Bill Summary
The "Small Entity Update Act" mandates the Securities and Exchange Commission (SEC) to conduct studies and rulemaking regarding the definition of "small entity" under U.S. securities laws. The Act requires the SEC to assess how the current definition aligns with the Regulatory Flexibility Act and the growth of financial markets since the last revision. It stipulates that the SEC must report its findings and recommendations to Congress within one year of enactment and then every five years thereafter. The SEC is also tasked with revising its rules based on these studies and adjusting the dollar figures in the definition of "small entity" to account for inflation every five years. This legislation aims to ensure that the definition remains relevant and encompasses a significant number of qualifying entities.
Possible Impacts
The "Small Entity Update Act" can impact individuals and businesses in various ways. Here are three examples:
1. **Access to Regulatory Relief**: By redefining what constitutes a "small entity," the legislation may allow more businesses to qualify for regulatory relief under the Securities and Exchange Commission (SEC) rules. This could reduce compliance costs and burdens for a larger number of small businesses, enabling them to allocate resources more efficiently, potentially fostering growth and innovation.
2. **Increased Participation in Financial Markets**: The revision of the definition of small entities might encourage more small businesses to engage in financial markets, such as issuing securities or seeking investments. This could result in greater access to capital for these businesses, which is crucial for their expansion and sustainability, thereby contributing to economic growth and job creation in their communities.
3. **Periodic Updates to Financial Thresholds**: The requirement for the SEC to adjust the definition of small entities based on inflation ensures that the thresholds remain relevant over time. This means that as the economy grows, more businesses will continue to benefit from the protections and considerations that come with being classified as a small entity. Individuals working in or owning small businesses will likely appreciate this flexibility, as it can help them navigate the evolving economic landscape.
[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3382 Referred in Senate (RFS)]
<DOC>
119th CONGRESS
1st Session
H. R. 3382
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
July 22, 2025
Received; read twice and referred to the Committee on Banking, Housing,
and Urban Affairs
_______________________________________________________________________
AN ACT
To require the Securities and Exchange Commission to carry out a study
and rulemaking on the definition of the term ``small entity'' under the
securities laws for purposes of chapter 6 of title 5, United States
Code, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Small Entity Update Act''.
SEC. 2. STUDIES, REPORTS, AND RULES REGARDING SMALL ENTITIES.
(a) Definitions.--In this section--
(1) the term ``Commission'' means the Securities and
Exchange Commission; and
(2) the term ``small entity''--
(A) has the meaning given the term in section 601
of title 5, United States Code, with respect to the
activities of the Commission; and
(B) includes any definition established by the
Commission of the term ``small business'', ``small
organization'', ``small governmental jurisdiction'', or
``small entity'' under paragraph (3), (4), (5), or (6),
respectively, of section 601 of title 5, United States
Code, with respect to the activities of the Commission.
(b) Studies and Reports.--Not later than 1 year after the date of
enactment of this Act, and again 5 years thereafter, the Commission
shall--
(1) conduct a study of the definition of the term ``small
entity'' with respect to the activities of the Commission for
the purposes of chapter 6 of title 5, United States Code, which
shall consider--
(A) the extent to which the definition of the term
``small entity'', as in effect during the period in
which the study is conducted, aligns with the findings
and declarations made under section 2(a) of the
Regulatory Flexibility Act (5 U.S.C. 601 note);
(B) the amount by which financial markets in the
United States have grown since the last time the
Commission amended the definition of the term ``small
entity'', if applicable; and
(C) how the Commission should define the term
``small entity'' to ensure that a meaningful number of
entities would fall under that definition; and
(2) submit to Congress a report that includes--
(A) the results of the applicable study conducted
under paragraph (1); and
(B) specific and detailed recommendations on the
ways in which the Commission could amend the definition
of the term ``small entity'' to--
(i) be consistent with the results
described in subparagraph (A); and
(ii) expand the number of entities covered
by such definition.
(c) Rulemaking.--Concurrently with, or after the completion of,
each study required under subsection (b), the Commission shall, subject
to public notice and comment, revise the rules of the Commission
consistent with the results of such study.
(d) Inflation Adjustments.--After the Commission issued the final
rule revisions required under subsection (c), and every 5 years
thereafter, the Commission shall adjust any dollar figures under the
definition of small entity established by the Commission to reflect the
change in the Consumer Price Index for All Urban Consumers published by
the Bureau of Labor Statistics of the Department of Labor.
Passed the House of Representatives July 21, 2025.
Attest:
KEVIN F. MCCUMBER,
Clerk.