Access to Small Business Investor Capital Act

Floor Speech

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Mrs. WAGNER. Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 2225) to permit a registered investment company to omit certain fees from the calculation of Acquired Fund Fees and Expenses, and for other purposes, as amended.

The Clerk read the title of the bill.

The text of the bill is as follows: H.R. 2225

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE.

This Act may be cited as the ``Access to Small Business Investor Capital Act''. SEC. 2. AMENDMENTS TO ACQUIRED FUND FEES AND EXPENSES REPORTING ON INVESTMENT COMPANY REGISTRATION STATEMENTS.

(a) Definitions.--For purposes of this section:

(1) Acquired fund.--The term ``Acquired Fund'' has the meaning given the term in Forms N-1A, N-2, and N-3.

(2) Acquired fund fees and expenses.--The term ``Acquired Fund Fees and Expenses'' means the Acquired Fund Fees and Expenses sub-caption in the Fee Table Disclosure.

(3) Business development company.--The term ``business development company'' has the meaning given the term in section 2(a) of the Investment Company Act of 1940 (15 U.S.C. 80a-2(a)).

(4) Fee table disclosure.--The term ``Fee Table Disclosure'' means the fee table described in Item 3 of Form N-1A, Item 3 of Form N-2, or Item 4 of Form N-3 (as applicable, and with respect to each, in any successor fee table disclosure that the Securities and Exchange Commission adopts).

(5) Form n-1a.--The term ``Form N-1A'' means the form described in section 274.11A of title 17, Code of Federal Regulations, or any successor regulation.

(6) Form n-2.--The term ``Form N-2'' means the form described in section 274.11a-1 of title 17, Code of Federal Regulations, or any successor regulation.

(7) Form n-3.--The term ``Form N-3'' means the form described in section 274.11b of title 17, Code of Federal Regulations, or any successor regulation.

(8) Registered investment company.--The term ``registered investment company'' means an investment company, as defined under section 3(a) of the Investment Company Act of 1940, registered with the Securities and Exchange Commission under such Act.

(b) Excluding Business Development Companies From Acquired Fund Fees and Expenses.--A registered investment company may, on any investment company registration statement filed pursuant to section 8(b) of the Investment Company Act of 1940 (15 U.S.C. 80a-8(b)), omit from the calculation of Acquired Fund Fees and Expenses those fees and expenses that the investment company incurred indirectly as a result of investment in shares of one or more Acquired Funds that is a business development company.

Mr. Speaker, I rise today in support of H.R. 2225, the Access to Small Business Investor Capital Act. I thank Congressman Sherman and the bipartisan cosponsors for their work on this bill.

This is a narrowly tailored fix to a longstanding problem that is hurting business development companies, or BDCs, which Congress originally created to help small and midsized businesses access capital.

Mr. Speaker, unfortunately, the SEC rule called Acquired Fund Fees and Expenses, or AFFE, requires funds that invest in BDCs to count the BDC internal expenses as part of their own expense ratio. The result is a higher reported cost, even though those fees aren't actually paid by the investor.

This has led many funds to avoid BDCs altogether, and it has kept BDCs out of key investment indexes. That means fewer dollars flowing to small businesses on Main Street.

H.R. 2225 fixes this. It allows funds to exclude expenses related to BDCs from their AFFE calculation, while still disclosing their investment in BDCs. This improves both accuracy and transparency. This is a smart and bipartisan solution that removes an intended barrier to capital formation without reducing investor protections.

Mr. Speaker, I urge my colleagues to support the bill, and I reserve the balance of my time.
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Mrs. WAGNER. Mr. Speaker, in closing, this is a smart and bipartisan solution that removes an unintended barrier to capital formation without reducing investor protections.

Mr. Speaker, I urge my colleagues to support H.R. 2225, and I yield back the balance of my time.

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