An administrative managing member of an SPV is a person or entity who is delegated specific administrative tasks (most frequently, setting up and managing a bank account) by the manager. Assure acts as an administrative manager of SPVs where the client elects or is required to retain managerial authority.
A company/individual hired by an SPV to perform specified back office support of the entity.
If the SPV or fund were to require any arbitration, this would be the location it would take place. The location must be within the United States; we recommend the location be in Delaware, or the same city and state that the organizer resides.
Separate legal rights, designated by asset, within a single legal structure. These are not pooled investments across all assets, but instead the investor funds attributed to a single asset constitute that Asset Class.
In private equity financing, an asset is typically a SINGLE financial asset, representing investment in the assets and securities of other institutions.
An SPV investing in MORE than one asset.
Blue Sky Laws are state laws designed to protect investors from securities (investment) fraud. Each time Assure closes a fund or syndicate, we have to notify the states through statutory filings within 15 days. For example, if a fund is raised with investors from California, Florida, and Massachusetts, we notify those three states within 15 days of the close (see "close" for definition of a close) and pay a per state fee. The Blue Sky fees are similar to a state tax and are OUTSIDE of Assures fees.
Carry (Carried Interest, Profits Interest)
Percentage of the excess gain (net proceeds received by a fund upon a liquidity event less the initial investment) to be paid to an organizer or another party stated in the Operations Agreement, regardless of whether they contributed any initial funds.
A close is triggered when three instances happen:
- Docs are signed by all parties (including the fund manager)
- Investment money has all been received
- The money has then been wired to the portfolio company all within the same round of financing.
This date will be used to stay compliant with the Federal Form D filing timing of 15 days.
NEW investors investing in the SAME portfolio company using the SAME legal entity during the SAME round of financing.
A company’s payment of stock, cash or physical products to its shareholders. For investment funds, a distribution is typically an allocation of capital gains and income from a portfolio company to its investors.
Employer Identification Number. A unique nine-digit number assigned by the IRS to entities operating in the United States for the purposes of identification and taxation. Every entity we administer will need an EIN.
An Expense Reserve is uncommon for an SPV; however, it is a service Assure can provide. Additional banking fees will apply.
An Expense Reserve is not required to pay for Assure's admin fees: Assure takes a deposit up-front and the remainder will be collected at the time the investment is made and the deal is closed.
Form D is a filing with the Securities and Exchange Commission (SEC) required for companies that are selling securities in reliance on a Regulation D exemption or Section 4(6) exemption provisions. Form D is a brief notice of a company’s executive officers and stock promoters, in lieu of the regular reports required when no exemption under Regulation D exists. It must be filed no later than 15 days after the first sale of securities.
Fund (Capital, Investment)
A fund is a source of money that will be allocated to a specific purpose. Individual and institutional investors place money in different types of funds with the goal of earning money.
Grantor of a trust
The person who creates the trust. The assets in the trust are supplied by the grantor.
The entity or individual who makes the investment decisions.
The management fee for a venture firm is designed to be used to pay the operational expenses associated with running the fund. For example, if there are legal expenses, travel expenses, investor meetings, etc. these are all examples of expenses that could be paid from a management fee.
An individual or entity that makes investments in portfolios of securities on behalf of other investors or clients in accordance with the investment objectives and parameters defined by the client. In addition, the manager is the only authorized signer on behalf of the SPV.
Stockholders owning different shares in the different companies within the same LLC. Treatment of the investors within the SPV is different. Investors are defined as Members of the SPV.
MLLC (Master LLC)
Master LLC is the entity registered with the state of Delaware or another state that recognizes series structures (see series LLC definition). It is required to have a Master LLC registered with Delaware before creating any Series LLCs associated with it. Master LLC should include part of the legal name of the Series LLC. The Master LLC does not control, share in economics, have ownership or membership and is completely separate from all Series LLC. The Master LLC simply allows for the formation of the Series LLC in the State of Delaware that operates as its own separate legal entity.
The same legal entity investing in more than one asset
Is another round of business financing by private equity investors or venture capitalists, for a company to raise capital.
Organizer (aka Advisor)
An individual, fund or venture capitalist who organizes and raises funds by reaching out to their network of friends, family and colleagues to raise money to invest in privately held companies. The organizer is also responsible for making fund-related decisions, advising Assure what to do administratively when the fund related decisions need to be executed and assigning carry.
Plan Asset Rule
If an IRA or 401k owns 25% or more of the equity interest, all of the profits and assets of that entity are considered assets of the retirement account. *I would clarify with Brian that this definition is sufficient.
PCA (Post Close Activity)
Any action that happens after the deal has finished. Everything, including but not limited; to minute changes.
Pro Rata (Follow on, Proportionate Allocation, Pro Rata Dividends Share, Pro Rata Investment Opportunity).
A NEW investment with the SAME legal entity, the SAME legal documents, the SAME terms and the SAME portfolio company with the same or fewer investors.
Pro-Rata (distribution share allocation)
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 calculations are used to determine distribution amounts investors.
Pro-Rata (Right of First Refusal)
The right of a shareholder to purchase shares in a future financing to maintain their percentage of ownership in a company. Assure also refers to the subsequently completed financing deal as a Pro Rata.
Reg D Exemption
Rule 506 of Regulation D provides two exemptions from registration of an offering of securities with the SEC. An issuer offering securities pursuant to rule 506(b) cannot use general solicitation or advertising to market the securities. Issuers are required to file Form D with the SEC, comply with state Blue Sky laws, and bad actor disqualification provisions.
Rule 506 of Regulation D provides two exemptions from registration of an offering of securities with the SEC. An issuer offering securities pursuant to rule 506(c) may broadly solicit and generally advertise an offering provided that all purchasers in the offering are accredited investors, the issuer takes reasonable steps to verify purchasers’ accredited investor status, the issuer files Form D with the SEC, complies with state Blue Sky laws, and complies with bad actor disqualification provisions.
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.
This term can be found on the SS-4 form to apply for the person who will control the entity and its assets; in Assure's case, this will be the organizer/advisor. No financial liability is placed on the responsible party.
Referring to the Federal Form D and Blue Sky filings
Application to apply for an EIN. This relays the contact information for the entity and the person responsible for requesting it. US citizens are recommended to fill out the form; international investors can sign the document, though the form will take about 3 weeks to process.
The subscription amount is the minimum monetary commitment that the organizer is requesting from the investors in order to participate in the deal.
A takeover of the administrative, windup and post close activities of an existing SPV or fund which has already closed.
Any event or transaction that results in a tax consequence for the party who executes the transaction is considered a taxable event. Common examples of taxable events for investors include receiving interest and dividends, selling securities for a gain, and exercising options. Unrealized gains on an investment do not qualify as a taxable event.
This is filed with the IRS to give extra time to file the return. *I would ask tax to see if they want to add anything here as a FYI for organizers.