ERA Registration: A Practical Guide for Fund Managers

The Investment Advisers Act of 1940 requires anyone who provides investment advice for compensation to register with the SEC, unless an exemption applies. For fund managers who are just starting out or managing smaller pools of capital, Exempt Reporting Adviser (ERA) status offers a way to comply with federal requirements without taking on the full obligations of SEC registration. This guide explains what ERA status is, how to determine if you qualify, and what the filing process involves.

What Is Form ADV?

Form ADV is the uniform registration and reporting form used by investment advisers filing with the SEC. It is filed electronically through the Investment Adviser Registration Depository (IARD) system. The form has two main parts.

ERAs also report information about each private fund they advise on Section 7.B of Schedule D. This includes the fund's name, type, gross asset value, and other operational details.

Do You Need to File?

Whether you file as an ERA depends on which Advisers Act exemption applies to your situation. There are two primary exemptions relevant to fund managers.

Venture Capital Fund Adviser Exemption (Section 203(l))

This exemption is available if you solely advise venture capital funds as defined by SEC Rule 203(l)-1. A qualifying venture capital fund must meet all of these criteria:

• The fund represents itself as a venture capital fund to investors
• The fund invests primarily in "qualifying investments" (generally equity in private operating companies acquired directly from the company)
• The fund does not borrow or otherwise incur leverage in excess of 15% of the fund's capital contributions and uncalled committed capital, and any such borrowing is for no more than 120 calendar days
• The fund does not offer investors redemption or other similar liquidity rights except in extraordinary circumstances
• The fund is not registered under the Investment Company Act and has not elected to be treated as a business development company

If you exclusively manage venture capital funds meeting these criteria, you qualify for the 203(l) exemption. You must still file Form ADV as an ERA, but you avoid full SEC registration.

Private Fund Adviser Exemption (Section 203(m))

This exemption applies to advisers who solely advise private funds and have less than $150 million in assets under management in the United States. Key conditions:

• You advise only "private funds" (funds relying on Section 3(c)(1) or 3(c)(7) of the Investment Company Act)
• Your total assets under management attributable to private funds in the U.S. are below $150 million
• You do not advise non-fund clients (separate accounts, individuals) unless otherwise exempt

Filing Requirements

Initial Filing

Your initial Form ADV should be filed promptly after you begin acting as an investment adviser to a fund. There is no specific pre-launch filing deadline in the Advisers Act, but best practice is to file before or at the time of your first close. The filing process involves:

• Setting up an IARD account and obtaining IARD/CRD numbers
• Completing the applicable sections of Form ADV Part 1
• Reporting each fund on Section 7.B of Schedule D
• Paying the IARD filing fee (currently $40 for ERAs)
• Submitting the filing electronically through the IARD system

Annual Amendment

ERAs must file an annual amendment to Form ADV within 90 days of their fiscal year end. For most fund managers, this means the amendment is due by March 31 each year (assuming a December 31 fiscal year). The annual amendment updates:

• Assets under management
• Number and types of funds advised
• Fund gross asset values
• Ownership and control information
• Disciplinary history (if any changes)

Material Changes

Outside the annual amendment cycle, you must promptly file an amendment if certain material information changes. This includes changes to your disciplinary history, changes in your business operations that affect your eligibility for the exemption, or if you are no longer eligible to be an ERA (for example, if your AUM crosses the $150 million threshold).

State Filing Requirements

Federal ERA status does not exempt you from state investment adviser regulation. Each state has its own rules governing whether ERAs must register, file notice documents, or are exempt at the state level. The requirements vary significantly.

Some states broadly exempt ERAs from state registration. Others require notice filings and fees. A few states require full state registration regardless of your federal ERA status, particularly for advisers to 3(c)(1) funds. You must analyze each state where you have a place of business or investors to determine your obligations.

For a detailed analysis of state-by-state requirements, see the guide on State Investment Adviser Regulations and Registration.

Related Filings

Form ADV is your adviser-level filing. Your fund also has its own filing obligations that are separate from, but related to, your ERA status.

Form D

Form D is a notice filing with the SEC for your securities offering under Regulation D. It must be filed within 15 days of the first sale of fund interests. Form D is filed through EDGAR (not IARD), and each fund or SPV needs its own Form D. The information on Form D (fund name, type, exemption relied upon) should be consistent with what you report on Form ADV.

Blue Sky Filings

Blue sky filings are state-level notice filings for your securities offering. They are filed in each state where you sell or offer fund interests, typically through the Electronic Filing Depository. These are separate from state adviser filings and relate specifically to the securities offering rather than your adviser status.

For complete details on Form D and blue sky filing requirements, see the guide on Form D and Blue Sky Filings for Private Funds.

How Capital Company Helps

Capital Company prepares and files Form D, blue sky filings, and Form ADV for funds on the platform. Schedule a demo to learn more.

This content is for informational purposes only and does not constitute legal, tax, or compliance advice. The Investment Advisers Act of 1940 and its rules are complex, and the summaries presented here may not cover all situations. You should consult with a qualified securities attorney to determine your specific registration obligations and exemption eligibility. Capital Company is not a law firm and does not provide legal advice.