H.R. 3383 — Incentivizing New Ventures and Economic Strength Through Capital Formation Act of 2025

This section amends Section 4(i) of the Securities Exchange Act of 1934, which establishes the Securities and Exchange Commission's (SEC's) Office of the Advocate for Small Business Capital Formation (i.e., assists small businesses and investors in resolving SEC issues, identifies regulatory burdens on capital formation, and conducts related outreach and reporting), to include rural-area small businesses alongside women-owned small businesses in (1) paragraph (4)(C) and (2) paragraph (6)(B)(iii).

This section directs the Securities and Exchange Commission (SEC), not later than six months after enactment, to revise Regulation D (17 CFR 230.500 et seq.) so that the prohibition on general solicitation under Rule 502(c)—which applies to private securities offerings exempt from registration under Rule 506—does not apply to issuer presentations at events sponsored by (1) federal, state, tribal, or local governments or their agencies; (2) colleges, universities, or other higher education institutions; (3) nonprofit organizations; (4) angel investor groups (i.e., groups of accredited investors with defined investment processes, unaffiliated with brokers or advisers); (5) incubators or accelerators; (6) venture forums, venture capital associations, or trade associations; or (7) other entities as determined by SEC rule. Events must (1) not occur in religious facilities (except accredited higher education institutions); (2) contain no advertising referencing specific offerings; and (3) have sponsors that provide no investment advice or recommendations, play no role in negotiations, charge only reasonable administrative fees, receive no compensation for introductions or negotiations, distribute a prescribed one-page risk disclosure, and avoid broker-dealer or adviser registration triggers. Issuers at such events may disclose only that they are offering or planning to offer securities, the type and amount offered, subscriptions to date, and intended use of proceeds. This section specifies that the revision applies only to presentations and communications (not purchases or sales) and clarifies that event attendance alone does not establish a pre-existing substantive relationship for Rule 506(b) offerings.

This section increases to $250,000 (from $100,000) each appearance of the specified amount in the formula limiting non-accredited investor participation in Regulation Crowdfunding offerings (i.e., the exemption allowing companies to raise up to $5 million annually from both accredited and non-accredited investors via online portals without full SEC registration), specifically (1) the annual income or net worth threshold above which the limit is the greater of $2,500 or 10 percent of the greater of such amounts (rather than 5 percent) and (2) the maximum aggregate amount under that 10 percent limit. It further authorizes the SEC to increase such amounts to $400,000 upon recommendation of the Office of the Advocate for Small Business Capital Formation and the Office of the Investor Advocate. The section also makes technical corrections to multiple cross-references in the Securities Act of 1933, standardizing citations such as "section 4(6)" to "section 4(a)(6)."

This section revises the exemption from SEC registration for investment advisers solely to private funds (i.e., advisers with less than $150 million in regulatory assets under management) by (1) increasing the assets-under-management threshold to $175 million (from $150 million); and (2) requiring the SEC to adjust that threshold every five years for inflation using the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics, rounded to the nearest $1,000,000.

This section establishes an Office of Small Business within each of the Securities and Exchange Commission's (SEC) Division of Corporation Finance, Division of Investment Management, and Division of Trading and Markets. These offices must coordinate with the SEC's Office of the Advocate for Small Business Capital Formation (which represents small businesses' interests in SEC rulemaking) on rules and policy priorities related to capital formation, without authorizing expenditures for additional full-time equivalent employees.

This section directs the Securities and Exchange Commission (SEC) to review, revise, and periodically adjust its definition of "small entity" under the Regulatory Flexibility Act (RFA) (i.e., 5 U.S.C. ch. 6, which requires agencies to analyze proposed rules' impacts on small businesses, small organizations, and small governmental jurisdictions and consider regulatory alternatives). (As background, agencies may tailor "small entity" definitions to their activities after public comment, per 5 U.S.C. §601.) Specifically, within one year of enactment and five years thereafter, the SEC must (1) study the current definition's alignment with RFA purposes, financial market growth since the last SEC amendment (if any), and adjustments needed to expand covered entities; and (2) report results and detailed recommendations to Congress. The SEC may satisfy these requirements by proposing rule revisions considering the same factors within one year for the initial review and between five and six years for the subsequent review. Concurrently with or after each study (or proposed revisions), the SEC must finalize rule changes through notice-and-comment rulemaking consistent with study results. (Thus, revisions aim to broaden small entity protections in SEC rulemaking.) After finalizing initial revisions, and every five years thereafter, the SEC must adjust any dollar thresholds in its small entity definition to reflect changes in the Consumer Price Index for All Urban Consumers.

