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

The Securities and Exchange Commission (the “Commission” or the “SEC”) is amending the definitions of “small business” and “small organization” (collectively, “small entities”) that are used in connection with Commission rulemaking under the Investment Company Act of 1940 (the “Investment Company Act”) and the Investment Advisers Act of 1940 (the “Advisers Act”). These definitions concern regulatory requirements applicable to registered investment companies and business development companies (collectively, “funds”) as well as investment advisers. The definitions are used specifically for purposes of the Regulatory Flexibility Act (the “RFA”), which requires the Commission to consider the impact of its regulations on small entities. The amendments are designed to modernize the definitions, by increasing certain asset-based thresholds, including a mechanism for periodic future inflation adjustments, and eliminating the threshold based on total assets for advisers. In connection with these amendments, the Commission is making conforming amendments to Form ADV as well as the rule that allows certain small SEC-registered advisers to apply for a continuing hardship exemption from making Advisers Act filings electronically.