• Кристина Субботина


Updated: Aug 12, 2019

Private equity ("PE") fund is a type of a private fund which invests in illiquid securities pursuant to long-term investment strategies. More information about its features and structures is here.

Below is a discussion of certain common documents and a formation checklist.


The following documents should be prepared before soliciting contributions from investors in a fund:

· Limited Partnership Agreement/ Limited Liability Operating Agreement (depending on a structure) is an organizational document which sets forth relationships, rights and duties of a general partner (“GP”) or manager ("Manager") and limited partners or members.

· Subscription Agreement is an agreement which sets out the investor’s capital commitment, representations and warranties to the fund.

· Investor Questionnaire is a form that is filled out by the investor to gather information about such investor and confirm that it is qualified under applicable laws to invest in the fund; and

· PPM (known as a Private Placement Memorandum or an Offering Memorandum) is a general disclosure and marketing document, which includes terms and risk factors, management bios, track record and description of an investment strategy. For smaller funds sometimes PPM can be replaced by including risk factors in the Subscription Agreement.


Before accepting capital contributions from investors to a fund, an investment manager should accomplish each of the tasks described below, from entity formation to creation of organizational documents and subscription package:

1. Legal analysis and planning to comply with all applicable federal and state laws:

  • Investors: usually should be “accredited investors” or “qualified purchasers” because of the additional disclosure requirements and regulatory risks that come with admitting not sophisticated enough investors.

  • Investment manager: usually should be registered at the federal or state level as a Registered Investment Adviser, unless exempted (an Exempt Reporting Adviser). Advisers that advise exclusively venture capital funds and advisers solely to private funds with less than $150 million in assets under management in the United States can elect to be treated as Exempt Reporting Advisers.

  • Fund: exemptions from the SEC registration (e.g., accredited investors, fewer than 100 investors in a fund or 250 investors in a venture capital fund, no commissions to GP/ Manager for sale of ownership interest of the fund, GP/ Manager will perform substantial duties for the fund, and so forth).

2. Form a limited partnership or a limited liability company as a fund and draft a limited partnership agreement or an operating agreement, respectively.

3. Form a limited liability company to serve as a GP or a Manager of the fund and draft an operating agreement.

4. Draft a Subscription Agreement, Investor Questionnaire and, if needed, PPM.

It is important to remember that legal counsel for the fund should review the formation structure before the fund offering to ensure compliance with U.S. federal and state regulations.

This article is not legal advice, and was written for general informational purposes only. If you have questions or comments about the article or are interested in learning more about this topic, feel free to contact its author Kristina Subbotina. Ms. Subbotina is a New York-based corporate and securities attorney representing startups and investment funds throughout their lifecycle, including business formation, financing rounds, M&A, and day-to-day business operations.

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