For a 3(c)(1) fund (or a 3(c)(7) fund) to invest in another 3(c)(1) fund and only be counted as 1 owner for the purposes of the 100 beneficial owner limitation, the “Investing Fund” must own less than 10% of the “Receiving Fund’s” outstanding voting securities. The SEC generally considers limited partnership interests to be voting securities but may not under circumstances where limited partners do not participate in the management of the Receiving Fund.

Limited partnership interests will be considered voting securities if any limited partner in the Investing Fund is a 3(c)(1) fund, not registered under the Investment Company Act, or if the Investing Fund was formed for the purpose of investing in the Receiving Fund. The SEC has indicated that an Investing Fund will be considered to be formed for the purposes of investing in the Receiving Fund if 40% or more of the Investing Funds committed capital is invested in the Receiving Fund.