Jurisdictions · United States (Delaware)
Delaware fund administration for US private funds and onshore feeders
Delaware is the default home for US private funds and the onshore leg of most master-feeder structures. Fundtec runs the capital accounts, investor services and tax-reporting data that US funds depend on.
In one minute
Delaware fund administration is the accounting, capital account maintenance, investor services and tax-reporting support for US private funds formed as Delaware limited partnerships or LLCs, including onshore feeders in master-feeder structures. Fundtec provides partnership accounting, allocation of income by investor, K-1 data preparation, and reporting data for SEC filings such as Form ADV and Form PF, and coordinates launches through Unefund.
Managers launching or administering a fund in this domicile who need its filings, functionaries and calendar handled correctly from day one.
A 30-minute scoping call, then a written plan: scope, the transition timeline and indicative pricing. No generic proposal.
Delaware funds at a glance
- Regulators
- US Securities and Exchange Commission (SEC) for advisers and offerings; state securities regulators; Delaware Division of Corporations for entity formation
- Core legislation
- Delaware Revised Uniform Limited Partnership Act; Delaware LLC Act; Securities Act of 1933 (Regulation D); Investment Company Act of 1940; Investment Advisers Act of 1940
- Main fund vehicles
- Delaware limited partnership (most common), Delaware LLC, Delaware statutory trust
- Typical investor type
- Accredited investors; qualified purchasers for 3(c)(7) funds; US taxable investors in onshore feeders
- Key filings
- Form D within 15 days of first sale; state notice filings; Form ADV (full or ERA); Form PF for qualifying registered advisers; partnership tax return (Form 1065) and Schedule K-1s; Delaware annual tax
- Administrator requirement
- No legal requirement to appoint an administrator; institutional investors and auditors generally expect one, and SEC custody rule compliance is simpler with one
- Typical setup time
- Entity formation can take days; a full launch with documents, banking and brokerage typically takes several weeks
Delaware LP and LLC fund structures
The Delaware limited partnership is the standard US private fund vehicle. A general partner, usually an affiliate of the manager, controls the fund; investors are limited partners with liability capped at their commitment. The LPA governs capital contributions, allocations, fees, carried interest and withdrawals. The Delaware LLC offers similar flexibility and is sometimes preferred for co-investment and single-asset vehicles.
Both are generally treated as partnerships for US tax purposes, so income, gains and losses pass through to investors. That makes capital account maintenance and tax allocations the core of Delaware fund accounting: every item of income and expense must be allocated to each partner in line with the LPA and the tax rules, period by period.
The Delaware onshore feeder in a master-feeder
In a US-offshore master-feeder structure, a Delaware LP serves as the onshore feeder for US taxable investors, alongside an offshore feeder, usually in the Cayman Islands or BVI, for non-US and US tax-exempt investors. Both invest in a master fund that holds the portfolio. The administrator allocates master-level results to each feeder, then to each investor, and the onshore feeder issues K-1s while the offshore feeder does not.
SEC registered vs exempt reporting advisers
A US-based private fund manager is generally either an SEC-registered investment adviser or an exempt reporting adviser (ERA). Advisers with regulatory assets under management above the SEC thresholds generally must register and file a full Form ADV, including a brochure, and comply with the Advisers Act rules on custody, compliance programs and books and records. Advisers solely to private funds with less than US$150 million in US private fund assets, and advisers solely to venture capital funds, can typically rely on exemptions and file as ERAs, completing only parts of Form ADV.
Registered advisers managing at least US$150 million in private fund assets also file Form PF, with more frequent and detailed reporting for large advisers. State registration may apply to smaller advisers. Thresholds and rule requirements should be confirmed with US counsel, as SEC private fund rules have changed repeatedly in recent years.
