Section 230-RICR-50-05-1.8 - Registration Exemption for Investment Advisers to Private FundsA. Exemption for Private Fund Advisers 1. A private fund adviser shall be exempt from the registration requirements of R.I. Gen. Laws § 7-11-203 if the private fund adviser satisfies each of the following conditions: a. Neither the private fund adviser nor any of its advisory affiliates are subject to a disqualification as described in Rule 262 of SEC Regulation A, 17 C.F.R. § 230.262; b. The private fund adviser files with the state each report and amendment thereto that an exempt reporting adviser is required to file with the Securities and Exchange Commission pursuant to SEC Rule 204-4, 17 C.F.R. § 275.204-4; andc. The private fund adviser pays the same fee as that specified for a federal covered adviser in R.I. Gen. Laws § 7-11-206(a)(5). 2. A private fund adviser who advises at least one (3)(c)(1) fund that is not a venture capital fund shall also comply with all of the following requirements: a. The private fund adviser shall advise only those 3(c)(1) funds (other than venture capital funds) whose outstanding securities (other than short-term paper) are beneficially owned entirely by persons who, after deducting the value of the primary residence from the person's net worth, would each meet the definition of a qualified client in SEC Rule 205-3, 17 C.F.R. § 275.205-3, at the time the securities are purchased from the issuer.b. At the time of purchase, the private fund adviser shall disclose the following in writing to each beneficial owner of a 3(c)(1) fund that is not a venture capital fund: (1) All services, if any, to be provided to individual beneficial owners; (2) All duties, if any, the investment adviser owes to the beneficial owners; and(3) Any other material information affecting the rights or responsibilities of the beneficial owners.c. The private fund adviser shall obtain on an annual basis audited financial statements of each 3(c)(1) fund that is not a venture capital fund, and shall deliver a copy of such audited financial statements to each beneficial owner of the fund. B. Federal Covered Investment Advisers. If a private fund adviser is registered with the Securities and Exchange Commission, the adviser shall not be eligible for this exemption and shall comply with the state notice filing requirements applicable to federal covered investment advisers in R.I. Gen. Laws § 7-11-203. C. Investment Adviser Representatives. A person is exempt from the registration requirements of R.I. Gen. Laws § 7-11-203 if he or she is employed by or associated with an investment adviser that is exempt from registration in this state pursuant to this regulation and does not otherwise act as an investment adviser representative. D. Electronic Filing. The report filings described in § 1.8(A)(1)(b) of this Part above shall be made electronically through the IARD. A report shall be deemed filed when the report and the fee required by R.I. Gen. Laws § 7-11-206(a)(5) are filed and accepted by the IARD on the state's behalf. E. Transition from Exemption to Registration. 1. An investment adviser who becomes ineligible for the exemption provided by this rule must comply with all applicable laws and rules requiring registration or notice filing within ninety (90) days from the date the investment adviser's eligibility for this exemption ceases. F. Grandfathering for Investment Advisers to 3(C)(1) Funds with Non-Qualified Clients 1. An investment adviser for a 3(c)(1) fund (other than a venture capital fund) that is beneficially owned by one or more persons who are not qualified clients as described in § 1.8(A)(2)(a) of this Part may qualify for the exemption contained in § 1.8(A)(1) of this Part if the following conditions are satisfied: a. The subject fund existed prior to May 17, 2012; and,b. As of May 17, 2012, the subject fund stopped accepting beneficial owners who were not qualified clients, as described in § 1.8(A)(2)(a) of this Part.230 R.I. Code R. 230-RICR-50-05-1.8