H.R.2225 - Access to Small Business Investor Capital Act (119th Congress)
Summary
H.R.2225, the "Access to Small Business Investor Capital Act," aims to modify the reporting requirements for registered investment companies. Specifically, it allows these companies to exclude fees and expenses incurred from investments in business development companies (BDCs) when calculating Acquired Fund Fees and Expenses. This adjustment is intended to streamline reporting and potentially encourage investment in small businesses through BDCs.
Expected Effects
The primary effect of this bill would be a change in how registered investment companies report their fees and expenses. By excluding BDC-related fees from the Acquired Fund Fees and Expenses calculation, the reported expense ratios of these investment companies could decrease. This could make them appear more attractive to investors.
Potential Benefits
- Simplifies reporting requirements for registered investment companies.
- May encourage investment in Business Development Companies (BDCs), which in turn support small businesses.
- Potentially lowers reported expense ratios for investment companies, making them more attractive to investors.
- Could lead to increased capital flow to small businesses, fostering growth and innovation.
- May improve the competitiveness of registered investment companies.
Most Benefited Areas:
Potential Disadvantages
- Reduced transparency in reporting, as certain fees are excluded from the calculation.
- Potential for misleading investors if the excluded fees are not clearly disclosed elsewhere.
- May disproportionately benefit BDCs over other types of investments.
- Could create a loophole for investment companies to lower their reported expenses artificially.
- Risk of encouraging excessive investment in BDCs without proper due diligence.
Constitutional Alignment
The bill appears to align with the Commerce Clause (Article I, Section 8, Clause 3) of the U.S. Constitution, as it regulates investment companies and their reporting practices, which fall under interstate commerce. There is no apparent infringement on individual rights or liberties as defined in the Bill of Rights. The bill does not appear to violate any specific constitutional provision.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).