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3C1 refers to a portion of the Investment Company Act of 1940 that allows private investment companies to be considered exceptions to certain regulations and reporting requirements stipulated by the Securities and Exchange Commission (SEC).
A 3(c)(1) fund is a pooled investment vehicle that is excluded from the definition of investment company in the Investment Company Act because it has no more than 100 beneficial owners (or, in the case of a qualifying venture capital fund, 250 beneficial owners) and otherwise meets criteria outlined in Section 3(c)(1) ...
A 3(c)(1) fund is a pooled investment vehicle that is excluded from the definition of investment company in the Investment Company Act because it has no more than 100 beneficial owners (or, in the case of a qualifying venture capital fund, 250 beneficial owners) and otherwise meets criteria outlined in Section 3(c)(1) ...
Their net worth must be over $5 million as an individual or $25 million as a group to qualify for this status. Just like with accredited investors, a trust fund investment of the same amount can also potentially validate investors as qualified purchasers.
A qualified purchaser is defined as an investor who owns at least $5 million of investments or who invests an aggregate of at least $25 million on a discretionary basis for other qualified purchasers.
Qualifying venture capital funds are a subset of all venture capital funds. Generally, venture capital funds are limited to 100 beneficial owners. Qualifying venture capital funds, however, have the opportunity to raise money from more investors (up to 250 beneficial owners) if they manage less than $10 million.
A qualified purchaser is an individual or entity that can invest in securities or investment products, like venture capital funds or private funds, because they meet specific sophistication thresholds set by the Investment Company Act of 1940.
For instance, a qualified purchaser is often allowed to invest in funds that are exempt from the Securities and Exchange Commission (SEC) registration under both Sections 3(c)(1) and 3(c)(7) of the Investment Company Act, whereas an accredited investor would only be allowed to invest in a Section 3(c)(1) fund.