§ 3321 Office.
(a) A licensee shall maintain not less than 1 office in the State.
(b) Each office of a licensee, whether within or outside of the State, shall be located in a place which is reasonably accessible to the public.
(c) A licensee shall maintain at each of its offices personnel who are competent to conduct the business of such office.
(d) Upon written notice to the Commissioner, a licensee may establish, relocate or close an office.
§ 3322 Business of a Bidco.
(a) The business of a licensee shall be the business of providing financing assistance and management assistance to business firms.
(b) A licensee may determine the structure and the terms and conditions for financing assistance provided by that licensee to a business firm including, but not limited to, structures such as straight loans, purchase of debt instruments, straight equity investments (e.g., purchase of common stock or preferred stock), debt with equity features (e.g., warrants to purchase stock, convertible debentures or receipt of a percentage of gross or net income or sales), royalty-based financing, guaranteeing of debt or leasing of property.
(c) Management assistance provided by a licensee to a business firm may encompass management and technical advice and services.
(d) A licensee may exercise the incidental powers that are necessary or convenient to carry on the business of, or that are reasonably related to the business of, providing financing assistance and management assistance to business firms.
(e) In connection with an extension of credit by a licensee to a business firm, the licensee and such business firms may, notwithstanding any other provisions of the laws of the State, agree to any rate of interest and any schedule of fees.
§ 3323 Control of business firm prohibited; exceptions.
(a) Either by itself or in concert with 1 or more of its directors, officers, principal shareholders or affiliates, 1 or more other licensees or 1 or more directors, officers, principal shareholders or affiliates of another licensee or licensees, a licensee shall not hold control of a business firm, except as follows:
(1) If and to the extent necessary to protect the interests of a licensee as a creditor of, or investor in, a business firm, a licensee that has provided financing assistance to a business firm may acquire and hold control of such business firm. Unless the Commissioner approves a longer period, a licensee holding control of a business firm under this paragraph shall divest itself of the interest which constitutes holding control as soon as practicable or within 3 years after acquiring such interest, whichever is earlier.
(2) With the approval of the Commissioner, a licensee may acquire and hold control of a corporation which is licensed as a small business investment company under the Small Business Investment Act of 1958 [15 U.S.C. § 661 et seq.], as amended.
(3) With the approval of the Commissioner, a licensee may acquire and hold control of a company which is a development company, whether or not such development company has been or may become certified by the United States Small Business Administration pursuant to the Small Business Investment Act of 1958 [15 U.S.C. § 661 et seq.], as amended.
(4) With the approval of the Commissioner, a licensee may acquire and hold control of another business firm which is engaged in no business other than the business of providing financing assistance or management assistance to business firms.
(5) With the approval of the Commissioner, a licensee may acquire and hold control of a business firm not referred to in paragraphs (1)-(4) of this subsection. The Commissioner shall not approve an application under this paragraph unless the Commissioner determines that such an acquisition will promote the purposes of this chapter.
(b) If a licensee anticipates acquiring and holding control of a business firm under subsection (a)(1) of this section, the licensee shall file with the Commissioner a plan for acquiring and holding control of such business firm that shall include, at minimum, the following:
(1) The reasons it is necessary for the licensee to acquire and hold control of such business firm;
(2) The percentage of outstanding voting securities of such business firm that the licensee anticipates acquiring and holding;
(3) The licensee's proposed course of action upon obtaining control of such business firm; and
(4) The length of time the licensee anticipates it will be necessary to hold control of such business firm.
(c) The Commissioner may require a licensee to demonstrate the necessity for such licensee to hold control of a business firm under subsection (a)(1) of this section.
(d) For the purposes of this section, "hold control" means ownership, directly or indirectly, of record or beneficially, of voting securities greater than:
(1) For a business firm with outstanding voting securities held by fewer than 50 shareholders, 40 percent of such outstanding voting securities.
(2) For a business firm with outstanding voting securities held by 50 or more shareholders, 25 percent of the outstanding voting securities.
§ 3324 Business of Bidco to be conducted in prudent business manner.
(a) A licensee shall transact its business in a prudent business manner and shall maintain itself in a viable condition.
(b) In determining whether a licensee is transacting business in a prudent business manner, the Commissioner shall not consider the risk of the financing assistance provided by such licensee to a business firm, unless the Commissioner determines that the risk is so great compared with the realistically expected return as to demonstrate mismanagement of the licensee.
(c) Subsection (b) of this section shall not limit the authority of the Commissioner to do any of the following:
(1) Determine that a licensee's financing assistance to a single business firm or a group of affiliated business firms is in violation of subsection (a) of this section if the amount of such financing assistance is unduly large in relation to the total assets or the total shareholder's equity of such licensee.
(2) Require that a licensee maintain a reserve in the amount of anticipated losses.
(3) Require that a licensee have in effect a written financing assistance policy, approved by its board of directors, including credit evaluation criteria and other matters. The Commissioner shall not require that a licensee adopt a financing assistance policy that contains standards which prevent such licensee from exercising needed flexibility in evaluating and structuring financing assistance to business firms on a deal-by-deal basis.
§ 3325 Avoidance of conflict of interest.
(a) A licensee shall avoid any transaction or act which involves, or has the potential to involve, a conflict of interest, unless such transaction or act and the circumstances underlying the conflict or potential conflict of interest are fully and adequately disclosed to appropriate persons.
(b) Notwithstanding subsection (a) of this section, a licensee shall provide the Commissioner with a separate notice, setting forth the specific facts concerning an actual or potential conflict of interest, prior to the consummation of any transaction or act referred to in subsection (a) of this section.
(c) Nothing in this section shall limit the authority of the Commissioner to determine that a transaction or act involves a conflict of interest, including, but not limited to, disapproval of any proposed transaction, or to take such steps that the Commissioner deems necessary or appropriate to resolve such conflict of interest.