If your principal office is outside the United States, you can be exempt from SEC registration as a foreign private adviser or under the offshore private fund adviser exemption. The foreign private adviser exemption requires no SEC filing, but you must have fewer than 15 U.S. clients and investors and less than $25 million attributable to them. The offshore exemption places no limit on U.S. investors in your funds, but you must file Form ADV as an Exempt Reporting Adviser (ERA).
If you meet neither, you need to register with the SEC or qualify for another exemption, such as the venture capital fund adviser exemption.
The Foreign Private Adviser Exemption
As a foreign private adviser, you do not register with the SEC or file Form ADV, and your firm does not appear in the SEC's public adviser database. You qualify if you:
- Have no place of business in the United States, meaning no U.S. office where anyone on your team regularly works on your funds.
- Have fewer than 15 U.S. clients and private fund investors combined. The count includes every U.S. investor in each fund you advise, plus any U.S. clients you advise directly.
- Have less than $25 million in regulatory AUM attributable to those clients and investors. A fund organized in the United States, such as a Delaware limited partnership, is itself a U.S. client, so all of its assets count, including capital from non-U.S. investors.
- Do not hold yourself out to the U.S. public as an investment adviser or advise a U.S. registered fund. Offering interests in your fund to U.S. investors in a private placement is not holding out.
The Offshore Private Fund Adviser Exemption
The offshore exemption is the version of the private fund adviser exemption for advisers with a principal office outside the United States. You qualify if you:
- Have no U.S. clients other than private funds. Your funds can have any number of U.S. investors, but a single managed account for a U.S. person ends the exemption immediately.
- Manage only private fund assets from any U.S. office, with a combined total under $150 million. Assets you manage from outside the United States do not count toward the limit.
Filing Form ADV as an ERA
You file Form ADV through IARD within 60 days of first relying on the exemption and amend it within 90 days after each fiscal year end. ERAs complete a shorter version of the form, and the filing is public.
Each annual amendment reports the private fund assets you manage from the United States. If they reach $150 million, you have 90 days after filing that amendment to apply for SEC registration.
If you have a U.S. office, the state where it is located may also impose its own filing requirements.
Side-by-Side Comparison
| Foreign private adviser | Offshore private fund adviser | |
|---|---|---|
| SEC filing | None. | Form ADV as an ERA, amended each year. |
| U.S. office | Not permitted. | Permitted for private fund work under $150 million. |
| U.S. clients | Any type, within the limits below. | Private funds only. |
| U.S. clients and investors | Fewer than 15, combined. | No limit. |
| Asset limit | Under $25 million attributable to U.S. clients and investors. | Under $150 million managed from U.S. offices. |
| A Delaware fund | All of its assets count toward the $25 million. | Counts toward the $150 million only if managed from a U.S. office. |
How to Choose
If you qualify for both, the foreign private adviser exemption is less work because you file nothing with the SEC. If you expect to launch a Delaware fund of $25 million or more, open a U.S. office, or reach 15 U.S. clients and investors, plan on the offshore exemption instead.
This content is for informational purposes only and does not constitute legal, tax, or compliance advice. Consult qualified counsel for guidance specific to your situation. Capital Company is not a law firm and does not provide legal advice.