LPs place a high degree of trust in a GP, committing their capital and in effect “locking it up” over the medium to long term.
The best assurance and control mechanisms for an LP are the regular flows of information, communication and face-to-face meetings with GP’s senior management. Formal procedural steps should however also be put in place that provide a reasonable level of assurance that the terms of the agreements and any particular laws are being adhered to.
A GP should make provision for internal review procedures which allow the board of the GP to gain a high level of comfort that the terms of the agreement with any LP or customer and any applicable legal requirements are being followed.
These procedures should be overseen by a member of staff of sufficient seniority and independence and with sufficient resources to ensure that they are undertaken effectively.