On Feb. 15, SEC proposed to update venture capital fund thresholds.
SEC issued proposed rule to update definition of qualifying venture capital funds.
Would inflation adjust dollar threshold to be considered qualifying venture capital fund.
Aims to implement the requirements of section 504 of the EGRRCPA, PL 115-74.
Rule Overview
Commission proposed a new rule under the ICA, 17 CFR 270.3c-7 (Rule 3c-7).
Adjust for inflation the dollar threshold used in defining qualifying venture capital fund.
Updates the dollar threshold for qualifying venture capital funds to $12mn aggregate capital contributions and uncalled committed capital, up from $1 mn current standard
Based on the Personal Consumption Expenditures Chain-Type Price Index (PCE Index).
SEC required to index dollar figure for this threshold to inflation once every 5 years.
Also would establish a process for future inflation adjustments every five years.
Consultation
Comments should be submitted within 30 days of publication in the federal register.
Feb. 21, 2024 SEC Fed Reg Proposal
On Feb. 21, 2024, SEC published proposal in federal register, comment Mar. 22, 2024.
Aug. 2024 SEC Adoption
On Aug. 21, 2024, SEC reported it adopted rule to update the definition of qualifying venture capital funds, effective 30 days from pending publication in federal register.
The final rule also allows the Commission to adjust for inflation this threshold amount by order every five years and specifies how those adjustments will be determined.
The agency also published notice of comments received on the inflation adjustment.
Aug. 2024 Fed Reg Final Rule
On Aug. 30, 2024, SEC published final rule in federal register, effective Sep. 30, 2024.
