The general partner is the entity that manages a limited partnership fund, makes investment decisions, and bears unlimited personal liability for the fund's obligations.
Why It Matters
The GP controls all fund operations, from investment selection to capital calls to distributions. Most GPs are structured as LLCs to limit the personal liability of the individuals behind the fund. Choosing not to form a separate GP entity exposes fund principals directly to the fund's obligations.
Key Details
- Typically formed as a Delaware LLC owned by the fund's principals.
- Receives carried interest, usually 20% of profits above the preferred return.
- Owes fiduciary duties to LPs, including a duty of care and a duty of loyalty, though the LPA can modify these duties to the extent permitted by state law.
- Can be removed by LPs under no-fault divorce provisions if specified in the LPA.
- Must be named on SEC Form ADV (if registered) and Form D (Regulation D filings).
For a deeper look at GP structures and how they relate to the management company, see the GP and Management Company Guide.
Capital Company handles GP-level accounting and reporting as part of fund administration, including carried interest calculations and GP commitment tracking.
This content is for informational purposes only and does not constitute legal, tax, or compliance advice. Consult qualified counsel for guidance specific to your situation.