10.2: Limited Partnership Agreement

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Abstract

The first risk capital pool of significance that accepted capital from outside investors (versus family investment vehicles centered around the fortunes of a given wealthy family) was American Research & Development Corporation (AR&D), organized in a corporate form and operated as a closed-end investment company registered under the Investment Company Act of 1940, with shares listed on the New York Stock Exchange. Subsequent models, however, have not generally followed AR&D in its selection of the legal vehicle through which to conduct operations. Despite the advent of the limited liability company format, the reasons most venture funds are still organized limited partnerships, versus limited liability companies, are largely historical and not substantive. The limited partnership form is more familiar. However, there is at least one substantive reason. If the fund makes foreign investments, disadvantageous foreign tax treatment may result in the fund is structured as a...

Sub-Topics

• 10.2.12: Precautions in Case of Advisers Act Registration; Limit Investors to "Qualified Clients."
• 10.2.13: Contractual Modification of Fiduciary Duties for Delaware Unincorporated Business Entities
• 10.2.14: Private Equity Limited Partnership Agreements: Common Trigger Events and Limited Partner Remedies
• 10.2.15: New Delaware Case Favors Indemnity for Investment Professionals
• 10.2.16: Recent Delaware Case Highlights Common Pitfalls to Avoid With Earn-Out Provisions