Q&As

Are there any restrictions imposed under English law in circumstances where an English limited partnership grants specific limited partners/investors, eg certain limited partners who make significant contributions to the relevant partnership, preferential rights relating to their investment in the limited partnership, eg through a side letter agreement?

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Produced in partnership with Christopher Dearie and Ravi Longia of MJ Hudson
Published on LexisPSL on 13/04/2017

The following Corporate Q&A Produced in partnership with Christopher Dearie and Ravi Longia of MJ Hudson provides comprehensive and up to date legal information covering:

  • Are there any restrictions imposed under English law in circumstances where an English limited partnership grants specific limited partners/investors, eg certain limited partners who make significant contributions to the relevant partnership, preferential rights relating to their investment in the limited partnership, eg through a side letter agreement?

Introduction

English law does not per se restrict an English limited partnership (ELP) from granting individualised rights to limited partners, whether through the limited partnership agreement (LPA) being the governing document of a limited partnership, the use of side letters or by other means.

However, the Alternative Investment Fund Managers Directive, Directive 2011/61/EU (AIFMD) would require the alternative investment fund manager (AIFM) of an ELP subject to the AIFMD to disclose to prospective investors (among other things) the existence of any practice of preferential treatment and any subsequent material changes to that practice. The AIFM may either be the general partner of the limited partnership or the manager of the limited partnership if the general partner has delegated the day-to-day management of the limited partnership to such person. In such situation, it would be a factual analysis to determine who would be the AIFM.

Side letter practice

The ELP is a popular vehicle for structu

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