The Investment Company Act of 1940 is the law regulating investment companies, requiring that such entities register with the SEC. Qualifying venture capital funds are currently exempt from that law if they have no more than 250 beneficial owners, no more than $10 million in aggregate capital contributions and uncalled committed capital, and meet the definition of a venture capital fund, according to the SEC's online glossary.
Under the Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018, the SEC is required to adjust the dollar threshold of qualifying venture capital funds for inflation every five years.
The revised $12 million threshold “takes into account the effects of inflation by reference to the historic and current levels of the Personal Consumption Expenditures Chain-type Price Index,” or PCE Index, according to the final rule.
The final rule also specifies that future inflation adjustments, which will continue to take place every five years, should use the PCE Index to make those adjustments.
The rule will take effect 30 days after the date it is published in the Federal Register.
