Thursday, February 15, 2024

SEC proposes inflation adjustment to threshold for venture capital funds

By R. Jason Howard, J.D.

The SEC has proposed a rule to update the dollar threshold amount to $12 million aggregate capital contributions and uncalled committed capital for a fund to qualify as a “qualifying venture capital fund” under the Investment Company Act of 1940 (Qualifying Venture Capital Funds Inflation AdjustmentRelease No. IC-35129, February 14, 2024).

Qualifying venture funds are excluded from the Act’s definition of an “investment company,” and the Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018 requires that the Commission index the dollar figure for this threshold to inflation once every five years.

The SEC press release on the proposed rule explains that it would increase the threshold from the current $10 million to $12 million “based on the Personal Consumption Expenditures Chain-Type Price Index (PCE Index).” In addition, the proposed rule would establish a process for future inflation adjustments every five years.

The proposal will be published on and in the Federal Register. The comment period will remain open for 30 days after publication in the Federal Register.

This is Release No. IC-35129.