The Virginia Subscription Agreement — A Section 3C1 Fund, also known as the Virginia 3C1 Fund Subscription Agreement, is a legal document that outlines the terms and conditions of investment for a specific type of investment fund known as a Section 3C1 fund. This agreement serves as a contract between the fund manager or general partner and potential investors interested in participating in the fund. A Section 3C1 fund is a type of investment fund that falls under the exempted funds' category pursuant to Section 3(c)(1) of the Investment Company Act of 1940. It is typically structured as a limited partnership or limited liability company (LLC). The main characteristic of a Section 3C1 fund is that it is limited to a maximum of 100 accredited investors, thereby allowing for a more exclusive offering compared to other investment funds. The Virginia Subscription Agreement — A Section 3C1 Fund outlines various important details and provisions related to the investment process. These may include: 1. Parties: This section identifies the parties involved in the agreement, such as the fund manager or general partner and the investor(s). 2. Subscription Amount: The agreement specifies the minimum and maximum subscription amounts that an investor can contribute to the fund. 3. Offering and Acceptance: It clarifies that the agreement constitutes an offer by the investor and acceptance by the fund manager, making it a binding contract between the two parties. 4. Representations and Warranties: Investors are required to make specific representations and warranties regarding their accredited investor status, financial capabilities, and understanding of the risks associated with the investment. 5. Transferability of Interests: The agreement may detail the conditions under which an investor can transfer their interests in the fund to a third party. 6. Fees and Expenses: This section outlines the fees and expenses associated with the investment, such as management fees, performance fees, and administrative expenses. 7. Governing Law and Jurisdiction: It specifies the governing law and jurisdiction in which any disputes arising from the agreement will be settled. The Virginia Subscription Agreement — A Section 3C1 Fund is a crucial legal document that protects the rights and interests of both the investors and the fund manager. It ensures that all parties involved understand the terms and conditions of the investment, promoting transparency and compliance with regulatory requirements. Different types of Virginia Subscription Agreements — A Section 3C1 Fund may exist based on specific fund strategies or requirements. For example, there could be a Virginia Subscription Agreement for a Section 3C1 Hedge Fund, a Virginia Subscription Agreement for a Section 3C1 Private Equity Fund, or a Virginia Subscription Agreement for a Section 3C1 Real Estate Fund. These agreements would have slight variations to address the unique characteristics and risks associated with each investment strategy.
Virginia Subscription Agreement - A Section 3C1 Fund
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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) ...
Rule 205?3 under the Advisers Act exempts an investment adviser from the prohibition against charging a client performance fees when the client is a ?qualified client.? A qualified client includes a client that has at least a certain dollar amount in assets under management with the adviser immediately after entering ...
Private funds must not plan to issue an IPO and their investors must be qualified purchases to qualify for the 3C7 exemption. There is no maximum limit for the number of purchasers of 3C7 funds. In contrast to 3C7, 3C1 funds deal with no more than 100 accredited investors.
An investor who purchases an FOF must pay two levels of fees. Just like an individual fund, an FOF may charge management fees and a performance fee, although the performance fees are typically lower than individual mutual funds to reflect the fact that most of the management is delegated to the sub-funds themselves.
To qualify as a VCOC, the fund must invest at least 50% of its assets in ?venture capital investments.? An investment qualifies as a venture capital investment if it is an investment in an ?operating company? and the fund obtains specific direct contractual management rights in the portfolio company.
3C1 allows private funds with 100 or fewer investors and no plans for an initial public offering to sidestep certain SEC requirements.
Types of 3(c)(1) Investors Generally speaking investors in Section 3(c)(1) hedge funds will be both accredited investors and qualified clients. A 3(c)(1) fund must limit its investors to qualified clients if it wants to charge a performance fee.
The investment adviser can also include a performance fee in the terms of the fund, typically over a defined hurdle return for the shareholders, and therefore earn an income stream similar to that of a privately offered PE or real estate fund.