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30 Απρ 2024 · Under Section 3 (c) (1), a fund may have up to 250 beneficial owners if it meets the definition of a qualifying venture capital fund, a 3 (c) (1) fund with $10 million or less in assets under management (AUM) and an investment strategy that conforms to the legal definition of a venture capital fund.
Legal Background. Section 7(d) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), prohibits a U.S. public offering of securities issued by a non-U.S. investment company.
Numerous investing entities rely on the section 3(c)(l) exception, including corporations, partnerships, and trusts.10 Moreover, section 3(c)(l) is unique in that it is commonly used by entities spanning the financial spectrum.
(10) The term Section 3(c)(7) Company means a company that would be an investment company but for the exclusion provided by section 3(c)(7) of the Act [15 U.S.C. 80a-3(c)(7)].
31 Ιαν 2024 · The Investment Company Act of 1940 protects investors by regulating investment companies, requiring registration with the SEC, setting disclosure and governance standards, prohibiting fraudulent practices, and imposing investment strategy restrictions.
Section 3(a)(1)(A) of the 1940 Act defines “investment company” to mean “any issuer which is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting, or trading in securities.”
Today, section 3(c)(1) issuers find themselves similarly perplexed and vulnerable to legal exposure and enforcement actions. Without relief, these issuers will be limited to making section 3(a)(10) offerings that are encumbered by an excess of the public offering requirements of the 1933 Act.
