any such records may be required from any place in the United States. In case of contumacy by, or refusal to obey a subpena issued to, any person, including a licensee, the Administration may invoke the aid of any court of the United States within the jurisdiction of which such investigation or proceeding is carried on, or where such person resides or carries on business, in requiring the attendance and testimony of witnesses and the production of books, papers, and documents; and such court may issue an order requiring such person to appear before the Administration, there to produce records, if so ordered, or to give testimony touching the matter under investigation. Any failure to obey such order of the court may be punished by such court as a contempt thereof. All process in any such case may be served in the judicial district whereof such person is an inhabitant or wherever he may be found. 23 Secs. 309, 310, and 311 are all new sections added by sec. 9 of Public Law 87-341. The previous sec. 309 was repealed by sec. 11(e) of Public Law 87-341. 15 U.S.C. 687c. 15 U.S.C. 687d. 15 U.S.C. 695. INJUNCTIONS AND OTHER ORDERS SEC. 311.23 (a) Whenever, in the judgment of the Administration, a licensee or any other 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 rule or regulation under this Act, or of any order issued under this Act, the Administration may make application to the proper district court of the United States or a United States court of any 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, rule, regulation, or order, and such courts shall have jurisdiction of such actions and, upon a showing by the Administration that such licensee or other 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. The proceedings in such a case shall be made a preferred cause and shall be expedited in every way. (b) In any such proceeding the court as a court of equity may, to such extent as it deems necessary, take exclusive jurisdiction of the licensee or licensees and the assets thereof, wherever located; and the court shall have jurisdiction in any such proceeding to appoint a trustee or receiver to hold or administer under the direction of the court the assets so possessed. CONFLICTS OF INTEREST SEC. 312. For the purpose of controlling conflicts of interest which may be detrimental to small business concerns, to small business investment companies, to the shareholders of either, or to the purposes of this Act, the Administration shall adopt regulations to govern transactions with any officer, director, or shareholder of any small business investment company, or with any person or concern, in which any interest, direct or indirect, financial or otherwise, is held by any officer, director, or shareholder of (1) any small business investment company, or (2) any person or concern with an interest, direct or indirect, financial or otherwise, in any small business investment company. Such regulations shall include appropriate requirements for public disclosure (including disclosure in the locality most directly affected by the transaction) necessary to the purposes of this section.24 [All of title IV of Public Law 85-699 was repealed by sec. 11(f) of Public Law TITLE V-LOANS TO STATE AND LOCAL DEVELOPMENT SEC. 501. (a) The Administration is authorized to make loans to State development companies to assist in carrying out the purposes of this Act. Any funds advanced under this subsection shall be in exchange for obligations of the development company which bear interest at such rate, and contain such other terms, as the Administration may fix, and funds may be so advanced without regard to the use and investment by the development company of funds secured by it from other sources. (b) The total amount of obligations purchased and outstanding at any one time by the Administration under this section from any one State development company shall not exceed the total amount borrowed by it from all other 23 Secs. 309, 310, and 311 are all new sections added by sec. 9 of Public Law 87-341. The previous sec. 309 was repealed by sec. 11(e) of Public Law 87-341. 24 Added by Public Law 88-273. sources. Funds advanced to a State development company under this section shall be treated on an equal basis with those funds borrowed by such company after the date of the enactment of this Act, regardless of source, which have the highest priority, except when this requirement is waived by the Adminis trator. SEC. 502. The Administration may, in addition to its authority under 15 U.S.C. 696. section 501, make loans for plant construction, conversion or expansion, including the acquisition of land, to State and local development companies, and such loans may be made or effected either directly or in cooperation with banks or other lending institutions through agreements to participate on an immediate or deferred basis: Provided, however, That the foregoing powers shall be subject to the following restrictions and limitations: (1) All loans made shall be so secured as reasonably to assure repayment. In agreements to participate in loans on a deferred basis under this subsection, such participation by the Administration shall not be in excess of 90 per centum of the balance of the loan outstanding at the time of disbursement. (2) The proceeds of any such loan shall be used solely by such borrower to assist an identifiable small-business concern and for a sound business purpose approved by the Administration. (3) Loans made by the Administration under this section shall be limited to $350,000 25 for each such identifiable small-business concern. (4) Any development company assisted under this section must meet criteria established by the Administration, including the extent of participation to be required or amount of paid-in capital to be used in each instance as is determined to be reasonable by the Administration. (5) No loans, including extensions or renewals thereof, shall be made by the Administration for a period or periods exceeding twentyfive years 26 plus such additional period as is estimated may be required to complete construction, conversion, or expansion, but the Administration may extend the maturity of or renew any loan made pursuant to this section beyond the period stated for additional periods, not to exceed ten years, if such extension or renewal will aid in the orderly liquidation of such loan. Any such loan shall bear interest at a rate fixed by the Administration.27 TITLE VI-CHANGES IN FEDERAL RESERVE AUTHORITY [Omitted as no longer current.] TITLE VII-CRIMINAL PENALTIES [This title amends the U.S. Code to include certain actions by persons affiliated with or dealing with SBIC's as Federal crimes. See 18 U.S.C. 212, 213, 216, 657, 1006, and 1014.] 