If a non-US family office does not fall within the family office exclusion and no other exemption from registration is available, the non-US family office will need to consider:
- Restructuring its business to ensure that it does not use any US “jurisdictional means” in connection with their advisory business (including, for example, not advising clients organized or resident in the United States and not maintaining an office there);
- Restructuring its business to ensure it falls within the family office exclusion or another exemption from registration;
- Applying to the SEC for an exemptive order in order to avoid registering under the Advisers Act; or
- Registering itself or one of its affiliates with the SEC or alternatively, in certain circumstances, the state in which the adviser maintains its principal office and place of business in the United States.
Given the substantive requirements, costs and on-going burdens of being registered under the Advisers Act, SEC registration should not be undertaken lightly, even though it should be noted that SEC generally does not require registered non-US investment advisers to comply with many of the substantive requirements of the Adviser Act in respect of its non-US clients. Preparing for registration can take three or four months (and sometimes significantly more) as the adviser must be fully compliant with the requirements of the Advisers Act from the date of effectiveness of registration. The formal process involves filing and SEC review of a complete Form ADV. Once the adviser has filed the form, the SEC is generally required to approve the registration or commence the denial thereof within 45 days.
Under the Dodd-Frank Act, from 21 July 2011, an investment adviser generally will not be permitted to register with the SEC if: (i) it has between $25 million and $100 million under management; (ii) it is required to be registered as an investment adviser in the state in which it has its principal office and place of business; and (iii) it will be subject to examination as an investment adviser by the relevant state securities commissioner.
A family office that was relying on, and was entitled to rely on, the private adviser exemption may delay registering with the SEC until 30 March 2012, although because initial applications for registration can take up to 45 days to be approved, family offices should file a complete application by 14 February 2012. Likewise, such a family office that determines it would instead like to seek an exemptive order should be prepared to make its submission at least two to three months in advance of 30 March 2012.