15 U.S.C. § 80a–62 — Distribution and repurchase of securities

Business development companies (BDCs) must follow section 80a-23, just as if they were registered closed-end investment companies. Section 80a-23 generally stops investment companies from selling shares below net asset value and controls how they repurchase securities. Three exceptions apply to BDCs. (1) The ban in section 80a-23(a)(2) doesn't apply to a company if (A) it's wholly owned by, or otherwise controlled by, a BDC, and (B) right after it issues securities in exchange for property other than cash or securities, it still won't count as an "investment company" under section 80a-3(a). (2) Even though section 80a-23(b) normally forbids it, a BDC may sell its own common stock — or warrants, options, or rights to buy that stock — at a price below the stock's current net asset value, if three things happen first: (A) At the BDC's last annual shareholder or partner meeting within the year before the sale, a majority of all voting shareholders, and separately a majority of shareholders who aren't affiliated with the company, approved this practice. (A BDC's very first public stock offering doesn't need this approval.) (B) A required majority of the BDC's directors or general partners (as defined in section 80a-56(o)) decided the sale serves the best interests of the company and its shareholders or partners. (C) That same required majority, working with any underwriters if the offering is underwritten, decided in good faith — right before soliciting firm purchase commitments, or right before issuing the securities — that the sale price closely tracks the market value of the stock, after subtracting any underwriting commission or discount. (3) A BDC may also sell its common stock below current net asset value whenever someone exercises a warrant, option, or right that the BDC issued under section 80a-60(a)(4).