DEFINITION of SEC Form N-54A

SEC Form N-54A is a filing with the Securities and Exchange Commission (SEC) that must be used by business development companies (BDCs) that want to be subject to the provisions of sections 55 through 65 of the Investment Company Act of 1940. 

BREAKING DOWN SEC Form N-54A

SEC Form N-54A is also known as "Notice of Intent to Elect to be Subject to Sections 55 through 65 of the Investment Company Act of 1940 Filed Pursuant to Section 54(a) of the Act." The headings for these sections in the Investment Company Act of 1940 are the following:

  • Sec. 55: Functions and Activities of Business Development Companies
  • Sec. 56: Qualifications of Directors
  • Sec. 57: Transactions with Certain Affiliates
  • Sec. 58: Changes in Investment Policy
  • Sec. 59: Incorporation of Provisions
  • Sec. 60: Functions and Activities of Business Development Companies
  • Sec. 61: Capital Structure
  • Sec. 62: Loans
  • Sec. 63: Distribution and Repurchase of Securities
  • Sec. 64: Accounts and Records
  • Sec. 65: Liability of Controlling Persons; Preventing Compliance with Title

What is a BDC?

A BDC is an entity that invests in and helps small- and medium-size companies grow in the initial stages of their development. Many BDCs are set up similarly to closed-end investment funds and are listed publicly on exchanges. To qualify as a BDC under the SEC, a firm must be domiciled in the U.S., register its securities with the SEC, hold a minimum of 70% of assets in the securities of emerging businesses with market values less than $250 million, and distribute at least 90% of profits to BDC shareholders. Another requirement is that the BDC provides managerial assistance to companies in its portfolio, which was one of the original reasons that this company class was formed by the U.S. government in the early 1980s as part of a multipronged approach of lifting the U.S. economy out of its doldrums.