SEC Proposes Amending Small Business Definitions for Investment Companies and Advisers
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.
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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