Plan Asset Rule
An entity, such as an SPV that is not itself a plan subject to ERISA, is treated as holding assets of the investing employee benefit plans if it appears that its primary purpose is to invest retirement plan assets. This is known as the “look-through rule.” The determination of whether an entity is treated as […]
Portfolio
A grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents. A portfolio may consist of non-public securities, like start up companies, real estate, art, and secondaries. Investing into private assets through a number of SPVs would result in a portfolio of private assets.
Portfolio Company (Investment Portfolio)
A start up company, company or entity in which an SPV invests into.
Private Transaction
A purchase or sale of assets that are not publicly listed. SPVs are used to aggregate capital to participate in a private transaction.
Pro Rata (Proportionate Allocation, Pro Rata Dividends Share, Pro Rata Investment Opportunity)
Pro rata is the term used to describe a proportionate allocation. It is a method of assigning an amount to a fraction according to its share of the whole. Pro rata in business financing may be used to identify the amount of shareholders dividend according to its share in the company. For SPVs, pro rata […]
Public Transaction
A purchase or sale of assets in which there will typically be no identifiable party to stand behind the obligations of the transaction after closing. In a public company transaction, the target company is subject to ongoing disclosure requirements by the Securities and Exchange Commission. This means that there is a significant amount of information […]
Purchase Agreement (PA)
A sales and purchase agreement (PA) is a legal contract that obligates a buyer to buy and a seller to sell a product or service. An PA serves as a basis for a transaction to take place, providing a framework of how the transaction will proceed, what is included in the transaction, and, if necessary, […]
Purchase Amount
Amount paid for an asset. The final amount sent from the SPV to the company or sponsor in exchange for the asset. The purchase amount should be stated in the purchase agreement.
Qualified Clients
A qualified client is a person that meets certain thresholds set by the SEC, which for individuals are currently at least $1.1. million in assets under management with the applicable investment advisor or a net worth of at least $2.2 million.
Qualified Purchaser
A qualified purchaser is a type of investor (other types are accredited investor and qualified clients) who can participate in certain alternative asset vehicles, such as 3(c)(7) funds. This standard gives SPV Organizers more flexibility in terms of the number of participants that can subscribe than the type of vehicles available for accredited investors (3(c)(1) […]
Qualifying Venture Capital Fund
Qualifying venture capital funds are a subset of all venture capital funds defined in the venture capital fund adviser exemption. Generally, structured vehicles that rely on Regulation D are limited to 100 investors. However, Qualifying Venture Capital Funds that meet the definition a “venture capital fund” stipulated by the Investment Advisers Act of 1940 can […]
Reg A (Regulation A or Title IV of the JOBS Act or Reg A+)
An exemption from registration for public offerings. Regulation A provides two offering tiers: Tier 1, for offerings of up to $20 million in a 12-month period; and Tier 2, for offerings of up to $50 million in a 12-month period. For offerings of up to $20 million, companies can elect to proceed under the requirements […]
Reg CF (Regulation Crowdfunding or Title III of the Jobs Act)
Regulation Crowdfunding (CF) provides an exemption from the registration requirements for securities-based crowdfunding allowing companies to offer and sell up to $5 million of their securities without having to register the offering with the SEC. With Regulation CF, non accredited investors now have the opportunity to participate in the early capital raising activities of start-up […]
Registered Agent
Also known as a resident agent or statutory agent, a registered agent is a business or individual designated to receive service of process when a business entity is a party in a legal action such as a lawsuit or summons. An SPV will typically have to engage a registered agent. Depending on the structure the […]
Regular LLC/LP (Traditional LLC/LP)
Before the Master Series LLC/LP structure was codified there was only LLC or LP. Now, because the Master Series structure can cause confusion, we need to distinguish between the two and the typical words to describe the original LLC/LP structure is “regular” or “traditional” (or the “OG!”). A regular LLC/LP structure typically requires a filing […]