Guides
Fund Formation: Questions and Answers for Texas Sponsors
About these guides
Forming a private fund involves entity structure, securities exemptions and investor documents that all have to fit together. Each page below answers one question a sponsor typically asks.
What Is a Private Fund?
A private fund pools money from investors for a stated strategy without a public offering. Types, how it differs from a syndication, and the laws that apply.
3(c)(1) vs 3(c)(7) Exclusion Explained
The two main Investment Company Act exclusions for private funds: the 100-investor limit under 3(c)(1) and the qualified purchaser test under 3(c)(7).
General Partner and Limited Partner Structure
How the general partner and limited partners divide control and liability in a Texas fund, and why the GP is almost always a separate LLC.
Delaware vs Texas for a Private Fund
Which state to form a fund in: Delaware's predictable law and investor familiarity versus Texas's simplicity for local funds and the Texas Business Court.
Management Company vs GP Entity
Why many funds use both a general partner entity and a separate management company, what each does, and how fees and carry flow between them.
Operating Agreement vs Limited Partnership Agreement: Key Terms
A fund governing agreement sets control, distributions, capital calls, transfers and removal rights. The terms that matter and how they differ.
What a Private Placement Memorandum Contains
A PPM is the main disclosure document for a private offering. What sections it needs, why risk factors matter, and how it protects the sponsor.
Exempt Reporting Adviser vs Registered Adviser
Private fund managers under $150 million in U.S. assets can file as exempt reporting advisers instead of registering. What still applies.
Texas Investment Adviser Notice Filings
Fund managers in Texas often have state filings even when exempt from SEC registration. What the Texas State Securities Board expects and how to find out.
Real Estate Fund vs Syndication
A syndication pools money for one named property. A fund pools it for several assets chosen later. How each differs in structure, disclosure and legal issues.
Side Letters in a Private Fund
A side letter gives one investor special terms. Common provisions like fee breaks and information rights, most favored nation clauses, and disclosure traps.
Preferred Return and Carried Interest Explained
How a fund waterfall pays investors and sponsors: return of capital, preferred return, catch-up and carried interest, with a simple illustration.
Texas Series LLC for a Fund
A Texas series LLC can hold separate pools of assets with internal liability shields. How it works, the formalities, and where it is less certain.
Fund of One and Separately Managed Accounts
A fund of one is a single-investor vehicle. A separately managed account is a contract with one client. Differences, uses, and the rules that still apply.
Bad Actor Rule for Fund Managers
Rule 506(d) bars Regulation D if covered persons have disqualifying histories. Who is covered, what disqualifies, and how fund managers check.
Subscription Agreements and Investor Questionnaires
The subscription package is how an investor commits to a fund: representations, accredited status, tax forms and anti-money laundering checks.
Fund Audits and Annual Reporting Requirements
What reporting a private fund owes investors and regulators: financial statements, audits, K-1s, adviser filings and the custody rule's audit alternative.
Talk to an attorney about your situation
Free consultation with a partner attorney. No cost, no obligation.
Book Free ConsultationFund Formation legal services →
This page is for general informational purposes and does not constitute legal advice. Anchor Legacy Planning is not a law firm; legal work is performed by independent, licensed attorneys. Anchor Legacy Planning does not offer, sell, or solicit investments and does not give investment advice.