An in-depth review of the legal documents of a fund drafting a 3-6 pages summary report.
This typically includes the offering memorandum and articles of association but can encompass other documents such as the investment management agreement and service provider agreements. The goal of such a review is to summarize the fund’s economical terms, identify the involved parties such as investment manager and/or advisor and the various service providers, describe the legal structure, and establish investor rights and oversight. We also have a close look at fees, hidden fees, costs and expenses which may be charged to the fund.
We pay close attention to the degree of discretion granted to the investment manager, the fund’s directors or general partner. Particularly, the minutiae of the redemption terms, the definition of the investment mandate and the NAV calculation process are scrutinized in this regard.
An important part of our analysis is to flag any inconsistencies and highlight unusual terms that should be taken up with the investment manager. The perspective of our analysis is less whether a particular provision is drafted in a way it may be challenged in court or not but to compare the language and the provisions with industry standards. Significant deviations or odd provisions can then be taken up with the investment manager to be altered or mitigated through the drafting of a side letter.