What is 3(c)(7) Exemption?
The 3(c)(7) exemption allows a private fund to have up to 499 beneficial owners — but all must be "qualified purchasers" with at least $5 million in investments. It is used by larger funds with many institutional LPs.
The 3(c)(7) exemption from the Investment Company Act permits up to 499 investors, but each must be a "qualified purchaser" — generally an individual with $5M+ in investments or an institution with $25M+. This allows large funds to accommodate more LPs than the 100-investor 3(c)(1) cap.
Most large institutional private equity and venture funds rely on 3(c)(7). It requires more rigorous LP qualification upfront but provides the flexibility to have a diverse LP base across many institutional investors.
Also known as: 3c7, Section 3(c)(7)