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High Court limits scope of documents required for private equity fund investors

A series of High Court judgments in London have provided a degree of clarity on the extent to which a limited partner in an English limited partnership is entitled to obtain information in relation to a private equity fund and its underlying investments.

According to a briefing by law firm Paul Hastings, these judgments are likely to impact contractual discussions between fund managers and limited partners in the key area of investor reporting.

The judgment is likely to have an effect on the manner in which investors will approach negotiations with general partners on reporting issues in new funds and also provides general partners with some degree of comfort, absent conflicting contractual provisions in their limited partnership agreement, over the means by which limited partners can secure detailed information on the fund’s investments and wider activities.

In giving judgment, Norris J considered the extent to which an investor is entitled to obtain such information as a matter of statute (under the Limited Partnerships Act 1907) and as a matter of contract (under the terms of a limited partnership agreement), noting the practical limits to the requests that a limited partner can make.

Over the course of two judgments, the judge ultimately decided the case in favour of the general partner by applying a somewhat restrictive interpretation as to what constituted “partnership documentation” and by drawing a distinction between information physically in possession of the partnership (by being held by its general partner and/or manager) and other information which was solely held by underlying investment entities of the partnership.

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