SEC Settlements Highlight Governing Document Amendment Considerations For Private Funds

Limited partnership agreements and similar documents that govern private funds are often amended over the course of a fund's life cycle. For example, many funds may be currently going through the amendment process in connection with the upcoming effective date of the Private Fund Adviser Rules.¹ We want to remind fund managers of certain (maybe not so obvious) considerations to keep in mind when preparing to amend or proposing amendments to their fund governing documents. To do so, we have examined two settlements with the U.S. Securities and Exchange Commission (SEC).

Background

Generally, governing documents have an "amendment" section that governs how they may be amended (e.g., what threshold vote of limited partners, if any, is required to amend). While managers should always comply with the respective governing document's amendment requirements, there are other factors to consider, particularly when it comes to disclosing conflicts of interest. Below we