What Are the Requirements for Registering a Fund Company in the U.S.? A Clear Guide!

Registration of Fund Companies in the United States A Comprehensive Overview

As the world's largest fund market, the United States boasts a highly developed fund industry and a relatively mature regulatory framework. For institutions seeking to establish a fund company in the U.S., meeting a series of stringent legal, compliance, and operational requirements is essential. This article provides a detailed analysis of the key aspects involved in setting up a fund company in the U.S., including corporate formation, regulatory framework, capital requirements, staffing, and disclosure obligations.

I. Legal Establishment and Registration Process

To register a fund company in the U.S., the first step is to incorporate a corporation or limited liability company LLC under the laws of a specific state. In practice, many fund companies choose to incorporate in Delaware due to its well-developed commercial law system and business-friendly environment.

After incorporation, if the fund company intends to raise capital from the public and engage in securities investments, it must file a registration statement with the U.S. Securities and Exchange Commission SEC. Under the Investment Company Act of 1940, most investment funds are required to register with the SEC and comply with applicable regulations.

In addition, the fund manager must determine whether it needs to register as an investment adviser with either the SEC or state regulators under the Investment Advisers Act of 1940. If the firm manages assets exceeding $160 million, registration with the SEC becomes mandatory.

II. Compliance and Regulatory Requirements

The U.S. fund industry is primarily regulated by the SEC, supported by self-regulatory organizations such as the Financial Industry Regulatory Authority FINRA. Fund companies must strictly adhere to the following core legislation

1. Securities Act of 1933 and Securities Exchange Act of 1934 These govern the issuance and trading of securities.

2. Investment Company Act of 1940 This outlines detailed rules regarding fund structure, investment limitations, and related-party transactions.

3. Investment Advisers Act of 1940 This regulates the conduct of investment advisers to protect investor interests.

4. Sarbanes-Oxley Act SOX This applies to publicly reporting fund companies and strengthens internal controls and financial transparency.

Fund companies must also establish robust internal compliance frameworks, including risk management systems, anti-money laundering AML policies, and data protection measures. In recent years, the SEC has intensified its enforcement actions, particularly concerning incomplete disclosures and inadequate conflict-of-interest management.

III. Capital and Financial Requirements

While there is no uniform minimum capital requirement for fund companies in the U.S., in practice, new entrants typically need to have sufficient initial capital-often recommended between $500,000 and $1 million-to build investor confidence and meet regulatory scrutiny.

Fund companies must maintain sound financial health, undergo regular independent audits, and submit quarterly and annual financial reports to the SEC. Open-end funds and closed-end funds are subject to strict rules on asset valuation, liquidity management, and leverage ratios.

IV. Professional Team and Executive Qualifications

A qualified professional team is essential for operating a fund company in the U.S., especially experienced investment managers and a Chief Compliance Officer CCO. The CCO is responsible for overseeing regulatory compliance and submitting periodic compliance reports to the board of directors.

The SEC clearly defines the responsibilities of the CCO, emphasizing independence and expertise. Directors and senior executives must pass background checks and should not have records of serious legal violations. In recent years, the SEC has imposed significant penalties in cases where fund executives concealed past misconduct, underscoring the regulator’s focus on integrity and accountability within the industry.

V. Disclosure and Investor Protection

Transparency is a cornerstone of U.S. fund regulation. At the time of registration, fund companies are required to submit detailed documents, including a prospectus, fund agreements, and descriptions of investment strategies. These materials must be regularly updated to ensure investors receive accurate and timely information.

Fund companies must also uphold principles of fair dealing and avoid insider trading or market manipulation. All trading activities must be transparent and conducted in the best interest of fund investors. In recent years, the SEC has strengthened oversight of complex financial practices such as dark pool trading and high-frequency trading to preserve market fairness and investor rights.

VI. Recent Developments and Trends

According to an announcement issued by the SEC in 2025, regulators are increasing scrutiny over private funds, proposing new rules that would require more private fund managers to disclose portfolio details to the public. This indicates that future disclosure standards for fund companies may become even stricter.

At the same time, with the growing popularity of ESG Environmental, Social, and Governance investing, more fund companies are integrating ESG factors into their investment decision-making processes. The SEC is also working to enhance ESG-related disclosure rules, requiring clearer labeling of products claiming to meet ESG criteria to prevent misleading greenwashing claims.

Conclusion

Registering a fund company in the United States involves not only a complex legal process but also the fulfillment of high standards across compliance, finance, staffing, and operations. As the regulatory environment continues to evolve, firms aiming to enter the U.S. market should prepare thoroughly in advance to ensure sustainable and compliant operations.