The Small Entity Update Act, a bill mandating the SEC to revise the definition of “small business” concerning securities regulation, was successfully passed by the full House on Tuesday.
According to ThinkAdvisor, the newly proposed bill mandates that the SEC provide regular reports and updates on the definition of small entities at five-year intervals. Additionally, under the Regulatory Flexibility Act, government agencies are obliged to take into account the potential effects of their regulations on small entities.
Under the proposed legislation, the SEC would be instructed to carry out a comprehensive study and subsequent rulemaking every five years. This process would involve defining the term “small entity” in accordance with the guidelines outlined in the Regulatory Flexibility Act.
Currently, the SEC defines a small business as an entity with annual revenue of less than $100 million.
“the SEC must provide specific and detailed recommendations to Congress on how the SEC can revise the definition of small entity to (1) align with specified statutory goals, including reducing unnecessary burdens on small entities; and (2) to expand the number of entities covered,” the bill states.
In a statement, Rep. Ann Wagner emphasized that the legislation aims to empower small and growing businesses by instructing the SEC to evaluate the regulatory costs associated with compliance. The goal being to prevent excessive burdens and ensure that regulations imposed on these businesses are reasonable and proportionate.
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