SEC adopts rule changes to expand small-entity definition for investment firms

The Securities and Exchange Commission announced on Nov. 4 2026 that it has adopted amendments to the rules that define which registered investment companies, investment advisers and business development companies qualify as small entities for purposes of the Regulatory Flexibility Act.

"Updating the SEC's definition of small entities for investment companies and investment advisers - which has not been done in nearly 30 years - is an important step to eliminate unnecessary regulatory burdens and modernize our rulebook," said SEC Chairman Paul S. Atkins. "These amendments more accurately capture the types of registered investment companies, investment advisers, and business development companies that are considered small relative to today's market and will help ensure the Commission's rulemaking is reflective of that reality."

The amendments increase the asset-based thresholds used to deem entities small, modify how related funds' assets are aggregated, eliminate the investment adviser total-assets threshold, and require inflation adjustments to the thresholds by order every ten years.

Under the RFA, the Commission must assess the impact of its regulations on small entities. The revised definitions will be incorporated into the SEC's regulatory-flexibility analyses, and the adopting release will be posted on the SEC website and published in the Federal Register.