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6 Governance Issues in Partnerships used as Private Investment Funds

From: The Law of Private Investment Funds (3rd Edition)

Timothy Spangler

From: Oxford Legal Research Library (http://olrl.ouplaw.com). (c) Oxford University Press, 2023. All Rights Reserved.date: 30 May 2024

Investment business — Regulated activities — Private fund

This chapter examines issues of governance arising from partnerships used as private investment funds. A limited partnership has two categories of partner: general partners and limited partners. The chapter first considers the role and duties of general partners and limited partners before discussing the English law vs Delaware law on limited partnerships, focusing on the advantages and disadvantages of Delaware law. It then looks at the UK legal reform on limited partnership and how the limited partnership agreement can be used to address the governance challenge presented by private investment funds. It also explains the duties of partners with respect to the governance challenge, taking into account the fiduciary duty in Delaware partnerships, the fiduciary duty of the board of directors under Delaware law, the Delaware Court of Chancery’s ruling in USA Cafes, and developments following USA Cafes.

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