Incentivizing New Ventures and Economic Strength Through Capital Formation Act of 2025
Officially: “Incentivizing New Ventures and Economic Strength Through Capital Formation Act of 2025” Read the full text
What it does
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1Short title
This section would let the Act be referred to by the short title 'Increasing Investor Opportunities Act.'
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1. Short title This Act may be cited as the Increasing Investor Opportunities Act .
2Closed-end company authority to invest in private funds
This section would add a new subsection to the Investment Company Act of 1940 covering closed-end companies that invest in private funds. Except where otherwise prohibited or restricted by the Investment Company Act itself or by a rule issued under it, the Securities and Exchange Commission (SEC) could not prohibit or otherwise limit a closed-end company from investing any or all of its assets in securities issued by private funds. Under that same exception, the SEC also could not impose any condition on, restrict, or otherwise limit the offer to sell, or sale of, securities issued by a closed-end company that invests or proposes to invest in private funds, or the listing of that company's securities on a national securities exchange. The SEC would still be allowed to impose a condition, restriction, or limitation on any of those activities if the condition, restriction, or limitation is unrelated to the underlying characteristics of a private fund or to a fund's status as a private fund. Despite section 6(f) of the Investment Company Act of 1940, this new subsection would also apply to a closed-end company that elects to be treated as a business development company under section 54 of the Act. The bill would also add a definition to the Investment Company Act stating that 'private fund' has the meaning given in section 202(a) of the Investment Advisers Act of 1940. Separately, the bill would amend the Securities Exchange Act of 1934 so that, except where an exchange's own rules are consistent with the new limit on SEC authority described above, a national securities exchange could not prohibit, condition, restrict, or otherwise limit the listing or trading of a closed-end company's securities because the company invests or may invest some or all of its assets in securities issued by private funds. For that exchange rule, 'closed-end company' would have the meaning given in section 5(a) of the Investment Company Act of 1940 and would include a closed-end company that elects to be treated as a business development company under section 54 of that Act, and 'private fund' would again have the meaning given in section 202(a) of the Investment Advisers Act of 1940. The bill would also change two cross-references within section 3(c) of the Investment Company Act of 1940: in the introductory text of paragraph (1) and in paragraph (7)(D), it would replace a reference to 'subparagraphs (A)(i) and (B)(i)' with a reference to 'subparagraphs (A)(i), (B)(i), and (C)'. The text of section 3(c) itself is not part of this bill, so this rendering cannot state what practical difference adding that reference to subparagraph (C) makes. Finally, the bill states that nothing in this section or its amendments may be read to limit or change any fiduciary duty owed to a closed-end company (as defined in section 5(a)(2) of the Investment Company Act of 1940) or owed by an investment adviser (as defined in section 2(a) of the Investment Company Act of 1940) to such a closed-end company, and that nothing in this section or its amendments may be read to limit or change the valuation, liquidity, or redemption requirements or obligations that the Investment Company Act of 1940 imposes on a closed-end company (as defined in that same section 5(a)(2)).
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2. Closed-end company authority to invest in private funds (a) In general Section 5 of the Investment Company Act of 1940 ( 15 U.S.C. 80a–5 ) is amended by adding at the end the following: (d) Closed-End company authority To invest in private funds (1) In general Except as otherwise prohibited or restricted by this Act (or any rule issued under this Act), the Commission may not prohibit or otherwise limit a closed-end company from investing any or all of the assets of the closed-end company in securities issued by private funds. (2) Other restrictions on Commission authority Except as otherwise prohibited or restricted by this Act (or any rule issued under this Act), the Commission may not impose any condition on, restrict, or otherwise limit— (A) the offer to sell, or the sale of, securities issued by a closed-end company that invests, or proposes to invest, in securities issued by private funds; or (B) the listing of the securities of a closed-end company described in subparagraph (A) on a national securities exchange. (3) Unrelated restrictions The Commission may impose a condition on, restrict, or otherwise limit an activity described in paragraph (1) or subparagraph (A) or (B) of paragraph (2) if that condition, restriction, or limitation is unrelated to the underlying characteristics of a private fund or the status of a private fund as a private fund. (4) Application Notwithstanding section 6(f), this subsection shall also apply to a closed-end company that elects to be treated as a business development company pursuant to section 54. . (b) Definition of private fund Section 2(a) of the Investment Company Act of 1940 ( 15 U.S.C. 80a–2(a) ) is amended by adding at the end the following: (55) The term private fund has the meaning given in section 202(a) of the Investment Advisers Act of 1940 ( 15 U.S.C. 80b–2(a) ). . (c) Treatment by national securities exchanges Section 6 of the Securities Exchange Act of 1934 ( 15 U.S.C. 78f ) is amended by adding at the end the following: (m) (1) Except as otherwise prohibited or restricted by rules of the exchange that are consistent with section 5(d) of the Investment Company Act of 1940 ( 15 U.S.C. 80a–5(d) ), an exchange may not prohibit, condition, restrict, or impose any other limitation on the listing or trading of the securities of a closed-end company when the closed-end company invests, or may invest, some or all of the assets of the closed-end company in securities issued by private funds. (2) In this subsection— (A) the term closed-end company — (i) has the meaning given the term in section 5(a) of the Investment Company Act of 1940 ( 15 U.S.C. 80a–5(a) ); and (ii) includes a closed-end company that elects to be treated as a business development company pursuant to section 54 of the Investment Company Act of 1940 ( 15 U.S.C. 80a–53 ); and (B) the term private fund has the meaning given in section 202(a) of the Investment Advisers Act of 1940 ( 15 U.S.C. 80b–2(a) ). . (d) Investment limitation Section 3(c) of the Investment Company Act of 1940 ( 15 U.S.C. 80a–3(c) ) is amended— (1) in paragraph (1), in the matter preceding subparagraph (A), in the second sentence, by striking subparagraphs (A)(i) and (B)(i) and inserting subparagraphs (A)(i), (B)(i), and (C) ; and (2) in paragraph (7)(D), by striking subparagraphs (A)(i) and (B)(i) and inserting subparagraphs (A)(i), (B)(i), and (C) . (e) Rules of construction (1) Nothing in this section or the amendments made by this section may be construed to limit or amend any fiduciary duty owed to a closed-end company (as defined in section 5(a)(2) of the Investment Company Act of 1940 ( 15 U.S.C. 80a–5(a)(2) )) or by an investment adviser (as defined under section 2(a) of the Investment Company Act of 1940 ( 15 U.S.C. 80a–2(a) )) to a closed-end company. (2) Nothing in this section or the amendments made by this section may be construed to limit or amend the valuation, liquidity, or redemption requirements or obligations of a closed-end company (as defined in section 5(a)(2) of the Investment Company Act of 1940 ( 15 U.S.C. 80a–5(a)(2) )) as required by the Investment Company Act of 1940.
Where it is
In the House.