SEC Proposes Rule to Update Definition of Qualifying Venture Capital Funds

The Securities and Exchange Commission today proposed a rule that would update the dollar threshold for a fund to qualify as a “qualifying venture capital fund” for purposes of the Investment Company Act of 1940 (Act). The rule would update the dollar threshold to $12 million aggregate capital contributions and uncalled committed capital, up from the current standard of $10 million. Qualifying venture capital funds are excluded from the Act’s definition of an “investment company.” The Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018 requires the Commission to index the dollar figure for this threshold to inflation once every five years. The proposed rule is designed to implement this statutory directive and would adjust the dollar amount to $12 million, based on the Personal Consumption Expenditures Chain-Type Price Index (PCE Index).