The Securities and Exchange Commission adopted amendments to two rules in order to implement congressionally mandated exemptions from registration for investment advisers who advise rural business investment companies (RBICs).  These exemptions were enacted as part of the RBIC Advisers Relief Act of 2018, which amended the Investment Advisers Act.

The Commission adopted amendments to rules 203(l)-1 and 203(m)-1.  These rules implement exemptions from SEC registration for advisers to venture capital funds and private funds. The amendments include RBICs in the definition of the term “venture capital fund” and exclude their assets from the definition of the term “assets under management” for purposes of the private fund adviser exemption. 

Advisers to RBICs, which are licensed by the U.S. Department of Agriculture, use the equity raised in capitalizing their funds to make venture capital investments mostly in smaller enterprises located primarily in rural areas. 

“These amendments implement congressionally-mandated exemptions to the Advisers Act that are intended to reduce regulatory burdens for advisers to RBICs,” said SEC Chairman Jay Clayton.  “It is my hope that the reduction in regulatory burdens will encourage capital formation in rural areas where capital to form and grow a business all too often is more scarce than it should be.”

The amendments will be published on the Commission’s website and in the Federal Register.  They will become effective upon publication in the Federal Register.