Setting Up 3(c)(1) and 3(c)(7) Parallel Funds: Why To Do It, When To Do It and How To Do It

The Investment Company Act places a lot of burdens on investment funds. Most private equity, venture capital, or hedge funds seek exemption from these burdens pursuant to either Section 3(c)(1) or Section 3(c)(7) thereof. A fund availing itself of the Section 3(c)(1) exemption may eventually find itself against the applicable threshold (whether it is 100 or 250 investors), yet still wish to accept investors. Or, a Section 3(c)(7) fund may wish to start accepting investors who are not qualified purchasers. This program will go in-depth into the Section 3(c)(1) and 3(c)(7) exemptions and will discuss how to set up a parallel fund in order to accommodate additional investors. This program will benefit asset management and fund formation practitioners, as well as in-house counsel to fund managers. 

Learning Objectives: 

1. Review the relevant rules and regulatory guidance for parallel funds

2. Examine how beneficial owners are counted for Section 3(c)(1) purposes

3. Gain an understanding of the qualified purchaser definition, including relevant terms used in the definition

4. Discuss the practical considerations involved in determining the best time to set up a parallel 3(c)(1) or 3(c)(7) fund

5. Identify common parallel 3(c)(1) and 3(c)(7) fund structures

6. Examine key formation, administration and governance matters for parallel 3(c)(1) and 3(c)(7) funds