A limited partnership (LP) is a partnership comprising at least one general partner and one or more limited partners who are passive investors. The general partner is responsible for managing the operations of the LP, while the limited partners provide capital but have limited control or involvement in the entity’s day-to-day operations.
A limited partnership agreement (LPA) is a legal document that outlines the relationship, terms, and agreement between the general partner and limited partner.
A hedge fund, private equity fund, or venture capital (VC) fund, is generally formed as a limited partnership. The limited partnership structure provides pass-through tax treatment and liability protection for limited partners. Under some circumstances it may make sense for the entity to be formed as a corporation or limited liability company (LLC); however, the vast majority of funds are limited partnerships.
Model Limited Partnership Agreements
The Institutional Limited Partners Association (ILPA) has developed model LPAs for use by private equity and other investment funds.
The purpose of the Model LPA initiative was to provide more transparency and uniformity, which would benefit both general partners and limited partners.
Users can access the model LPAs by visiting the ILPA website here.