TLDR:
The Limited Partnership Agreement (LPA) is the foundational governing document for a private investment fund organized as a limited partnership—venture capital, private equity, hedge funds, infrastructure funds, etc. The LPA defines the relationship between the General Partner (GP) and Limited Partners (LPs), governing economics, governance, restrictions, and fund operations.
Key LPA Provisions
A comprehensive LPA covers: fund economics (management fee structure, carried interest, GP commitment, expense allocation), capital commitments and call mechanics (how LPs fund their commitments over time), investment restrictions (geographic, sector, size limits, concentration limits, related-party prohibitions), governance (LP advisory committee, voting rights, removal provisions, key-person clauses), distributions and waterfall (order of distributions, hurdle rate, catch-up, GP clawback), transfer restrictions on LP interests, indemnification of the GP and its principals, conflicts of interest provisions, and termination/dissolution mechanics.
Key-Person Provisions
One of the most heavily negotiated LPA provisions is key-person clauses. These typically name 2-4 key individuals at the GP whose continued involvement is essential—if a defined number stop devoting their time, the fund automatically enters a “key-person event” suspending the investment period until LPs decide whether to continue. Key-person provisions protect LPs from the GP’s principal departure but create tension with GP’s flexibility on internal team management.
ILPA Principles and Market Standards
The Institutional Limited Partners Association (ILPA) publishes principles for LP-GP alignment, including the ILPA Reporting Template (standardized fee and expense reporting), ILPA Model LPA (standard provisions), and ILPA Principles 3.0 (best practice recommendations on terms). ILPA standards have significantly influenced market terms—around fee structures, expense allocation, and transparency. For Turkish-domiciled funds (typically structured as Girişim Sermayesi Yatırım Fonu under SPK regulation), the LPA equivalent is the Fon İçtüzüğü (fund bylaws) which must satisfy specific SPK requirements while incorporating market-standard provisions.