A Limited Partner Advisory Committee (LPAC) is a governance body composed of select limited partners that provides oversight of GP activities. The LPAC reviews conflicts of interest, approves certain transactions that fall outside normal fund operations, and serves as a check on GP discretion in situations where the manager's interests may diverge from those of the fund's investors.
Why It Matters
The LPAC serves as a governance checkpoint at moments when the GP faces conflicts of interest. This role is particularly important in continuation vehicle transactions, where the GP is on both sides of the deal and pricing, fee terms, and asset selection all require independent scrutiny. Without an LPAC, LPs would have limited recourse beyond the terms of the limited partnership agreement itself.
Key Details
- Members are typically representatives of the fund's larger LPs, selected at or shortly after the fund's final close.
- The committee reviews and approves conflicts of interest and related-party transactions, including situations where the GP is investing alongside the fund or engaging affiliated service providers.
- In continuation vehicle transactions, the LPAC may review the proposed transfer price, the selection of assets, and the terms of the new vehicle before the deal proceeds to an LP election.
- The LPAC may approve fee waivers, consent to extensions of the fund term, or authorize the GP to take actions that would otherwise require full LP consent.
- The scope and authority of the LPAC are defined in the fund's LPA. Some LPAs grant broad advisory authority; others limit the committee to specific conflict scenarios.
For a full overview, see the Continuation Vehicles guide.
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. Capital Company is not a law firm and does not provide legal advice.