US private fund exemptions compared
| Exemption | Who can invest | Key limits | Notes |
|---|---|---|---|
| Reg D Rule 506(b) | Unlimited accredited investors, up to 35 non-accredited sophisticated investors | No general solicitation | Most common private offering route; Form D filing |
| Reg D Rule 506(c) | Accredited investors only | General solicitation permitted | Issuer must take reasonable steps to verify accredited status |
| Investment Company Act 3(c)(1) | Typically accredited investors | Up to 100 beneficial owners (250 for qualifying venture funds up to US$10M) | Suits smaller funds |
| Investment Company Act 3(c)(7) | Qualified purchasers only | No numerical cap in the Act; practical limits from Exchange Act registration thresholds | Suits larger and institutional funds |
K-1s and US tax reporting for Delaware funds
A Delaware fund taxed as a partnership files Form 1065 and issues a Schedule K-1 to every partner, reporting that partner’s share of income, gains, losses, deductions and credits. K-1 quality depends on the accuracy of capital accounts and tax allocations through the year: wash sales, straddles, section 1256 contracts, foreign income and state sourcing all flow through. Investors expect K-1s, or reliable estimates, well before their own filing deadlines.
Fundtec prepares the book-to-tax data, allocation schedules and investor-level detail that tax preparers need, and supports the full K-1 cycle. See File Your K-1s for how we work with your tax adviser.
K-1 season starts in January, not March
Late K-1s are the most common investor complaint for US funds. Fundtec closes the books, finalizes allocations and delivers tax packages on an agreed calendar so your tax preparer can issue K-1s on time. See how we run K-1 support.
How Fundtec supports a Delaware fund
Launch coordination
Unefund coordinates structure, counsel, Form D and state filings timing, and bank and prime broker onboarding. See Launch a Fund.
Operating model
We set up the partnership accounting model, allocation methodology, fee and carry terms, and investor records.
Investor services
Accredited investor and KYC documentation, subscriptions, capital calls, withdrawals and investor statements.
Fund accounting and tax data
Capital accounts, NAV, master-feeder allocations, book-to-tax schedules and K-1 support. See File Your K-1s.
Ongoing administration
Data for Form ADV and Form PF, audit support and operational administration. See Hire a Fund Administrator.
Questions
Common questions about US (Delaware)
Didn’t find your question? Put it to a specialist directly.
Ask a specialistFrequently asked questions
Why are most US private funds formed in Delaware?
Delaware offers flexible, well-understood partnership and LLC statutes, a specialized business court and a large body of case law. Investors, counsel and auditors are familiar with Delaware terms, which speeds negotiation. Delaware LPs and LLCs are also generally treated as tax partnerships, so income passes through to investors.
What is the difference between Rule 506(b) and Rule 506(c)?
Rule 506(b) lets a fund raise from unlimited accredited investors and up to 35 non-accredited sophisticated investors, but prohibits general solicitation. Rule 506(c) allows general solicitation and advertising, but every investor must be accredited and the fund must take reasonable steps to verify their status. Both require a Form D filing.
What is the difference between a 3(c)(1) and a 3(c)(7) fund?
A 3(c)(1) fund is limited to 100 beneficial owners, or 250 for qualifying venture funds with up to US$10 million, and typically admits accredited investors. A 3(c)(7) fund admits only qualified purchasers and has no numerical cap in the Investment Company Act. Larger institutional funds usually rely on 3(c)(7).
Does my adviser need to register with the SEC?
It depends on assets and clients. Advisers above the SEC regulatory assets thresholds generally register. Advisers solely to private funds with under US$150 million in US private fund assets, or solely to venture capital funds, can usually file as exempt reporting advisers instead. US counsel should confirm the position.
Who files Form PF?
Form PF is filed by SEC-registered investment advisers that manage at least US$150 million in private fund assets. Large hedge fund and private equity advisers face more frequent and detailed reporting. Exempt reporting advisers do not file Form PF. Fundtec prepares fund-level data that feeds the filing.
When are K-1s due to investors?
For calendar-year partnerships, Form 1065 and Schedule K-1s are due by March 15, with an extension available to September 15. Many investors need K-1s or estimates earlier to meet their own deadlines. Timely K-1s depend on a clean year-end close and accurate tax allocations throughout the year.
Does a Delaware fund need an administrator?
There is no legal requirement, but most institutional investors, auditors and operational due diligence teams expect an independent administrator. Registered advisers also find custody rule compliance and audit preparation simpler with one. An administrator maintains capital accounts, investor records and the data behind K-1s and regulatory filings.
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