Business Law | Fund Formation and Administration

Fund Formation and
Administration Attorney

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What is fund formation and administration?

Fund formation is the pooling of money with the goal of earning money. There are several types of funds that can be formed for investment and business purposes including venture capital, fund of funds, private equity, growth equity, investment fund, and FinTech sponsors, just to name a few.

Fund administration incorporates best practices that adhere to regulations on Securities and Exchange Commission (SEC) compliance, conflict of interest, fee and expense allocation, and related disclosers as well as security measures like Know Your Investor (KYI) and Anti-Money Laundering (AML). With a fund administrator in place private equity firms can continue to build secure relationship with investors.

Why do I need legal guidance on fund formation and administration?

When forming a fund there is a set of legal criteria, legal documentation, and SEC filings required in order to gain any sort of investor interest. Some of that legal criteria includes a private placement memorandum (PPM), an operational agreement, a subscription agreement, and an investor questionnaire.

1Private Placement Memorandum (PPM)

A private placement memorandum (PPM) is a legal document that discloses data and information an investor would need to know to make an informed decision about investing. Items in a PPM would include the company’s objectives, risks, legal liabilities, terms of investment, financial statements, management biographies, description of securities, business operations, investment opportunities, and more.

2Operational Agreement

An operational agreement (i.e., limited partnership (LP) or limited liability company (LLC)) outlines the business’ financial and functional decisions (e.g., rules, regulations, and provisions) in order to govern the internal operations of the business to suit the needs of the business owners.

3Subscription Agreement

A subscription agreement documents investor commitment and defines the terms of the investment. This could affect what is taxable.

4Investor Questionnaire

An investor questionnaire compiles information about whether an investor is accredited in accordance with Securities and Exchange Regulation D, Employee Retirement Income Security Act (ERISA) status, NASD restricted persons, PATRTIOT Act compliance, and contact information. This document gives detailed information about if an investor is a desirable candidate for fund investment.

Fund Formation and Administration Legal Services

There are a number of legal aspects to fund formation and administration and at Blake Harris Law we can assist your business in the following areas:

Asset Protection
Broker-dealer regulations
Compliance services
Dispute resolution
Domestic and Offshore Trusts
Employee Retirement Income Security Act (ERISA) practices
Estate planning
International jurisdictions
Management rights
Portfolio company investment structuring
Risk management
Securities laws
Tax structuring
Venture capital funds

Part of our business law services include advising clients on how to structure new funds. We help in every aspect of the fund formation process from organizing a fund structure to defining fund investment strategies and policies to preparing legal materials to negotiating agreements, and so much more. To find out more, please call Blake Harris Law at 786-559-1209 or contact us here.