Fund Structure
What is 3(c)(1) Exemption?
The 3(c)(1) exemption allows a private fund to avoid Investment Company Act registration if it has fewer than 100 beneficial owners (250 for certain qualifying funds). Most small and emerging manager funds rely on this exemption.
Under Section 3(c)(1) of the Investment Company Act, a fund is exempt from registration as an investment company as long as it does not make a public offering and has fewer than 100 (or in some cases 250) beneficial owners.
The 100-investor limit constrains how many LPs a 3(c)(1) fund can have. Larger funds with many LPs typically shift to the 3(c)(7) exemption, which allows up to 499 QP investors.
Also known as: 3c1, Section 3(c)(1)