This section exempts actions taken by the Advocate for Small Business Capital Formation under SEC section 4(i) from treatment as a "collection of information" under the Paperwork Reduction Act (PRA). (As background, the Advocate is an SEC office that assists small businesses and entrepreneurs with capital formation by identifying regulatory barriers, convening meetings, and reporting to Congress.) Certain PRA consultation, inventory, and public notice requirements continue to apply, but the SEC is not required to submit such actions to the Office of Management and Budget for review, display control numbers, or indicate PRA compliance.

This section revises thresholds for qualifying venture capital funds exempt from registration as investment companies under the Investment Company Act of 1940 by (1) increasing the maximum number of beneficial owners to 500 (from 250); and (2) in the non-qualifying capital basket, increasing the limit to $50 million (from $10 million) and changing the measurement start date to the date of enactment of the INVEST Act of 2025 (previously, a date selected by the SEC). (Qualifying venture capital funds are private investment funds that invest primarily in qualifying equity securities of startups and early-stage companies and are exempt from SEC registration requirements if they meet these and other criteria.) This section further directs the Advocate for Small Business Capital Formation, in consultation with the Investor Advocate, to conduct a study beginning five years after enactment assessing the amendments' effects on portfolio businesses and startups—including trends in geographic capital distribution, socio-economic characteristics and veteran status of founders or controlling persons, industry sectors, company size, and development stage—using SEC data and third-party assistance; issue a report to Congress and the public; and solicit public comment for 180 days. The SEC may then, if the report demonstrates increased geographic capital distribution, founder socio-economic diversity, or veteran founder participation, issue rules adjusting the thresholds to 250-750 beneficial owners or $10-$100 million in non-qualifying capital, with proposed rules due within 180 days after the comment period (without affecting required inflation indexing of the dollar limit).

This section directs the Securities and Exchange Commission (SEC), within 180 days of enactment, to revise regulations at 17 CFR § 275.203(l)-1 governing venture capital funds (i.e., private funds exempt from certain Investment Advisers Act registration and reporting requirements if they meet the rule's criteria). The revisions (1) expand the definition of a qualifying investment to include equity securities issued by a qualifying portfolio company, whether acquired directly or in a secondary acquisition, and investments in another venture capital fund; and (2) require that, immediately after acquiring any asset, a private fund hold no more than 49% of its aggregate capital contributions and uncalled committed capital (excluding short-term holdings) in one or more venture capital funds or qualifying investments acquired in a secondary acquisition, valued at cost or fair value on a consistent basis.

This section revises the definition of accredited investor under the Securities Act of 1933 by redesignating existing subparagraphs (i) and (ii) as (A) and (F), respectively, striking "; or" after (A), and inserting after (A) new subparagraphs specifying additional qualifying natural persons: (B) net worth exceeding $1 million (adjusted for inflation by the SEC every five years to the nearest $10,000 using the CPI-U for All Urban Consumers), excluding primary residence value net of secured indebtedness up to its fair market value (with adjustments for certain increases in such indebtedness); (C) individual income exceeding $200,000 or joint income with spouse or spousal equivalent exceeding $300,000 in each of the two most recent years, with reasonable expectation of the same in the current year; (D) persons currently licensed or registered as brokers or investment advisers by the SEC, self-regulatory organization, or state/territorial securities authority, and in good standing; and (E) persons with demonstrable education or job experience providing professional knowledge of the relevant investment, as determined by SEC regulation and verified by a self-regulatory organization. (As background, accredited investors are eligible for securities offerings exempt from registration under Regulation D, which does not require the disclosures mandated for public offerings.) This section directs the SEC to revise the Regulation D definition of accredited investor to conform to these changes not later than 180 days after enactment.

This section amends the Securities Act of 1933, Investment Company Act of 1940, and Securities Exchange Act of 1934 to expand exemptions from registration requirements and investment company definitions for interests or participations in certain retirement plans—including section 403(b) tax-sheltered annuity plans (i.e., used by public schools, churches, and tax-exempt organizations)—as well as related collective trust funds maintained by banks and insurance company separate accounts. Qualifying 403(b) plans must be (1) subject to title I of the Employee Retirement Income Security Act of 1974; (2) offered with the employer serving as fiduciary for participants' investment selections; or (3) governmental plans (as defined in IRC §414(d)), with employer, fiduciary, or agent review and approval of each investment alternative prior to offering in governmental plans; collective trust funds must consist solely of assets from such plans, governmental plans, church plans, or other specified excluded trusts; and separate accounts must derive solely from contributions to qualifying plans, governmental plans, insurance advances, or specified 403(b) contributions. (Thus, these exemptions extend to private nonprofit 403(b) plans previously ineligible, facilitating retirement savings offerings by charities and educational institutions without securities registration.)

