H.R. 4431

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4431 Referred in Senate (RFS)]

<DOC>
119th CONGRESS
1st Session
H. R. 4431

_______________________________________________________________________

IN THE SENATE OF THE UNITED STATES

December 2, 2025

Received; read twice and referred to the Committee on Banking, Housing, 
and Urban Affairs

_______________________________________________________________________

AN ACT

To amend the Investment Company Act of 1940 with respect to the 
definition of qualifying venture capital funds, 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 ``Improving Capital Allocation for 
Newcomers Act of 2025''.

SEC. 2. QUALIFYING VENTURE CAPITAL FUNDS.

Section 3(c)(1) of the Investment Company Act of 1940 (15 U.S.C. 
80a-3(c)(1)) is amended--
(1) in the matter preceding subparagraph (A), by striking 
``250 persons'' and inserting ``500 persons''; and
(2) in subparagraph (C)(i)--
(A) by striking ``$10,000,000'' and inserting 
``$50,000,000''; and
(B) by striking ``beginning from a measurement made 
by the Commission on a date selected by the 
Commission'' and inserting ``beginning from a 
measurement made on the date of the enactment of the 
Improving Capital Allocation for Newcomers Act of 
2025''.

SEC. 3. STUDY AND RULEMAKING.

(a) Study Required.--
(1) In general.--Beginning 5 years after the date of 
enactment of this Act, the Advocate for Small Business Capital 
Formation, in consultation with the Investor Advocate, shall 
conduct a study on the effect of the amendments made by section 
2 on the businesses and startup entities in which qualifying 
venture capital funds invest, specifically including, with 
respect to such businesses and startup entities, changes or 
trends relating to--
(A) the geographic distribution of capital to 
portfolio companies;
(B) the socio-economic characteristics of founders 
or controlling persons;
(C) the veteran status of founders or controlling 
persons;
(D) the industry sector, size, stage of 
development, and related details; and
(E) other factors or metrics determined by the 
Advocate for Small Business Capital Formation.
(2) Authorities related to required study.--For purposes of 
conducting the study required by paragraph (1), the Advocate 
for Small Business Capital Formation and the Investor Advocate 
shall have authority to--
(A) obtain from the Securities and Exchange 
Commission (in this section referred to as the 
``Commission'') and utilize any data or information 
necessary to carry out the study;
(B) request and receive assistance from any 
division or office of the Commission, including the 
Division of Economic and Risk Analysis; and
(C) enter into agreements with third parties to 
assist in data analysis.
(b) Report.--The Advocate for Small Business Capital Formation 
shall issue a report to the Congress containing all findings and 
determinations made in carrying out the study required by subsection 
(a)(1), and make such report available to the public on the website of 
the Commission.
(c) Public Comment.--During the 180-day period beginning on the 
date the report is issued under subsection (b), the Commission shall 
solicit feedback from the public on the findings and determinations 
contained in the report.
(d) Rulemaking.--
(1) In general.--The Commission, in consultation with the 
Investor Advocate and the Advocate for Small Business Capital 
Formation, may, after considering all comments received under 
subsection (c) and only if the Commission determines in such 
report that the amendments made by section 2 have had a 
demonstrable effect on increasing the geographic distribution 
of capital to portfolio companies, increasing the variety of 
the socio-economic characteristics of founders or controlling 
persons, or increasing the number of founders or controlling 
persons who are veterans, issue rules to--
(A) increase or decrease the 500 person threshold 
described in the matter preceding subparagraph (A) of 
section 3(c)(1) of the Investment Company Act of 1940, 
but such threshold may not exceed 750 persons or be 
reduced below 250 persons; and
(B) increase or decrease the $50,000,000 dollar 
figure in section 3(c)(1)(C)(i) of the Investment 
Company Act of 1940, but such dollar figure may not 
exceed $100,000,000 or be reduced below $10,000,000.
(2) Deadline for rulemaking.--The rulemaking authority in 
paragraph (1) only applies to a rule with respect to which the 
proposed rule was issued during the 180-day period beginning at 
the end of the public comment period described in subsection 
(c).
(3) No effect on inflation adjustments.--A rule issued 
under this subsection shall have no effect on the requirement 
under clause (i) of section 3(c)(1)(C) of the Investment 
Company Act of 1940 (15 U.S.C. 80a-3(c)(1)(C)), as amended by 
section 2, to index the first dollar amount in such clause for 
inflation.

Passed the House of Representatives December 1, 2025.

Attest:

KEVIN F. MCCUMBER,

Clerk.