No. Under both Section 3(c)(1) and Section 3(c)(7), knowledgeable employees are excluded from beneficial owner counts. The SEC defines knowledgeable employees as:
- Executive officers of the fund or its management company
- Directors or general partners of the fund or its management company
- Any employee who has participated in the investment activities of the fund (or substantially similar funds) for at least 12 months
This exclusion allows your team members to co-invest alongside LPs without consuming investor slots. However, the employee must genuinely qualify under the SEC definition. Administrative staff, marketing personnel, and other employees who do not participate in investment decisions do not qualify as knowledgeable employees.
The 12-month participation requirement is cumulative and can include time at prior firms, as long as the investment activities were substantially similar.
Document each knowledgeable employee's qualifications at the time they invest. If the SEC reviews your investor count, you will need to show why specific investors were excluded from the beneficial owner total.
See The 100 Investor Limit Under Section 3(c)(1) for the complete look-through rules and counting methodology.
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