How to Start a Hedge Fund in Delaware
Updated on Wednesday 09th August 2017
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American hedge funds are typically registered in Delaware, a jurisdiction which offers numerous tax advantages for the investors who are interested in how to start a fund. A hedge fund registered in Delaware, United States of America (USA) generally refers to private investment companies which can benefit from specific incorporation exemptions applicable under the Securities Act 1933 and the Investment Company Act 1940.
How to register a Delaware hedge fund
Investors who are interested in incorporating a hedge fund startup in Delaware will need to register two legal entities. One of the business forms refers to the hedge fund itself, while the other one is created for the investment manager of the hedge fund. Delaware is the main location in USA where hedge fund startups can be registered, as the jurisdictions offers a legislation favorable to the business environment.
As a general rule, the hedge funds in Delaware, USA are registered under one of the following business forms:
• limited partnership;
• limited liability corporation.
When incorporating a hedge fund in Delaware, the investors will need to register the legal entity with the Internal Revenue Service (IRS). At the same time, it is necessary to apply for a Federal Employer Identification Number, a procedure which can be completed on the IRS’ website. It is important to know that the registration procedure can be completed in a short period of time.
The procedure on how to start an investment fund in Delaware registered as a hedge fund states that the investors will need to draw the company’s articles of association and other compulsory documents.
Qualifying a hedge fund in Delaware
Another option related to the incorporation of a hedge fund in Delaware refers to qualifying the respective investment company in this jurisdiction. This option is available for a hedge fund that has already been incorporated in another state and the investors are interested in performing investment activities in Delaware. Foreign funds qualifying in this situation will only refer to the registration with the competent authorities, which will issue a certificate that will state the investment fund has the right of performing investments in Delaware. At the same time, the certification will also refer to the fact that the fund is registered for tax purposes in this jurisdiction.
Investors interested in how to start a fund in Delaware should know that the company’s employees will also need to be registered for taxation in this country.
Businessmen are invited to contact our team of affiliates in Delaware for more details on the registration of a hedge fund. Those interested in how to start a hedge fund in Delaware can receive in-depth assistance on the taxation of this type of investment company.