This section directs the SEC to revise the definition of accredited investor under Regulation D (i.e., rules governing private securities offerings exempt from registration under the Securities Act of 1933) to include any natural person certified through a new examination. Not later than one year after enactment, the SEC must establish the examination—which is designed such that a financially sophisticated individual would be unlikely to fail—to certify competency in securities types, disclosure requirements for exempt vs. registered offerings, corporate governance, financial statements, risks of unregistered/private investments (e.g., limited liquidity and disclosures, valuation subjectivity, information asymmetry, leverage, concentration, and long horizons), conflicts of interest, and other investor-protection criteria. Beginning 180 days after establishment, a registered national securities association must administer the examination free of charge.

This section amends section 4 of the Securities Exchange Act of 1934 (15 U.S.C. 78d) to (1) establish within the Securities and Exchange Commission (SEC) the Senior Investor Taskforce—headed by a Director who reports to the SEC Chairman, appointed from individuals with experience advocating for senior investors (i.e., investors over age 65), staffed without additional compensation using existing funds and personnel from specified SEC divisions and offices, and tasked with minimizing duplication of efforts, identifying challenges facing senior investors (e.g., financial exploitation and cognitive decline), recommending regulatory changes, coordinating and consulting with relevant entities, and issuing biennial reports to designated congressional committees on trends, issues, and recommendations (with the first report due after consideration of a specified prior report and the Taskforce terminating after 10 years from enactment); and (2) direct the Government Accountability Office (GAO), not later than two years after enactment, to submit to Congress and the Taskforce a study of the economic costs and frequency of financial exploitation of senior citizens.

This section directs the Securities and Exchange Commission (SEC) to propose, within 180 days of enactment, and finalize, within one year of enactment, rules permitting covered entities—including registered investment companies, business development companies, brokers, dealers, municipal securities dealers, government securities brokers or dealers, investment advisers, transfer agents, and funding portals—to deliver required regulatory documents to investors electronically, exempting such delivery from consumer consent requirements under section 101(c) of the Electronic Signatures in Global and National Commerce Act (15 U.S.C. 7001(c)). (As background, E-SIGN generally equates electronic records to paper but requires affirmative consumer consent, right to paper, and withdrawal options for disclosures to consumers.) The rules must (1) provide an initial paper communication on electronic delivery, a transition period of up to 180 days to electronic delivery for non-users, and annual paper reminders for up to two years thereafter; (2) specify content and timing requirements for notices; (3) include opt-out mechanisms for paper delivery; (4) require remediation of failed electronic deliveries; (5) set minimum readability and retainability standards; and (6) mandate confidentiality protections for personal information by entities other than brokers, dealers, registered investment advisers, and investment companies. This section further requires the SEC to review and amend its rules within one year to allow electronic delivery to satisfy "in writing" requirements (except where statutes mandate paper), directs self-regulatory organizations to conform their rules, deems untimely electronic delivery compliant if the SEC misses its deadline, and clarifies that it does not alter the substance or timing of disclosure obligations.

This section authorizes closed-end companies, including those electing business development company (BDC) status, to invest any or all assets in private funds (i.e., issuers exempt from registration under the Investment Company Act of 1940 [ICA] Sections 3(c)(1) or 3(c)(7), as defined in the Investment Advisers Act of 1940); prohibits the Securities and Exchange Commission (SEC) from restricting such investments, the offer or sale of related closed-end company securities, or their listing on a national securities exchange based on those investments (while permitting unrelated restrictions); and similarly prohibits exchanges from conditioning or restricting listing or trading of such securities (except consistent with the new ICA restrictions). (As background, closed-end companies raise capital through a one-time public offering of a fixed number of shares that then trade on exchanges like stocks, unlike open-end mutual funds; BDCs focus on debt/equity investments in small and mid-sized U.S. businesses.) The section (1) adds these provisions to ICA Section 5(d) and Exchange Act Section 6(m), (2) incorporates the Advisers Act definition of private fund into ICA Section 2(a)(55), and (3) revises ICA Section 3(c)(1) and (3)(c)(7)(D) to reference subparagraph (C) alongside (A)(i) and (B)(i) in limitations on investment advisers' holdings. Rules of construction clarify that the changes do not alter fiduciary duties or closed-end companies' valuation, liquidity, and redemption requirements under the ICA.

