What is a Qualified Purchaser?
Under the Investment Company Act of 1940, there were many new regulations and requirements for investment companies and the requirement to register certain securities. Specifically addressed and relied upon in the Investment Company Act of 1940 includes private funds, private equity funds, and a variety of other unregistered securities. Under Section 3(c)(7) of the Investment Company Act, is an exemption that exempts funds from registration with the Securities and Exchange Commission (SEC) if the funds are owned only by “qualified purchasers.” In addition, there is an additional requirement that the securities must never be offered for sale to the general public under Section 3(c)(7).
A qualified purchaser is defined as:
- An individual or family-owned business not formed for the specific purpose of acquiring interest in the fund that owns $5,000,000 or more in investments
- A trust not formed for the specific purpose of acquiring the interest in the fund which is sponsored by and managed by qualified purchasers
- An individual or entity not formed for the specific purpose of acquiring the interest in the fund which owns and invests at least $25,000,000 in investments
- An entity, of which each beneficial owner is a qualified purchaser.
For More Information
If you have questions about your private fund and whether a certain investor qualifies without jeopardizing your private offering under Regulation D, or you have legal questions regarding the Securities Act, Securities and Exchange Act, or the Investment Company Act, then please contact our office at (513) 241-0400. You can also fill out the contact form on a website and one of our attorneys will respond shortly.