Mich. Admin. Code R. 451.4.5 - Registration exemption for investment advisers to private funds
Rule 4.5.
(1)
This rule takes effect 365 days after the rule set has been filed with the
secretary of state.
(2) As used in
this rule, "venture capital fund " means a private fund that meets the
definition of a venture capital fund in SEC rule 203(l)-1, 17 C.F.R. §
275.203(l)-1.
(3) Subject to the
additional requirements of subrule (4) of this rule, a private fund adviser
formed or domiciled in this state, and a private fund adviser not domiciled in
this state but offering its fund securities to Michigan residents, is exempt
from the registration requirements of section 403 of the act , MCL 451.2403, if
the private fund adviser satisfies both of the following conditions:
(a) Neither the private fund adviser nor any
of its advisory affiliates are subject to a disqualification as described in
SEC rule 506(d)(1) of SEC regulation D,
17
C.F.R. §
230.506(d)(1).
(b) The private fund adviser files with the
state each report, and amendments to each report if applicable, that an exempt
reporting adviser is required to file with the SEC pursuant to SEC rule 204-4,
17 C.F.R. §
275.204-4.
(4) In order to qualify for the exemption
described in subrule (3) of this rule, a private fund adviser who advises at
least one 3(c)(1) fund that is not a venture capital fund , shall, in addition
to satisfying each of the conditions specified in subrule (3) of this rule,
comply with all of the following requirements:
(a) The private fund adviser shall advise
only those 3(c)(1) funds, other than venture capital funds, whose outstanding
securities, other than short-term paper, are beneficially owned entirely by
persons who each meet the definition of a qualified client in SEC rule 205-3,
17
C.F.R. §
275.205-3, or an accredited
investor in SEC rule 501,
17 C.F.R. §
230.501, at the time the securities are
purchased from the issuer.
(b) At
the time of the purchase, the private fund adviser shall disclose all of the
following in writing, to each beneficial owner of a 3(c)(1) fund that is not a
venture capital fund :
(i) All services, if
any, to be provided to individual beneficial owners.
(ii) All duties, if any, the investment
adviser owes to the beneficial owners.
(iii) Any other material information
affecting the rights or responsibilities of the beneficial owners.
(c) The private fund adviser shall
obtain, on an annual basis, audited financial statements for each 3(c)(1) fund
that is not a venture capital fund , and shall deliver a copy of such audited
financial statements to each beneficial owner of the fund .
(d) Subrule (4)(c) of this rule does not
apply to a 3(c)(1) fund with respect to any annual period if both of the
following are true:
(i) Each beneficial owner
is a qualified client .
(ii) The
private fund adviser has provided to each beneficial owner a written disclosure
explaining that the private fund will not provide audited financial statements
to investors annually, but that other similarly-situated funds may provide
audited financial statements to their investors.
(5) If a private fund adviser is
registered with the SEC , the investment adviser shall not be eligible for the
exemption in subrule (3) of this rule, and shall comply with the state notice
filing requirements applicable to federal covered investment advisers in
section 405 of the act , MCL 451.2405.
(6) A person is exempt from the registration
requirements of section 404 of the act , MCL 451.2404, if he or she is employed
by, or associated with, an investment adviser that is exempt from registration
in this state pursuant to this rule and does not otherwise act as an investment
adviser representative outside of the scope of his or her employment.
(7) The report filings described in subrule
(3)(b) of this rule must be made electronically through the IARD . A report is
deemed filed when the report is filed and accepted by the IARD on the states
behalf.
(8) An investment adviser
who becomes ineligible for the exemption provided by this rule shall comply
with all applicable laws and rules requiring registration or notice filing
within 90 days from the date the investment advisers eligibility for this
exemption ceases.
(9) An investment
adviser to a 3(c)(1) fund , other than a venture capital fund , that has 1 or
more beneficial owners who are not qualified clients or accredited investors as
described in subrule (4)(a) of this rule is eligible for the exemption
contained in subrule (3) of this rule, if all of the following conditions are
satisfied:
(a) The subject fund existed prior
to the effective date of this regulation.
(b) As of the effective date of this rule,
the subject fund ceases to accept beneficial owners who are not qualified
clients or accredited investors, as described in subrule (4)(a) of this
rule.
(c) The investment adviser
discloses, in writing, the information described in subrule (4)(b) of this rule
to all beneficial owners of the fund .
(d) As of the effective date of this rule,
the investment adviser delivers financial statements as required by subrule
(4)(c) of this rule, unless subrule (4)(d) applies to the private fund
adviser .
(10) Subrule
(3)(a) of this rule does not apply upon a showing of good cause and without
prejudice to any other action of the administrator , if the administrator
determines that it is not necessary under the circumstances that an exemption
be denied.
Notes
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