This section amends securities registration requirements for national securities exchanges by (1) reducing, for emerging growth companies (i.e., issuers with annual gross revenues of less than $1.235 billion that meet other criteria under the Jumpstart Our Business Startups (JOBS) Act), the required financial statement lookback period to the two preceding fiscal years (from three); and (2) authorizing any issuer to confidentially submit a draft registration statement for nonpublic SEC staff review prior to public filing, requiring public filing of the initial submission and all amendments no later than 10 days before exchange listing, with such information exempt from disclosure under the Freedom of Information Act and deemed confidential under SEC rules.

This section permits a registered investment company (i.e., a mutual fund, exchange-traded fund, or similar) to omit from the calculation of Acquired Fund Fees and Expenses in its fee table disclosure—on any registration statement filed with the SEC—those fees and expenses incurred indirectly from investments in one or more business development companies (BDCs). (BDCs invest in or lend capital to small and developing businesses, and Acquired Fund Fees and Expenses currently must include indirect fees from investments in other funds.)

This section expands the "testing-the-waters" exemption in Section 5(d) of the Securities Act of 1933—allowing issuers to communicate orally or in writing with qualified institutional buyers or accredited investors to gauge interest in a contemplated securities offering prior to registration—from emerging growth companies to all issuers and authorizes the Securities and Exchange Commission (SEC) to impose additional requirements on non-emerging growth companies after submitting a report to Congress listing supporting findings. This section further revises Section 6(e) to extend confidential nonpublic review of draft registration statements by SEC staff—previously limited to emerging growth companies—to all issuers for initial public offerings, initial registrations under Section 12(b) of the Securities Exchange Act of 1934, or follow-on offerings, requiring public filing of the initial submission and amendments no later than 10 days before the effective date (for initial public offerings), 10 days before exchange listing (for initial Section 12(b) registrations), or 48 hours before the effective date (for follow-on offerings), and similarly authorizes the SEC to impose additional requirements on non-emerging growth companies after a report to Congress.

This section expands disclosure exemptions for emerging growth companies by amending (1) Section 7(a)(2) of the Securities Act of 1933 to permit such companies to omit, in IPO registration statements, acquired company financial statements or information otherwise required under SEC regulations 17 CFR 210.3-05 or 210.8-04 (i.e., Regulation S-X rules on business acquisition financial statements) for periods prior to the company's earliest presented audited period, with such relief applying permanently even after the company ceases to qualify as an emerging growth company; and (2) Section 12(b)(1)(K) of the Securities Exchange Act of 1934 to apply the same exemption to exchange listing applications. (Thus, emerging growth companies and former emerging growth companies avoid providing historical financial statements for pre-acquisition periods of acquired businesses that predate their own initial audited financials.)

This section directs the Comptroller General of the United States, in consultation with the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA), to conduct a study on costs associated with initial public offerings (IPOs) by small- and medium-sized companies. The study must (1) examine direct and indirect costs such as fees for accountants, underwriters, and advisors, and compliance with federal and state securities laws; (2) compare those costs to alternative financing and liquidity sources; (3) assess impacts on capital formation; (4) analyze effects on retail investor access to such companies' public securities; and (5) review IPO trends including numbers of IPOs, cost evolutions, underwriter and broker-dealer activity, services provided, investment research changes, and litigation costs. The Comptroller General must submit a report to Congress with all findings and any administrative or legislative recommendations within 360 days of enactment.

This section expands the definition of a well-known seasoned issuer (WKSI) under federal securities laws by reducing the minimum aggregate market value of voting and non-voting common equity held by non-affiliates to $400 million (from $700 million), as determined under Form S-3 General Instruction I.B.1., and by disregarding any requirement relating to minimum worldwide market value of such equity in the existing WKSI definition (17 CFR 230.405). (WKSI status enables streamlined securities registration via automatic shelf offerings.) The section further directs the Securities and Exchange Commission, not later than 90 days after the end of each calendar year, to publish the total number of applications withdrawn during that year that were submitted under 17 CFR 230.405 for a determination of non-ineligibility to qualify as a WKSI.

This section directs the Securities and Exchange Commission (SEC) to require, by rule, issuers with multi-class share structures—i.e., capitalization structures containing two or more classes of securities with differing voting rights in director elections—to disclose in proxy or consent solicitation materials for annual shareholder meetings (or other filings as determined by the SEC) the following for each director, director nominee, named executive officer, or beneficial owner of 5% or more of total combined voting power: (1) shares of all voting classes beneficially owned, as a percentage of total outstanding voting securities; and (2) voting power held, as a percentage of total combined voting power. (Thus, the disclosure highlights disparities between economic ownership and voting control in multi-class structures.)