17 CFR 270.2a51-1 - Definition of investments for purposes of section 2(a)(51) (definition of “qualified purchaser”); certain calculations.

§ 270.2a51-1 Definition of investments for purposes of section 2(a)(51) (definition of “qualified purchaser”); certain calculations.

(a)Definitions. As used in this section:

(1) The term Commodity Interests means commodity futures contracts, options on commodity futures contracts, and options on physical commodities traded on or subject to the rules of:

(i) Any contract market designated for trading such transactions under the Commodity Exchange Act and the rules thereunder; or

(ii) Any board of trade or exchange outside the United States, as contemplated in Part 30 of the rules under the Commodity Exchange Act [ 17 CFR 30.1 through 30.11].

(2) The term Family Company means a company described in paragraph (A)(ii) of section 2(a)(51) of the Act [ 15 U.S.C. 80a-2(a)(51)].

(3) The term Investment Vehicle means an investment company, a company that would be an investment company but for the exclusions provided by sections 3(c)(1) through 3(c)(9) of the Act [ 15 U.S.C. 80a-3(c)(1) through 3(c)(9)] or the exemptions provided by §§ 270.3a-6 or 270.3a-7, or a commodity pool.

(4) The term Investments has the meaning set forth in paragraph (b) of this section.

(5) The term Physical Commodity means any physical commodity with respect to which a Commodity Interest is traded on a market specified in paragraph (a)(1) of this section.

(6) The term Prospective Qualified Purchaser means a person seeking to purchase a security of a Section 3(c)(7) Company.

(7) The term Public Company means a company that:

(i) Files reports pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 [ 15 U.S.C. 78m or 78o(d)]; or

(ii) Has a class of securities that are listed on a “designated offshore securities market” as such term is defined by Regulation S under the Securities Act of 1933 [ 17 CFR 230.901 through 230.904].

(8) The term Related Person means a person who is related to a Prospective Qualified Purchaser as a sibling, spouse or former spouse, or is a direct lineal descendant or ancestor by birth or adoption of the Prospective Qualified Purchaser, or is a spouse of such descendant or ancestor, provided that, in the case of a Family Company, a Related Person includes any owner of the Family Company and any person who is a Related Person of such owner.

(9) The term Relying Person means a Section 3(c)(7) Company or a person acting on its behalf.

(10) The term Section 3(c)(7) Company means a company that would be an investment company but for the exclusion provided by section 3(c)(7) of the Act [ 15 U.S.C. 80a-3(c)(7)].

(b)Types of Investments. For purposes of section 2(a)(51) of the Act [ 15 U.S.C. 80a-2(a)(51)], the term Investments means:

(1) Securities (as defined by section 2(a)(1) of the Securities Act of 1933 [ 15 U.S.C. 77b(a)(1)]), other than securities of an issuer that controls, is controlled by, or is under common control with, the Prospective Qualified Purchaser that owns such securities, unless the issuer of such securities is:

(i) An Investment Vehicle;

(ii) A Public Company; or

(iii) A company with shareholders' equity of not less than $50 million (determined in accordance with generally accepted accounting principles) as reflected on the company's most recent financial statements, provided that such financial statements present the information as of a date within 16 months preceding the date on which the Prospective Qualified Purchaser acquires the securities of a Section 3(c)(7) Company;

(2) Real estate held for investment purposes;

(3) Commodity Interests held for investment purposes;

(4) Physical Commodities held for investment purposes;

(5) To the extent not securities, financial contracts (as such term is defined in section 3(c)(2)(B)(ii) of the Act [ 15 U.S.C. 80a-3(c)(2)(B)(ii)] entered into for investment purposes;

(6) In the case of a Prospective Qualified Purchaser that is a Section 3(c)(7) Company, a company that would be an investment company but for the exclusion provided by section 3(c)(1) of the Act [ 15 U.S.C. 80a-3(c)(1)], or a commodity pool, any amounts payable to such Prospective Qualified Purchaser pursuant to a firm agreement or similar binding commitment pursuant to which a person has agreed to acquire an interest in, or make capital contributions to, the Prospective Qualified Purchaser upon the demand of the Prospective Qualified Purchaser; and

(7) Cash and cash equivalents (including foreign currencies) held for investment purposes. For purposes of this section, cash and cash equivalents include:

(i) Bank deposits, certificates of deposit, bankers acceptances and similar bank instruments held for investment purposes; and

(ii) The net cash surrender value of an insurance policy.

