Small Entity Update Act

The Small Entity Update Act would require the Securities and Exchange Commission (SEC) to study and potentially redefine what counts as a “small entity” for its regulatory activities under the Regulatory Flexibility Act (as implemented in chapter 6 of Title 5, U.S.C.). The goal is to ensure the definition reflects current market growth and increases the number of entities that qualify for small-entity protections in SEC rulemaking. The bill mandates two major studies (one within 1 year of enactment and a second 5 years later), plus accompanying rulemaking to revise SEC rules based on each study, with public notice and opportunity for comment. It also requires automatic inflation adjustments to dollar figures in the small-entity definition every 5 years after the final rule revisions. In short, the measure seeks to modernize and broaden who is considered a “small entity” for SEC regulatory purposes and keep those definitions aligned with inflation and market changes.