A THOROUGH UNDERSTANDING OF PRIVATE EQUITY

RETOUR SOMMAIRE

A CACEIS PRODUCT DEVELOPMENT PUBLICATION - 2010

MAIN ACTORS AND STRUCTURES

It is worth noting that Ireland is not only a fund domicile, but also a fund administration centre of excellence across all asset classes, including private equity funds. Today Ireland boasts being the largest administration centre in the world for alternative investments. The country’s fund administration success has been based on innovation, good legal and regula- tory framework, excellent business environment and the ability to provide experienced staff that can facilitate the processing of sophisticated products.

The United States

2.2.4

Nearly all US venture capital funds are structured as limited partnerships. The most popular US jurisdiction for formation is Delaware, since the Delaware LP offers full tax transparency to US investors and has established itself as a suitable platform for dealing efficiently with the regula- tory constraints of US-based institutional investors. The principle characteristics of the US limited partnership entity are detailed in the table below.

Figure 30 – Main features of the US limited partnership

US LP

Formation

Application legislation

> Laws of state of formation (e.g. Delaware) > US Securities Act of 1933, as amended (“USSA”) Also to be considered: > US Employee Retirement Income Security Act of 1974 as amended (ERISA); > State securities regulation; > FDIC Bank Holding Company Act (BHCA). > USSA Regulation D > US Investment Company Act of 1940, as amended (exemptions under section 3I(1) or 3I(7)) > US Securities Exchange Act of 1934, as amended > USA Patriot Act

Offering/Marketing

Registration

Disclosure

Non-US offerings

> USSA Regulation S

Fund Managers

> US Investment Advisers Act of 1940, as amended > State investment Adviser regulations > US National Association of Securities Dealers > State broker dealer/placement agent registration

Promoter (third party)

Legal structure

> Limited Partnership (usually one GP and multiple LPs)

Eligible investors

> “Accredited investor” or “qualified purchaser”

Eligible assets and risk diversification requirements

> Unrestricted

Borrowing restrictions > None – dictated in the Limited Partnership Agreement (“LPA”) Minimum capital requirement > None – dictated in the LPA (typically $1 - $5 million for individuals, $5 million and higher for entities Regulated structure Yes/No > No Supervisory Authority > None currently – proposals in both houses of congress such as the Hedge Fund Transparency Act and the Hedge Fund Advisor Registration Act of 2009 would provide the SEC with oversight

Number of structures recorded by the Supervisory Authority

> Not applicable

Tax regime

> Limited partnerships are not taxed. Investors in the fund are taxed directly on their portion of income, expenses, gains and losses in the fund

Administrator/Custodian requirements Copyright CACEIS, 2009

> No requirement

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