Timing of Fund Distributions | AlphaLAW Register AIF Estonia

Explanation

Distributions are generally expected to be made as soon as possible after an investment has been realised and proceeds have been received by the fund. In practice, funds whose strategies result in ongoing income from multiple sources may pool such amounts while distributing the more infrequent capital returns as soon as practicable. Prompt distributions improve the internal rate of return of a fund.

Registration of Management Companies & Funds | AlphaUMi Estonia

Over the time, any asset manager who does more than plan to manage own assets faces the problem of a transparent and convenient management infrastructure.

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Recommendation

Distributions should be made in accordance with the relevant provisions in the fund documents.

Before making a distribution, the GP should consider the fund’s reserves for follow-on investments and current and foreseeable liabilities and assets (including liabilities for tax, escrow and clawback provisions and contingent liabilities such as those under warranties and indemnities).

Distributions should not be made if this would cause the fund to become insolvent or unable to meet its reasonable future liabilities.

Before making a distribution in-specie, any restrictions on transfer of the relevant investments should be considered.