Outside US investors in a US based LP?

Discussion in 'Professional Trading' started by gmst, Oct 20, 2012.

  1. gmst


    Is it legally possible to accept money from investors based outside of US to invest in a Delaware, US based LP, as limited partners? Or is there a law that says only US resident investors can become limited partners in a US based LP?

    I vaguely remember reading somewhere that to accept non US based investors, the fund must be an off-shore fund (i.e. incorporated outside US like in Cayman Islands or BVI)? Is it true? Can anyone please give a link if possible? I couldn't find anything easily on the web.
  2. If you ever started making money consistently trading, you'd give up these ideas of non USA White Knights saving you by investing money.
  3. gmst


    I am not asking this question because I want to set up a fund. lol.

    Its just that a buddy of mine wanted my opinion on this question and I couldn't find anything concrete. So, I posted this query here to see if I can get some concrete info.
  4. yeah whatever, we all think about this shit on the weekend

    there is a "buddy of mine" that is very mentally unstable. Do you have any suggestions for "him"?
  5. like on a typical afternoon when the the market closes and I go out drinking with all my trading "buddies."

    You'd be surprised how many of them want to attract non USA customers to their hedge fund.

    It's a great life as long as you can live it all inside your head.
  6. gaugamela


  7. heech


    There are no legal problems with doing this at all. Foreign investors might be the ones complaining about taxation issues (since they have to send in their equivalent of a 1040 - they have no US tax id number + deal with withholding).... But the US otherwise welcomes foreign investors, including in a Delaware LP.
  8. gmst



    I was hoping you would see this thread and be kind enough to respond. Thanks for detailed clarification. Cheers.
  9. zdreg


    normal procedure is to set up 2 parallel LLP. one is for US investors and the 2nd is for non US investors.
  10. heech


    For a couple of reasons, which may not apply for all cases:

    1) is the taxation issue. Many foreign investors don't want to deal with filing taxes in the US, for ANY reason.

    2) regulatory issues with foreign ownership of some securities.

    But in my case, since I'm a futures only fund, it's not really an issue. Futures aren't securities. Foreign investors don't have to file taxes (although they do have to submit the 1040-type form, the name of which escapes me right now)... and there aren't any regulatory issues.

    But a futures-only fund isn't all that common, and some foreign investors don't want to educate themselves with the difference (and/or face the possibility of the IRS coming after them for any reason). So, having an off-shore structure might be a good idea.
    #10     Oct 23, 2012