Is there a limitation on the amount of investors in a 3(c)(7) hedge fund?
The 3(c)(7) hedge fund offers securities to “qualified purchasers.” There are no such limitations on the number of qualified purchasers under the Investment Company Act of 1940. However, where there are more than 500 investors in the limited partnership, the entity my be subject to classification as a “publicly traded entity. ” Should that occur, the entity may lose its flow-through tax treatment which is one of the primary benefits of the hedge fund’s limited partnership structure.