(c)Investment Purposes. For purposes of this section:

(1) Real estate shall not be considered to be held for investment purposes by a Prospective Qualified Purchaser if it is used by the Prospective Qualified Purchaser or a Related Person for personal purposes or as a place of business, or in connection with the conduct of the trade or business of the Prospective Qualified Purchaser or a Related Person, provided that real estate owned by a Prospective Qualified Purchaser who is engaged primarily in the business of investing, trading or developing real estate in connection with such business may de deemed to be held for investment purposes. Residential real estate shall not be deemed to be used for personal purposes if deductions with respect to such real estate are not disallowed by section 280A of the Internal Revenue Code [ 26 U.S.C. 280A].

(2) A Commodity Interest or Physical Commodity owned, or a financial contract entered into, by the Prospective Qualified Purchaser who is engaged primarily in the business of investing, reinvesting, or trading in Commodity Interests, Physical Commodities or financial contracts in connection with such business may be deemed to be held for investment purposes.

(d)Valuation. For purposes of determining whether a Prospective Qualified Purchaser is a qualified purchaser, the aggregate amount of Investments owned and invested on a discretionary basis by the Prospective Qualified Purchaser shall be the Investments' fair market value on the most recent practicable date or their cost, provided that:

(1) In the case of Commodity Interests, the amount of Investments shall be the value of the initial margin or option premium deposited in connection with such Commodity Interests; and

(2) In each case, there shall be deducted from the amount of Investments owned by the Prospective Qualified Purchaser the amounts specified in paragraphs (e) and (f) of this section, as applicable.

(e)Deductions. In determining whether any person is a qualified purchaser there shall be deducted from the amount of such person's Investments the amount of any outstanding indebtedness incurred to acquire or for the purpose of acquiring the Investments owned by such person.

(f)Deductions: Family Companies. In determining whether a Family Company is a qualified purchaser, in addition to the amounts specified in paragraph (e) of this section, there shall be deducted from the value of such Family Company's Investments any outstanding indebtedness incurred by an owner of the Family Company to acquire such Investments.

(g)Special rules for certain Prospective Qualified Purchasers - 1) Qualified institutional buyers. Any Prospective Qualified Purchaser who is, or who a Relying Person reasonably believes is, a qualified institutional buyer as defined in paragraph (a) of § 230.144A of this chapter, acting for its own account, the account of another qualified institutional buyer, or the account of a qualified purchaser, shall be deemed to be a qualified purchaser provided:

(i) That a dealer described in paragraph (a)(1)(ii) of § 230.144A of this chapter shall own and invest on a discretionary basis at least $25 million in securities of issuers that are not affiliated persons of the dealer; and

(ii) That a plan referred to in paragraph (a)(1)(i)(D) or (a)(1)(i)(E) of § 230.144A of this chapter, or a trust fund referred to in paragraph (a)(1)(i)(F) of § 230.144A of this chapter that holds the assets of such a plan, will not be deemed to be acting for its own account if investment decisions with respect to the plan are made by the beneficiaries of the plan, except with respect to investment decisions made solely by the fiduciary, trustee or sponsor of such plan.

