Written by Isabel Alcántara, Esq. and Guest Author, Aleesha Jacob.
A non-U.S. investment adviser firm may register with the United States Securities and Exchange Commission (SEC). The U.S. Investment Advisers Act of 1940 sets forth the conditions that would subject a non-U.S. adviser to registration obligations with the SEC. While such registration may be required if the adviser has clients residing in the U.S., certain exemptions to registering with the SEC exist, including the Foreign Private Adviser Exemption, the Private Fund Adviser Exemption, and the Venture Capital Fund Exemption.
Note that the term non-U.S. adviser is used by the SEC to describe an investment adviser firm that is not physically located in the United States. In other words, non-U.S. advisers are investment adviser firms that maintain a principal office in a country other than the United States.
In the event a non-U.S. adviser is required or decides to register with the SEC, the adviser must complete Form ADV. This form is filed for initial registration with the SEC. Amendment of Form ADV is required annually and when a firm experiences a material change to their business model. Form ADV Part 1 solicits information about those who own and run the investment adviser firm, as well as details regarding clients. Meanwhile, Form ADV Part 2A delineates various disclosures that the firm must articulate in the form of a brochure. The brochure must be delivered to advisory prospects and clients in the course of their interaction with an adviser firm's personnel. Once a non-U.S. investment adviser is registered, it is subject to regulation and inspection by the SEC and may be subject to regulation by state securities divisions depending on the firm’s activities.
Furthermore, non-U.S. advisers might consider organizing and registering a separate subsidiary with the SEC rather than registering the parent company. Generally speaking, the registered subsidiary would be required to comply with the Advisers Act. However, the parent firm would not necessarily be subject to the Advisers Act so long as the U.S.-registered affiliate operates as a separate entity.
Alcantara Law, LLC has experience registering non-U.S. advisers with the SEC. Contact us for more information.
