SEC Updates Small-Entity Definitions for Funds and Advisers

The Securities and Exchange Commission has adopted amendments that revise which registered investment companies, investment advisers and business development companies qualify as small entities for purposes of the Regulatory Flexibility Act. The agency announced the action without offering additional details beyond the scope of the change.

The definitions are used in the SEC's regulatory flexibility analysis, a process intended to examine whether proposed rules could impose a disproportionate burden on smaller firms. Small-entity status therefore helps shape how the agency evaluates the potential costs of its rulemaking. That review is meant to help the agency decide whether flexibility or exemptions are warranted.

The amendments cover both registered investment companies and investment advisers, as well as business development companies. By updating the definitions, the SEC is adjusting a framework that determines how those types of firms are treated in the agency's assessments of regulatory impact.

The change is part of the SEC's ongoing work to keep its rules current and to review how regulatory requirements affect smaller participants in the asset management industry. The agency did not disclose further specifics about the amendments in the announcement.