(2)Joint Investments. In determining whether a natural person is a qualified purchaser, there may be included in the amount of such person's Investments any Investments held jointly with such person's spouse, or Investments in which such person shares with such person's spouse a community property or similar shared ownership interest. In determining whether spouses who are making a joint investment in a Section 3(c)(7) Company are qualified purchasers, there may be included in the amount of each spouse's Investments any Investments owned by the other spouse (whether or not such Investments are held jointly). In each case, there shall be deducted from the amount of any such Investments the amounts specified in paragraph (e) of this section incurred by each spouse.

(3)Investments by Subsidiaries. For purposes of determining the amount of Investments owned by a company under section 2(a)(51)(A)(iv) of the Act [ 15 U.S.C. 80a-2(a)(51)(A)(iv)], there may be included Investments owned by majority-owned subsidiaries of the company and Investments owned by a company (“Parent Company”) of which the company is a majority-owned subsidiary, or by a majority-owned subsidiary of the company and other majority-owned subsidiaries of the Parent Company.

(4)Certain Retirement Plans and Trusts. In determining whether a natural person is a qualified purchaser, there may be included in the amount of such person's Investments any Investments held in an individual retirement account or similar account the Investments of which are directed by and held for the benefit of such person.

(h)Reasonable Belief. The term “qualified purchaser” as used in section 3(c)(7) of the Act [ 15 U.S.C. 80a-3(c)(7)] means any person that meets the definition of qualified purchaser in section 2(a)(51)(A) of the Act [ 15 U.S.C. 80a-2(a)(51)(A)]) and the rules thereunder, or that a Relying Person reasonably believes meets such definition.

[ 62 FR 17526, Apr. 9, 1997]

This is a list of United States Code sections, Statutes at Large, Public Laws, and Presidential Documents, which provide rulemaking authority for this CFR Part.

This list is taken from the Parallel Table of Authorities and Rules provided by GPO [Government Printing Office].

It is not guaranteed to be accurate or up-to-date, though we do refresh the database weekly. More limitations on accuracy are described at the GPO site.


United States Code
U.S. Code: Title 15 - COMMERCE AND TRADE

§ 30 - Repealed. Pub. L. 107–273, div. C, title IV, § 14102(f), Nov. 2, 2002, 116 Stat. 1922

§ 37 - Immunity from antitrust laws

§ 77f - Registration of securities

§ 77g - Information required in registration statement

§ 77h - Taking effect of registration statements and amendments thereto

§ 77j - Information required in prospectus

§ 77q - Fraudulent interstate transactions

§ 77s - Special powers of Commission

§ 77eee - Securities required to be registered under Securities Act

§ 77ggg - Qualification of indentures covering securities not required to be registered

