Other matters concerning the general partner: Overview, definition, and example
What are "other matters concerning the general partner"?
"Other matters concerning the general partner" refers to additional provisions in a partnership agreement that outline the rights, responsibilities, and limitations of the general partner beyond core operational duties. These matters may include decision-making authority, liability protections, financial contributions, restrictions on activities, and dispute resolution procedures.
This clause ensures that all parties in a partnership—especially limited partners—understand how the general partner will operate, manage risks, and comply with legal or contractual obligations.
Why are "other matters concerning the general partner" important?
General partners have significant control over a partnership’s operations, financial decisions, and strategic direction. Clearly defining their additional responsibilities and restrictions helps prevent conflicts, ensures compliance with partnership laws, and protects the interests of all partners.
For example, a partnership agreement may specify that the general partner cannot take on excessive debt without consent from the limited partners or that they must maintain certain financial reporting standards. These safeguards help maintain transparency and prevent mismanagement.
Understanding "other matters concerning the general partner" through an example
Imagine a real estate investment partnership where the general partner is responsible for acquiring and managing properties on behalf of investors (the limited partners). To protect the partnership, the agreement includes additional matters concerning the general partner, such as:
- Debt Restrictions: The general partner cannot take on more than $1 million in debt without limited partner approval.
- Conflict of Interest Rules: The general partner must disclose any personal investments that may compete with the partnership.
- Profit Distribution Control: The general partner must distribute profits to limited partners according to a set formula, with no discretionary changes.
By including these provisions, the partnership ensures that the general partner operates within agreed-upon limits, reducing financial and legal risks.
An example of an "other matters concerning the general partner" clause
Here’s an example of how this clause might appear in a partnership agreement:
“The General Partner shall have the authority to manage the affairs of the Partnership, subject to the following conditions: (i) The General Partner shall not incur indebtedness exceeding $1,000,000 without prior written approval from a majority of the Limited Partners; (ii) The General Partner shall disclose any potential conflicts of interest that may impact the Partnership; (iii) The General Partner shall ensure that all financial records and reports are made available to the Limited Partners in accordance with generally accepted accounting principles (GAAP). Any material breach of these provisions may result in removal of the General Partner in accordance with Section [X] of this Agreement.”
Conclusion
"Other matters concerning the general partner" helps define the scope of authority, limitations, and responsibilities of the general partner in a partnership agreement. These provisions protect the partnership and its investors by ensuring transparency, preventing conflicts of interest, and setting clear operational guidelines.
Before entering a partnership, all parties should carefully review these terms—because well-defined rules for the general partner help prevent disputes and keep the partnership running smoothly.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.