| name | limited-partnership-agreement |
| language | en |
| description | Drafts U.S. private equity and venture capital Limited Partnership Agreements (LPAs) covering GP/LP governance, capital commitments, distribution waterfalls, fees, carry, key person provisions, LPAC, transfers, tax, and dissolution. Use when drafting or revising a fund LPA, converting a term sheet to an LPA, or structuring fund formation documents. Trigger: limited partnership agreement, LPA, fund formation, capital calls, carried interest, waterfall, GP/LP. |
| tags | ["agreement","corporate","drafting"] |
Limited Partnership Agreement (LPA)
Drafts an institutional-quality LPA governing GP/LP economics, governance, and lifecycle from formation through liquidation.
Prerequisites
- Fund name, jurisdiction, entity structure (LP, GP, manager/adviser).
- Term sheet or economics summary (commitments, fees, carry, pref return, waterfall type).
- Strategy parameters (sector, geography, stage, concentration limits).
- Investor eligibility and regulatory profile (Reg D, qualified purchaser, ERISA).
- Key person list, investment period, and term/extension mechanics.
Quick Start
Collect inputs below, then draft articles in document skeleton order.
Required Inputs
| Field | Notes |
|---|
| Fund legal name | Include "L.P." suffix |
| Jurisdiction | State LP statute; cite in formation article |
| Term and extensions | Initial term + extension mechanics |
| Investment period | Duration + early termination triggers |
| Capital commitments | By LP; via Subscription Agreements |
| Management fee | Rate, base, step-down, timing |
| Preferred return | Rate, compounding, calculation |
| Carry and catch-up | % split, catch-up mechanics |
| Waterfall basis | Whole-fund vs deal-by-deal |
| Key person | Event definition + suspension |
| LPAC (if used) | Composition + consent matters |
| Transfer restrictions | Consent + permitted transfers |
| Tax elections | Section 754, audit regime |
| Clawback | After-tax basis + escrow/guaranty |
| Dissolution triggers | Term, GP removal, judicial decree |
Document Skeleton
Draft articles in this order:
- Definitions — Consistent capitalization across all defined terms.
- Formation & Purpose — State LP act citation, purpose, term.
- Capital Commitments — Binding commitments via Subscription Agreements.
- Capital Calls — Notice, timing, default remedies, cure period.
- Allocations — 704(b) capital accounts, tax compliance.
- Distributions — Waterfall tiers (whole-fund or deal-by-deal).
- Management — GP authority, fiduciary standard if applicable.
- Fees & Expenses — Management fee, offsets for transaction/monitoring/director fees.
- Key Person — Event definition, suspension, LP remedies.
- LPAC — Advisory role, consent matters (non-binding except as specified).
- Transfers — Consent conditions, no tax termination trigger.
- Exculpation/Indemnity — GP/affiliate, standard of conduct.
- Tax Matters — Elections, BBA audit regime.
- Reports/Records — K-1 delivery timeline, annual audit.
- Dissolution — Triggers, wind-up authority, final accounting.
- Miscellaneous — Amendments, notices, governing law.
Core Provisions
Distribution Waterfall
Standard four-tier European (whole-fund) waterfall:
| Tier | Recipient | Amount |
|---|
| 1 | LPs | 100% until return of contributed capital |
| 2 | LPs | 100% until preferred return satisfied |
| 3 | GP | Catch-up to achieve carry % on tiers 2–3 |
| 4 | LPs/GP | Split per carry (e.g., 80/20) |
- Whole-fund: carry only after aggregate return of capital + preferred return.
- Deal-by-deal: interim carry permitted; must add clawback + escrow.
Fee Mechanics
- Investment period: % of commitments.
- Post-investment period: % of cost basis or FMV.
- Paid quarterly in advance.
- Offset transaction, monitoring, and director fees received by GP/affiliates.
Capital Call & Default
- Notice period: 10–30 days; pro rata draw by unfunded commitment.
- Specify payment methods and wiring instructions.
- Cure period before default declaration.
- Default remedies: default interest, capital account reduction, forced sale at discount, forfeiture of distributions or voting rights.
Clawback
- Calculate on after-tax basis.
- Escrow reserve or GP guaranty required.
- Final true-up at liquidation.
LPAC Consent Matters
- Related-party/affiliate transactions.
- Conflicts and co-investments.
- Valuation policy changes.
- Auditor removal or replacement.
- Term extensions beyond initial period.
- Material amendments requiring LP consent.
Tax & Regulatory
- Pass-through allocations; K-1 delivery deadline.
- Section 754 election authority.
- Centralized partnership audit regime (BBA 2015).
- Withholding authority for U.S. and non-U.S. partners.
- Investor representations: accredited investor, qualified purchaser.
- AML/KYC certifications.
Dissolution
- Triggers: term expiry, GP withdrawal/removal, judicial decree.
- Wind-up authority and liquidation process.
- Final accounting with objection window.
Pitfalls & Checks
- Cite the exact governing state LP statute in the formation article.
- Align defined terms, cross-references, and exhibit references throughout.
- Ensure allocation and distribution provisions are consistent with tax capital accounts and the waterfall.
- If deal-by-deal carry, escrow and clawback protections are mandatory.
- Transfer restrictions must avoid triggering tax termination or securities registration.
- Confirm regulatory representations match fund strategy and investor base.
- Flag nonstandard provisions or investor-specific side-letter carve-outs.
