10.2.4.b: Note on Certain Issues Relating to Allocations Tied to Capital Commitments, Capital Contributions

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Abstract

10.1.4.b: Note on Certain Issues Relating to Allocations Tied to Capital Commitments, Capital Contributions and Capital Account Balances; Defaults on Capital Commitments Practitioners should be aware of certain inequities and anomalies that arise in the daily operation of a fund when the fund's governing documents allocate profit and losses based on capital commitments, capital contributions, or the balances of capital accounts. This note describes situations in which the general partner needs authority to make adjustments to distributions in order to address inequities and anomalies that arise, and provides generic language authorizing the general partner to address them. These problems generally arise due to discrepancies in the timing among partner in making their initial capital commitments or funding capital calls in response to a call on capital commitments. This note also addresses situations in which the general partner should be authorized to exercise greater...