SEC Adopts Small Entity Definition Updates: $10 Billion Threshold for Investment Companies, $1 Billion for Advisers
The U.S. Securities and Exchange Commission announced on November 4 (Press Release 2026-112) that it has adopted amendments updating the definitions of "small entity" under the Regulatory Flexibility Act (RFA) for registered investment companies, investment advisers, and business development companies (BDCs). The definitions were adopted in 1982 and last updated in 1998; the asset management industry has grown substantially since the asset-based thresholds were initially set.
According to the SEC's fact sheet (Release IA-7035): for investment companies, the net asset threshold under the Investment Company Act of 1940 rises from $50 million to $10 billion, and related funds' net assets will be aggregated by reference to a "family of investment companies" as used in Item B.5 of Form N-CEN, rather than a "group of related investment companies." For investment advisers, the regulatory assets under management threshold under the Investment Advisers Act of 1940 rises from $25 million to $1 billion, the adviser total assets threshold is eliminated, control relationship thresholds receive conforming changes, and Form ADV is amended in conformity.
The amendments also provide for inflation adjustments to the asset thresholds by order every 10 years beginning on the rules' effective dates. The amendments become effective 90 days after the adopting release is published in the Federal Register.
SEC Chairman Paul S. Atkins said updating a definition not revised in nearly 30 years is an important step to eliminate unnecessary regulatory burdens and modernize the rulebook, and that the amendments more accurately capture the types of registered investment companies, advisers, and BDCs considered small relative to today's market. Commissioner Mark T. Uyeda, in a same-day statement, noted that a $1 billion threshold would represent about 75% of advisers but only under 3% of total industry regulatory assets under management, and stressed that the changes do not alter any substantive requirement applicable to any firm; they provide a framework for assessing the economic impact of rulemaking on smaller entities.
(Source: U.S. Securities and Exchange Commission)
Source: U.S. Securities and Exchange Commission
Published by GSM · USA (original Chinese edition)
Photo: 图：美国证券交易委员会（SEC）徽标。SEC 官方徽标（公共领域），GSM 固定图库合成图。 / Photo: Seal of the U.S. Securities and Exchange Commission. Official SEC seal (public domain), GSM fixed-library composite.
