Investment Vehicles Lawyers

What is a Limited Partnership (LP)?

An LP is a formal legal structure used by investors to pool capital. It consists of a General Partner (GP), who manages the investments, & Limited Partners (LPs), who are passive investors with liability limited to their investment.

What is a Family Investment Company (FIC)?

An FIC is a private company established by a family to hold, manage & grow its collective investment assets. It is a powerful tool for professionalising wealth management & transferring value to the next generation in a tax-efficient manner.

What is the difference between an LP & an FIC?

An LP is typically used for specific, time-bound investment strategies with external or internal managers. An FIC is a more permanent, holistic structure designed for the long-term stewardship of a single family’s entire investment portfolio.

What is a Limited Partnership Agreement (LPA)?

The LPA is the critical legal document that governs the entire operation of an LP. It defines the rights & obligations of the GP & LPs, covering governance, capital calls, distributions & exit rights.

Why is a professionally drafted LPA so important?

A professionally drafted LPA is the single most important element in protecting your capital. It prevents disputes by creating institutional-grade clarity on all critical issues before a single dollar is invested.

How do these vehicles protect my personal assets?

They create a formal legal separation between you & the investments. If an investment fails or is sued, the liability is contained within the vehicle, shielding your other personal assets from creditors.

What are the primary tax advantages?

The primary advantage is tax efficiency. A properly structured vehicle in the correct jurisdiction allows investment returns to flow through to investors in a way that legally minimises tax leakage.

When should a family consider creating an FIC?

A family should consider an FIC when their collective assets become significant enough that informal management is a risk. It is also a critical tool when planning for the transfer of wealth to the next generation.

How does an FIC help with succession planning?

An FIC allows you to transfer economic value to the next generation via non-voting shares, while you retain control through voting shares. This is a highly effective & tax-efficient way to manage intergenerational wealth transfer.

What is a “private fund”?

A private fund is a formal investment vehicle, typically structured as an LP, that is not publicly offered. It is the standard structure for venture capital, private equity & other sophisticated investment strategies.

How long does it take to form an LP or FIC?

The timeline varies based on complexity, but a typical process can take 2-4 months. This includes the strategic design, jurisdiction selection, drafting of all legal agreements & formal registration.

What is the role of a General Partner (GP)?

The GP is the active manager of the partnership. They are responsible for sourcing deals, managing the investments & making all operational decisions, and they have unlimited liability for the partnership’s debts.

How are investment returns distributed?

Investment returns are distributed according to the “waterfall” structure defined in the LPA. This outlines how profits are shared between LPs & the GP once capital has been returned.