Breaking Up Is Hard to Do: How to Remove a General Partner from a Commingled Fund
In the recent economic downturn, investors who were dissatisfied with the performance of the general partner in underperforming commingled funds may have been surprised by the limitations on their ability to remove the general partner. As a result of those experiences, investors are focused on improving their rights to remove or replace general partners. This article discusses typical fund provisions regarding general partner removal. As might be expected, the provisions vary greatly from fund to fund, and the final provisions depend on the negotiating leverage of the limited partner investors.
THE STARTING POINT
The Delaware Revised Uniform Limited Partnership Act does not provide a mechanism for limited partners to remove the general partner of a limited partnership. Instead, the power to remove the general partner is governed by the provisions contained in the partnership agreement. If the partnership agreement is silent regarding the