25 This limitation was raised from $250,000 to $350,000 by sec. 10(1) of Public Law 87-341. 26 This limitation was raised from 10 years to 25 years by sec. 10(2) of Public Law 87-341. 27 Previous limitation on the life of sec. 502 (June 30, 1961) was repealed by sec. 26 of Public Law 87-27 (the Area Redevelopment Act). 26 U.S.C. 1242. 26 U.S.C. 1243. 26 U.S.C. 243(b). * TEXT OF TAX PROVISIONS SECTION 57 OF TECHNICAL AMENDMENTS ACT OF 1958 * * SEC. 57. SMALL BUSINESS INVESTMENT COMPANIES. (a) LOSSES ON SMALL BUSINESS INVESTMENT COMPANY STOCK AND LOSSES OF SMALL BUSINESS INVESTMENT COMPANIES.-Part IV of subchapter P of chapter 1 (relating to special rules for determining capital gains and losses) is amended by adding at the end thereof the following new sections: "SEC. 1242. LOSSES ON SMALL BUSINESS INVESTMENT COMPANY STOCK. "If "(1) a loss is on stock in a small business investment company operating under the Small Business Investment Act of 1958, and "(2) such loss would (but for this section) be a loss from the sale or exchange of a capital asset, then such loss shall be treated as a loss from the sale or exchange of property which is not a capital asset. For purposes of section 172 (relating to the net operating loss deduction) any amount of loss treated by reason of this section as a loss from the sale or exchange of property which is not a capital asset shall be treated as attributable to a trade or business of the taxpayer. 28 "SEC. 1243. LOSS OF SMALL BUSINESS INVESTMENT COMPANY. "In the case of a small business investment company operating under the Small Business Investment Act of 1958, if "(1) a loss is on convertible debentures (including stock received pursuant to the conversion privilege) acquired pursuant to section 304 of the Small Business Investment Act of 1958, and "(2) such loss would (but for this section) be a loss from the sale or exchange of a capital asset, then such loss shall be treated as a loss from the sale or exchange of property which is not a capital asset." 29 (b) DIVIDENDS RECEIVED BY SMALL BUSINESS INVESTMENT COMPANIES.Section 243 (relating to dividends received by corporations) is amended (1) by striking out in subsection (a) "In the case of a corporation" and inserting in lieu thereof "In the case of a corporation (other than a small business investment company operating under the Small Business Investment Act of 1958)"; (2) by redesignating subsection (b) as (c), and by inserting after subsection (a) the following new subsection: "(b) SMALL BUSINESS INVESTMENT COMPANIES.-In the case of a small business investment company operating under the Small Business Investment Act of 1958, there shall be allowed as a deduction an amount equal to 100 percent of the amount received as dividends (other than dividends described in paragraph (1) of section 244, relating to dividends on preferred stock of a 28 Under Internal Revenue Service Income Tax Regulation § 1.1242-1(a) sec. 1242 ordinary loss deductions are made clearly available to subsequent purchasers as well as to original investors in SBIC stock. 20 Sec. 304 of the Small Business Investment Act of 1958 was amended in 1960 to permit SBIC's, under SBA regulations, to accept securities other than convertible debentures in exchange for equity capital supplied to small concerns. However, only convertible debentures and stock acquired by exercise of the conversion privilege are specifically covered by sec. 1243 of the Internal Revenue Code. 12 public utility) from a domestic corporation which is subject to taxation under (c) TECHNICAL AMENDMENTS.— (1) Section 165(h) (relating to deduction for losses) is amended by adding at the end thereof the following new paragraphs: "(3) For special rule for losses on stock in a small business investment company, see section 1242. "(4) For special rule for losses of a small business investment company, see section 1243." (2) Section 246(b) (1) (relating to limitation on aggregate amount of deductions for dividends received by corporations) is amended by striking out "243" each place it appears therein and insert in lieu thereof "243(a)". (3) The table of sections for part IV of subchapter P of chapter "Sec. 1242. Losses on small business investment company stock. (d) EFFECTIVE DATE.-The amendments made by this section shall apply with respect to taxable years beginning after the date of the enactment of this Act. SECTION 3 OF PUBLIC LAW 86-376 SEC. 3. (a) Section 542 (c) of the Internal Revenue Code of 1954 (relating 26 U.S.C. 542(c). to exceptions from definition of a personal holding company) is amended (a) by inserting "" in lieu of "." at the end thereof and (b) by adding at the end thereof the following new paragraph (11) 30: "(11)30 A small business investment company which is licensed by the Small Business Administration and operating under the Small Business Investment Act of 1958 and which is actively engaged in the business of providing funds to small business concerns under that Act. This paragraph shall not apply if any shareholder of the small business investment company owns at any time during the taxable year directly or indirectly (including, in the case of an individual, ownership by the members of his family as defined in section 544 (a) (2) a 5 per centum or more proprietary interest in a small business concern to which funds are provided by the investment company or 5 per centum or more in value of the outstanding stock of such concern." (b) The amendment made by this section shall apply to taxable years beginning after December 31, 1958. 30 Renumbered as par. (8) by Revenue Act of 1964. |