{
  "slug": "investment-company-act-1940",
  "name": "Investment Company Act of 1940",
  "short_name": "1940 Act",
  "aliases": [
    "ICA",
    "'40 Act"
  ],
  "jurisdiction": "US",
  "regulator": "SEC",
  "kind": "act",
  "effective_date": "1940-08-22",
  "summary": "U.S. federal statute regulating investment companies (mutual funds, closed-end funds, BDCs). Hedge funds avoid Investment Company status by relying on Section 3(c)(1) or 3(c)(7) exclusions; these exclusions are foundational to private-fund structuring.",
  "scope": "Issuers primarily engaged in investing, reinvesting, owning, holding, or trading in securities.",
  "key_provisions": [
    {
      "section": "3(c)(1)",
      "title": "100-Investor Exclusion",
      "summary": "Excludes from 'investment company' status any issuer with no more than 100 beneficial owners that is not making (and does not propose to make) a public offering."
    },
    {
      "section": "3(c)(7)",
      "title": "Qualified Purchaser Exclusion",
      "summary": "Excludes any issuer whose outstanding securities are owned exclusively by Qualified Purchasers (generally $5M+ investments for individuals, $25M+ for entities)."
    },
    {
      "section": "17",
      "title": "Affiliated Transactions",
      "summary": "Restricts transactions between funds and affiliated persons."
    }
  ],
  "thresholds": [
    {
      "name": "Section 3(c)(1) max beneficial owners",
      "value": 100,
      "unit": "owners"
    },
    {
      "name": "Qualified Purchaser — individual",
      "value": 5000000,
      "currency": "USD"
    },
    {
      "name": "Qualified Purchaser — entity (family-owned)",
      "value": 5000000,
      "currency": "USD"
    },
    {
      "name": "Qualified Purchaser — entity (not family-owned)",
      "value": 25000000,
      "currency": "USD"
    }
  ],
  "applies_to": [
    "registered investment companies",
    "private funds relying on 3(c)(1)/3(c)(7)"
  ],
  "related_regulations": [
    "investment-advisers-act-1940",
    "regulation-d",
    "securities-act-1933"
  ],
  "related_terms": [
    "qualified-purchaser",
    "accredited-investor",
    "section-3c1",
    "section-3c7",
    "private-fund"
  ],
  "official_text_url": "https://www.sec.gov/about/laws/ica40.pdf",
  "history": "Enacted alongside the Advisers Act in response to the SEC's 1935-1939 Investment Trust Study. The 3(c)(7) exclusion was added by the National Securities Markets Improvement Act of 1996 (NSMIA) to permit larger pools of qualified investors."
}