SEC extends registration deadline, defines VC

The US Securities and Exchange Commission has given private equity firms an extra eight months to register with it, and has also clarified which firms will be exempt from the registration requirement.

The US Securities and Exchange Commission has formally extended the registration deadline for private fund managers to 30 March 2012. The deadline was originally set for next month.

US financial reform bill The Dodd-Frank Act, passed last year, requires private equity firms with $150 million or more of assets under management in the US to register with the SEC. Registration will give the US government more oversight over managers, including the right to run inspections and forces firms to hire or designate a compliance officer.

The SEC announced 22 June that an extension has been granted as rules are just now being finalised. Until now, firms which straddle the line between venture capital and private equity had not known if they would be required to register.

However, at the 22 June meeting, the SEC addressed registration exemptions for venture capital funds and private equity funds with less than $150 million in assets under management in the US.

To qualify for an exemption, the SEC ruled that:

• The fund can pursue qualifying investments, with an exemption for 20 percent of the venture capital fund’s capital commitments
• The fund must represent itself as a venture capital fund
• The fund cannot leverage itself with more than 15 percent of its capital
• The fund cannot offer investors short-term liquidity except in certain circumstances

The extended deadline gives fund managers more time to designate a chief compliance officer, implement a compliance programme, and file all necessary forms with the SEC.