The Securities and Exchange Commission ( “SEC”) is proposing to amend the definition of a venture capital fund (rule 203(l)-1) and the private fund adviser exemption (rule 203(m)-1) under the Investment Advisers Act of 1940 (the “Advisers Act”) in order to reflect changes made by title LXXIV, sections 74001 and 74002 of the Fixing America’s Surface Transportation Act of 2015 (the “FAST Act”), which amended sections 203(l) and 203(m) of the Advisers Act.
The FAST Act amended the exemption from investment adviser registration for any adviser solely to one or more “venture capital funds” in Advisers Act section 203(l) by deeming “small business investment companies” to be “venture capital funds” for purposes of the exemption. Accordingly, they are proposing to amend the definition of a venture capital fund to include “small business investment companies.”
The FAST Act amended the exemption from investment adviser registration for any adviser solely to “private funds” with less than $150 million in assets under management in Advisers Act section 203(m) by excluding the assets of “small business investment companies” when calculating “private fund assets” towards the registration threshold of $150 million. Accordingly, they are proposing to amend the definition of “assets under management” in the private fund adviser exemption to exclude the assets of “small business investment companies.”
For more information, see the proposed amendment in the Federal Register.