An amendment numbered 1 printed in House Report 110-350 to establish a bright line standard of majority stock ownership for determining whether a venture capital company is affiliated with the companies in which it invests.

1. Rewrites title V

   Replaces

   Removes title V.

   Inserted: TITLE V--VENTURE CAPITAL INVESTMENT STANDARDS

   Inserted: SEC. 501. DETERMINING WHETHER BUSINESS CONCERN IS INDEPENDENTLY OWNED AND OPERATED.

   Inserted: Section 3(a) of the Small Business Act (15 U.S.C. 632(a)) is amended by adding at the end the following:

   Inserted: "(5) Non-affiliation of venture capital from consideration of small business concern.--For purposes of determining whether a small business concern is independently owned and operated under paragraph (1) or meets the small business size standards instituted under paragraph (2), the Administrator shall not consider a business concern to be affiliated with a venture capital operating company (or with any other business that the venture capital operating company has financed) if--

   Inserted: "(A) the venture capital operating company does not own 50 percent or more of the business concern; and

   Inserted: "(B) employees of the venture capital operating company do not constitute a majority of the board of directors of the business concern.

   Inserted: "(6) Definition of 'independently owned and operated'.--For purposes of this section, a business concern shall be deemed to be 'independently owned and operated' if--

   Inserted: "(A) it is owned in majority part by one or more natural persons or venture capital operating companies;

   Inserted: "(B) there is no single venture capital operating company that owns 50 percent or more of the business concern; and

   Inserted: "(C) there is no single venture capital operating company the employees of which constitute a majority of the board of directors of the business concern.

   Inserted: "(7) Definition of 'venture capital operating company'.--For purposes of this section, the term 'venture capital operating company' means a business concern--

   Inserted: "(A) that--

   Show 8 more inserted paragraphsShow less

   Inserted: "(i) is a Venture Capital Operating Company, as that term is defined in regulations promulgated by the Secretary of Labor; or

   Inserted: "(ii) is an entity that--

   Inserted: "(I) is registered under the Investment Company Act of 1940 (15 U.S.C. 80a-51 et seq.);

   Inserted: "(II) is an investment company, as defined in section 3(c)(14) of such Act (15 U.S.C. 80a-3(c)(14)), which is not registered under such Act because it is beneficially owned by less than 100 persons; or

   Inserted: "(III) is a nonprofit organization affiliated with, or serving as a patent and licensing organization for, a university or other institution of higher education and that invests primarily in small business concerns; and

   Inserted: "(B) that is not controlled by any business concern that is not a small business concern within the meaning of section 3; and

   Inserted: "(C) that has fewer than 500 employees; and

   Inserted: "(D) that is itself a concern incorporated and domiciled in the United States, or is controlled by a concern that is incorporated and domiciled in the United States.".

   Original wording

   Strike title V and insert the following:

Read automatically from the Congressional Record. Check the original before relying on it.

As printed