Institutional Limited Partners Association released a set of principles and best practices for the private equity industry that promote better alignment of interests, governance and transparency between general partners and limited partners, said Kathy Jeramaz-Larson, executive director.
Also included in the 16-page document released Tuesday are details on preferred private equity contract terms and best practices for limited partner advisory committees.
The best practices include stronger clawback provisions that require full and timely repayment to limited partners of excess distributions of profits received by general partners, management fees that amount to no more than normal operating costs, investments that are consistent with the investment strategy described when the fund was raised, and fees and profits that are subject to limited partner and independent auditor review.
The document reflects the views of ILPA members and other limited partners during round-table discussions at the association’s conference and from a survey of members in May, Ms. Jeramaz-Larson stated. The document is intended to serve as a basis for discussion and reference, she said.
The document is posted on the ILPA website, http://www.ilpa.org.