SEC Updates Small Entity Definitions for Investment Companies and Advisers

The Securities and Exchange Commission (SEC) announced on November 4, 2026, that it has adopted amendments to the definitions of small entities for registered investment companies, investment advisers, and business development companies. These changes, made under the Regulatory Flexibility Act, aim to modernize thresholds that had not been significantly updated since 1998. Under the previous rules, a registered investment company was classified as a small entity if it and its related funds had combined net assets of $50 million or less. Similarly, an investment adviser qualified as a small entity if it managed less than $25 million in regulatory assets, had less than $5 million in balance-sheet assets, and met specific control relationship criteria. The amendments significantly raise these thresholds.

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