Regulation D Annual & Interim Amendments

Form D Updating Requirements

Initial Filing Requirement

As discussed in our overview of Regulation D, hedge funds must file a Form D with the SEC within 15 days of the first subscription of hedge fund interests.  This filing is now done completely online through the SEC’s EDGAR filing system.  If you have any questions on your initial Form D filing requirements, please contact Cole-Frieman & Mallon LLP.

Annual Amendment Required

Hedge funds which are continuously offering their interests are required to file an amended electronic Form D on an annual basis (e.g. on or before the anniversary of the most recent amendment (or original filing)).  Real estate funds and private equity funds which have made a “final closing” will not be required to file an annual amendment unless one year lapses from the first sale date and the final closing date.  See generally Rule 503(a)(3)(iii).

Requirement to Correct Errors or Report Changes

Hedge funds must file amendments to Form D to correct material mistakes of fact or errors, and to report changes in information reported on previous Form D filings.  The amendment must be filed as soon as practicable.

Generally changes will require an amendment except for certain more administrative changes.  The changes which do not require instant amendment include:

  • The address or relationship to the issuer of a related person identified in Item 3 of Form D;
  • The fund’s revenues or aggregate net asset value;
  • The minimum investment amount, if the change is an increase, or if the change, together with all other changes in that amount since the previously filed notice of sales on Form D, does not result in a decrease of more than 10%;
  • Any address or state(s) of solicitation shown in response to Item 12 of Form D;
  • The total offering amount, if the change is a decrease, or if the change, together with all other changes in that amount since the previously filed notice of sales on Form D, does not result in an increase of more than 10%;
  • The amount of interests/securities sold in the offering or the amount remaining to be sold;
  • The number of non-accredited investors who have invested in the offering, as long as the change does not increase the number to more than 35;
  • The total number of investors who have invested in the offering; or
  • The amount of sales commissions, finders’ fees or use of proceeds for payments to executive officers, directors or promoters, if the change is a decrease, or if the change, together with all other changes in that amount since the previously filed notice of sales on Form D, does not result in an increase of more than 10%.

The only time that changes to these items must be reported on an interim basis is when the issuer is otherwise filing a 503(a) amendment.

Rule 503(a)(4) requires that current information must be provided in response to all parts of the Form D, regardless of the reason for the filing.  Thus, even when filing an amendment to correct a small error, current information must be given for all parts of the form, even those items excepted under 503(a)(3)(ii).  Similarly, when filing to report changes in information that is not under the exception, current information must be provided for all parts of the Form D.  And, of course, when making an annual filing, all information must be current.

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Please contact us if you have a question on this issue or if you would like to start a hedge fund.  Other related hedge fund law articles include:

Bart Mallon, Esq. of Cole-Frieman & Mallon LLP runs the Hedge Fund Law Blog.  He can be reached directly at 415-868-5345.

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