The exemption from South Dakota registration requirements for certain investment advisers meeting the conditions of Sections 203(b) and 203(l) of the Investment Advisers Act of 1940 was amended to permit the exemption for certain investment advisers meeting the conditions of Sections 203(b), (l) or (m) of the 1940 Act, effective October 24, 2011.
The Section 203(b) exemption known as the "private adviser" exemption contains a "de minimis" exemption at Section 203(b)(3) for investment advisers that, during the preceding 12-month period, had fewer than 15 clients and neither held themselves out generally to the public as an investment adviser nor acted as an investment adviser to any investment company registered under the Investment Company Act of 1940, or is a company that elected to be a business development company under Section 54 of the Investment Advisers Act of 1940. The Section 203(b)(3) exemption, previously relied on by advisers to hedge and other private funds, was repealed and replaced by the new exemptions at Sections 203(l) and (m).
The Section 203(l) exemption is for advisers that advise only one or more "venture capital funds." The Section 203(m) exemption, the new addition to South Dakota's private adviser exemption, instructs the SEC to exempt investment advisers that act solely as advisers to private funds and have assets under managment in the U.S. of less than $150 million.