- (a) Issuance; debentures or participating securities composing trust or
pool
The Administration is authorized to issue trust certificates representing
ownership of all or a fractional part of debentures issued by small business investment companies, including companies operating under the authority of section 681(d) of this title, and guaranteed by the Administration under this chapter, or participating securities which are issued by such companies and purchased and guaranteed pursuant to section 683(g) of this title: Provided, That such trust certificates shall be based on and backed by a trust or pool approved by the Administration and composed solely of guaranteed debentures or guaranteed participating securities.
- (b) Terms and conditions of guarantee; payment of principal and interest
The Administration is authorized, upon such terms and conditions as are deemed
appropriate, to guarantee the timely payment of the principal of and interest on trust certificates issued by the Administration or its agent for purposes of this section. Such guarantee shall be limited to the extent of principal and interest on the guaranteed debentures or the redemption price of and priority payments on the participating securities, which compose the trust or pool. In the event that a debenture in such trust or pool is prepaid, or participating securities are redeemed, either voluntarily or involuntarily, or in the event of default of a debenture or voluntary or involuntary redemption of a participating security, the guarantee of timely payment of principal and interest on the trust certificates shall be reduced in proportion to the amount of principal and interest such prepaid debenture or redeemed participating security and priority payments represent in the trust or pool. Interest on prepaid or defaulted debentures, or priority payments on participating securities, shall accrue and be guaranteed by the Administration only through the date of payment on the guarantee. During the term of the trust certificate, it may be called for redemption due to prepayment or default of all debentures or redemption, whether voluntary or involuntary, of all participating securities residing in the pool.
- (c) Full faith and credit of United States
The full faith and credit of the United States is pledged to the payment of
all amounts which may be required to be paid under any guarantee of such trust certificates issued by the Administration or its agent pursuant to this section.
- (d) Collection of fees
The Administration shall not collect a fee for any guarantee under this
section: Provided, That nothing herein shall preclude any agent of the Administration from collecting a fee approved by the Administration for the functions described in subsection (f)(2) of this section.
- (e) Subrogation rights; ownership rights in debentures or participating
securities
- (1) In the event the Administration pays a claim under a guarantee issued
under this section, it shall be subrogated fully to the rights satisfied by such payment.
- (2) No State or local law, and no Federal law, shall preclude or limit the
exercise by the Administration of its ownership rights in the debentures or participating securities residing in a trust or pool against which trust certificates are issued.
- (f) Central registration requirements; regulation of brokers and dealers
- (1) The Administration shall provide for a central registration of all trust
certificates sold pursuant to this section. Such central registration shall include with respect to each sale -
- (A) identification of each small business investment company;
- (B) the interest rate or prioritized payment rate paid by the small business
investment company;
- (C) commissions, fees, or discounts paid to brokers and dealers in trust
certificates;
- (D) identification of each purchaser of the trust certificate;
- (E) the price paid by the purchaser for the trust certificate;
- (F) the interest rate on the trust certificate;
- (G) the fee of any agent for carrying out the functions described in
paragraph (2); and
- (H) such other information as the Administration deems appropriate.
- (2) The Administrator shall contract with an agent or agents to carry out on
behalf of the Administration the pooling and the central registration functions of this section including, notwithstanding any other provision of law, maintenance on behalf of and under the direction of the Administration, such commercial bank accounts as may be necessary to facilitate trusts or pools backed by debentures or participating securities guaranteed under this chapter, and the issuance of trust certificates to facilitate such poolings. Such agent or agents shall provide a fidelity bond or insurance in such amounts as the Administration determines to be necessary to fully protect the interests of the Government.
- (3) Prior to any sale, the Administrator shall require the seller to disclose
to a purchaser of a trust certificate issued pursuant to this section, information on the terms, conditions, and yield of such instrument.
- (4) The Administrator is authorized to regulate brokers and dealers in trust
certificates sold pursuant to this section.