SEC Proposes Amending Small Business Definitions for Investment Companies and Advisers

Detected February 11th, 2026

Summary

The SEC has proposed amendments to the definitions of 'small business' and 'small organization' for investment companies and advisers under the Regulatory Flexibility Act. The proposal aims to increase asset-based thresholds and establish a mechanism for future inflation adjustments. Public comments are due by March 13, 2026.

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What changed

The Securities and Exchange Commission (SEC) has issued a proposed rule to amend the asset-based thresholds used to define 'small business' and 'small organization' for investment companies and investment advisers under the Regulatory Flexibility Act (RFA). This proposal, identified by File Number S7-2026-01, also includes provisions for periodic inflation adjustments to these thresholds and related amendments to Form ADV and electronic filing hardship exemptions.

Investment companies and advisers that rely on these definitions for RFA purposes should review the proposed changes. The SEC is seeking public comment on this proposal, with a deadline of March 13, 2026. Failure to comply with potential future requirements stemming from these amendments could result in regulatory scrutiny.

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Proposed Rule

Amendments to the “Small Business” and “Small Organization” Definitions for Investment Companies and Investment Advisers for Purposes of the Regulatory Flexibility Act

Public Comments

Submit a Comment on S7-2026-01 View Received Comments

Overview

The Securities and Exchange Commission (the “Commission” or the “SEC”) is proposing to amend the rules under the Investment Company Act of 1940 (the “Investment Company Act”) and under the Investment Advisers Act of 1940 (the “Advisers Act”) that define the terms “small business” and “small organization” for purposes of the Regulatory Flexibility Act (the “RFA”) to increase the asset-based thresholds used in those definitions. The Commission also is proposing a mechanism for periodic future inflation adjustments of the asset-based thresholds used in these definitions. The Commission further is proposing amendments to Form ADV and the rule providing continuing hardship exemptions from filing electronically for investment advisers in connection with the proposed amendments.

Last Reviewed or Updated: Feb. 3, 2026