§ 77nnn - Reports by obligor; evidence of compliance with indenture provisions

§ 77sss - Rules, regulations, and orders

§ 78c - Definitions and application

§ 78d - Securities and Exchange Commission

§ 78l - Registration requirements for securities

§ 78m - Periodical and other reports

§ 78n - Proxies

§ 78o - Registration and regulation of brokers and dealers

§ 78w - Rules, regulations, and orders; annual reports

§ 78bb - Effect on existing law

§ 78ee - Transaction fees

§ 79c

§ 79t

15 U.S. Code § 80a–1 - Findings and declaration of policy

15 U.S. Code § 80a–2 - Definitions; applicability; rulemaking considerations

15 U.S. Code § 80a–3 - Definition of investment company

15 U.S. Code § 80a–3a - Protection of philanthropy under State law

15 U.S. Code § 80a–4 - Classification of investment companies

15 U.S. Code § 80a–5 - Subclassification of management companies

15 U.S. Code § 80a–6 - Exemptions

15 U.S. Code § 80a–7 - Transactions by unregistered investment companies

15 U.S. Code § 80a–8 - Registration of investment companies

15 U.S. Code § 80a–9 - Ineligibility of certain affiliated persons and underwriters

15 U.S. Code § 80a–10 - Affiliations or interest of directors, officers, and employees

15 U.S. Code § 80a–11 - Offers to exchange securities

15 U.S. Code § 80a–12 - Functions and activities of investment companies

15 U.S. Code § 80a–13 - Changes in investment policy

15 U.S. Code § 80a–14 - Size of investment companies

15 U.S. Code § 80a–15 - Contracts of advisers and underwriters

15 U.S. Code § 80a–16 - Board of directors

15 U.S. Code § 80a–17 - Transactions of certain affiliated persons and underwriters

15 U.S. Code § 80a–18 - Capital structure of investment companies

15 U.S. Code § 80a–19 - Payments or distributions

15 U.S. Code § 80a–20 - Proxies; voting trusts; circular ownership

15 U.S. Code § 80a–21 - Loans by management companies

15 U.S. Code § 80a–22 - Distribution, redemption, and repurchase of securities; regulations by securities associations

15 U.S. Code § 80a–23 - Closed-end companies

15 U.S. Code § 80a–24 - Registration of securities under Securities Act of 1933

15 U.S. Code § 80a–25 - Reorganization plans; reports by Commission

15 U.S. Code § 80a–26 - Unit investment trusts

15 U.S. Code § 80a–27 - Periodic payment plans

15 U.S. Code § 80a–28 - Face-amount certificate companies

15 U.S. Code § 80a–29 - Reports and financial statements of investment companies and affiliated persons

15 U.S. Code § 80a–30 - Accounts and records

15 U.S. Code § 80a–31 - Accountants and auditors

15 U.S. Code § 80a–32 - Filing of documents with Commission in civil actions

15 U.S. Code § 80a–33 - Destruction and falsification of reports and records

15 U.S. Code § 80a–34 - Unlawful representations and names

15 U.S. Code § 80a–35 - Breach of fiduciary duty

15 U.S. Code § 80a–36 - Larceny and embezzlement

15 U.S. Code § 80a–37 - Rules, regulations, and orders

15 U.S. Code § 80a–38 - Procedure for issuance of rules and regulations

15 U.S. Code § 80a–39 - Procedure for issuance of orders

15 U.S. Code § 80a–40 - Hearings by Commission

15 U.S. Code § 80a–41 - Enforcement of subchapter

15 U.S. Code § 80a–42 - Court review of orders

15 U.S. Code § 80a–43 - Jurisdiction of offenses and suits

15 U.S. Code § 80a–44 - Disclosure of information filed with Commission; copies

15 U.S. Code § 80a–45 - Reports by Commission; hiring and leasing authority

15 U.S. Code § 80a–46 - Validity of contracts

15 U.S. Code § 80a–47 - Liability of controlling persons; preventing compliance with subchapter

15 U.S. Code § 80a–48 - Penalties

15 U.S. Code § 80a–49 - Construction with other laws

15 U.S. Code § 80a–50 - Separability

15 U.S. Code § 80a–51 - Short title

15 U.S. Code § 80a–52 - Effective date

15 U.S. Code § 80a–53 - Election to be regulated as business development company

15 U.S. Code § 80a–54 - Acquisition of assets by business development companies

15 U.S. Code § 80a–55 - Qualifications of directors

15 U.S. Code § 80a–56 - Transactions with certain affiliates

15 U.S. Code § 80a–57 - Changes in investment policy

15 U.S. Code § 80a–58 - Incorporation of subchapter provisions

15 U.S. Code § 80a–59 - Functions and activities of business development companies

15 U.S. Code § 80a–60 - Capital structure

15 U.S. Code § 80a–61 - Loans

15 U.S. Code § 80a–62 - Distribution and repurchase of securities

15 U.S. Code § 80a–63 - Accounts and records

15 U.S. Code § 80a–64 - Preventing compliance with subchapter; liability of controlling persons

15 U.S. Code § 80b–3 - Registration of investment advisers

15 U.S. Code § 80b–4 - Reports by investment advisers

15 U.S. Code § 80b–11 - Rules, regulations, and orders of Commission

§ 80c-39

§ 80c-89

§ 80w-37

The section you are viewing is cited by the following CFR sections.