Recommendations
What Issues Should The GP Address on Liquidation?
In this article we will take a look at the issues the GP should address on liquidation.
Svetlana Kotka
Svetlana is a partner of AlphaLaw. Her main areas of practice is general commercial litigation, Corporate & Commercial Law, Investments, Banking & Finance, Intellectual Property Law and Trademarks.
Recommendations
The Factors a GP Should Consider In Assessing The Possibility of Extending The Fund Life
In this article we will understand what the fund extension is and will review the factors a GP should consider in assessing the possibility of extending the fund life.
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Key Person Provisions
In this article we will take a look at the issues that should be addressed regarding Key Person provisions in the fund documents.
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LP Conflicts of Interest
In this article we provide the information on how should conflicts of interest between LPs within a fund, or between different funds managed by the same GP, be handled.
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GP & LP Relations Generally
In this article we will explain what other arrangements should the GP make with regard to LP relations.
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Fund Reporting Obligations to LPs
In this article we will take a look at the reports GP should make to LPs. Good relations between LPs and GPs are the essence of a strong partnership, thus, it is very important to understand the main rules applied to reporting.
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Provisions for Distributions From a Fund
What provisions should be made regarding distributions from a fund to LPs?
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The Issues Considering when Managing Listed Investments
Explanation There are a number of issues that affect GP when it holds listed (quoted) investments. Dealing in such investments will often be subject to additional regulation (such as prohibitions on insider dealing and market abuse). The GP may also need to consider the impact on the market of its
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Sale of a Portfolio Company Between Funds Managed by the Same GP
Explanation Situations where funds managed by the same GP are transacting between themselves inevitably lead to conflicts of interest as each vehicle may have different investors and therefore different interests. Such conflicts are typically difficult to resolve and therefore in most circumstances are unlikely to be acceptable to LPs. That
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Who Should Make a Decision to Exit an Investment?
Explanation Since the decision to exit is a judgment call, it is important that the decision-making process involves GP in the same way as it is the original investment. Executive experience is needed to evaluate the risks and rewards of the decision. If co-investors from the fund are involved, this
Recommendations
Special Considerations When Establishing, Investing in, and Managing a Fund
Explanation The obligations of a fund's GP and LPs to each other, portfolio companies, stakeholders and the public at large are fundamentally the same as for other types of private equity investments. The difference lies in the greater likelihood that the actions of the GP will affect stakeholders
Recommendations
Provisions GP Should Make for Follow-on Investments
Explanation It may be necessary or desirable to make follow-on investments in a portfolio company (e.g., for the fund expansion plans or for the refinance a poorly performing portfolio company). The ability to make a follow-on investment in a successful portfolio company may create a conflict of interest if
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Appropriate Structure & Level of Compensation for the Portfolio Company's Employees
Explanation The structure and compensation of portfolio company employees and management should induce excellent long-term performance, reward sustainable financial and non-financial results, and ethical behaviour. Balancing compensation in the context of the particular industry, the expertise and contribution of the individual, and the long-term needs of the company are important
Recommendations
Factors to be Considered by GP When Evaluating Shareholder Consent Issues in a Portfolio Company
Explanation The level of GP (investor) consents that are deemed appropriate are usually agreed to during the negotiation of the investment Agreement. Typically, an investment will be structured so that certain proposed actions of the portfolio company will require shareholder consents, including GP on behalf of the fund. These shareholder
Recommendations
Liabilities Associated with Board Membership
Explanation The position of a board member is a responsible and trusted position and no one should be forced to accept the position. Some individuals may be unwilling to accept the position because of the potential liabilities associated with the position of a director. Depending on the jurisdiction, directors may
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Is a Diversity Policy Really Necessary?
Explanation Boards function as decision-making and review forums involving people with differing skills and approaches. Diversity of skills and styles leads to better balanced and informed decision-making. Recommendation In reviewing board composition, the board should be aware of the benefit of diversity in its selection as well as any applicable