Full Form of BDC
Business Development Company
BDC Full Form is Business Development Company. BDC is a kind of an unregistered company of closed-end investment nature in the United States of America. Such company makes investments in small and moderate-sized enterprises. In the year 1980, the Congress created this category of the company by introducing amendments in the Investments Company Act 1940. The election in the BDC framework means that the BDC shall be subjected to all the important provisions of the Act 1940, which restricts the incurrence of debt by a BDC and bars most of the affiliated transactions, and mandates compliance with a Comprehensive Compliance Program and a Code of Ethics. The Act also mandates regulation by SEC (which stands for Securities and Exchange Commission).
BDCs are mandated to file reports quarterly, proxy statements and annual reports with the SEC. There are a few BDCs that are publicly traded whereas others are not. The Internal revenue Code provides that BDCs be taxed in the capacity of Regulated Investment Companies (abbreviated as RIC). The company is required to pay minimal or zero corporate income tax if it is able to meet requirements relating to diversity, distribution, and income. RICs are required to distribute minimum 90 percent of the taxable income in the form of dividends to investors. Many BDCs are known to distribute 90 percent of such income to avoid payment of all corporate taxes.
BDCs are very much like Private Equity (abbreviated as PE) and venture capital (abbreviated as VC) funds because they provide investors a mode of investment in small and moderate-sized companies and facilitate participation in the sale of such investments. The PE and VC funds are however closed to everyone but rich investors. BDCs, on the other side, enable anyone who buys a share to participate in the open market. This particular feature is one of the most attractive features of BDCs.