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Barry McVay's FEDERAL CONTRACTS DISPATCH

DATE: November 29, 2000

FROM: Barry McVay, CPCM

SUBJECT: Small Business Administration; Management-Ownership of Small Business Investment Companies (SBICs)

SOURCE: Federal Register, November 29, 2000, Vol. 65, No. 230, page 71053

AGENCIES: Small Business Administration (SBA)

ACTION: Final Rule

SYNOPSIS: SBA is amending its SBIC regulations to prohibit the ownership of more than 70% of a leveraged SBIC by any single investor or group of affiliated investors.

EDITOR'S NOTE: The SBA's regulations are in Title 13 of the Code of Federal Regulations. The SBA SBIC regulations are in Chapter 1, Small Business Administration, Part 107, Small Business Investment Companies.

For more on the proposed rule, see the August 14, 2000, FEDERAL CONTRACTS DISPATCH "Small Business Administration; Management-Ownership of Small Business Investment Companies (SBICs)."

EFFECTIVE DATE: December 29, 2000.

FOR FURTHER INFORMATION CONTACT: Leonard W. Fagan, 202-205-7583.

SUPPLEMENTAL INFORMATION: On August 14, 2000, SBA published a proposed rule that would revise Part 107 of SBA's regulations, Section 107.150, Management-Ownership Diversity Requirement, to prevent a single investor or group of affiliated investors from owning or controlling more than 70% of a leveraged SBIC. SBA also proposed an exception which would allow an entity qualifying as a "traditional investment company" to own and control more than 70% of an SBIC. SBA received no comments on the proposed rule, so it is finalizing the rule with minor editorial changes, such as relettering the paragraphs to conform to the drafting requirements of the Federal Register.

FOR FURTHER INFORMATION CONTACT: Barry McVay at 703-451-5953 or by e-mail to BarryMcVay@FedGovContracts.com.

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