3c1 Exemption - counting beneficial owners - 99 investor limit

Funds with a 3c1 exemption cannot have more than 99 beneficial owners. So the question comes up - how do I count beneficial owners?

Here is some high level guidelines

1. Each individual investor must be counted.
2. If an investor has 2 accounts, for example an individual account and an SD-IRA account, they only need to be counted once as they are the beneficial owner of both accounts
3. If an entity invests, you may need to look through the entity to count the individual investors. You will need to look through and count the beneficial owners in the following cases
   1. The entity is another investment company (3c1 fund / SPV) and the entity will own more than 10% of the voting share. This will likely not apply since the investing entity will not have voting share in the customizable fund.
   2. The entity was formed for the sole purpose of investing in your fund. This is defined by the 40% rule. If more than 40% of the underlying entity assets is invested in your fund, then you must look through.
   3. The entity permits its underlying investors to have discretion over whether or not they participate in the investor’s participation in the fund. All customizable funds do so this does apply.

Given the above,

• Customizable funds with a 3c1 exemption should not invest in another customizable fund with a 3c1 exemption
• Customizable funds with a 3c1 exemption can invest in another customizable fund with a 3c5 exemption as the 99 investor limit does not apply to the 3c5 fund
• Customizable funds with a 3c5 exemption should not invest in another customizable fund with a 3c1 exemption