Carried Interest And Compliance: Navigating Regulatory Hurdles

This article has been published by The Economic Times at: https://ciso.economictimes.indiatimes.com/news/navigating-carried-interest-and-compliance-overcoming-regulatory-and-cybersecurity-challenges/121575732

With access to sensitive financial data, ownership records, and compensation models across jurisdictions, the shift toward cloud-based administration and third-party platforms may expose the ecosystem to new cyber threats.

Carried interest, or "carry", has long served as a critical incentive mechanism in private capital markets aligning general partners ("GPs") and limited partners ("LPs") through performance-linked profit sharing. Fund managers typically receive a percentage of profits once a predefined hurdle rate is surpassed. To operationalize this, many funds typically issued profit-linked units in the GP entity to managers, facilitating downstream distribution once performance thresholds are met.