When it comes to the business of institutional investment, one of the most important documents to have in place is a subscription agreement. This is a legal document that outlines the terms and conditions of investment for limited partners (LPs) in a private equity fund.

The Institutional Limited Partners Association (ILPA) has created a model subscription agreement that is widely used in the industry. The ILPA model subscription agreement is designed to provide clarity and consistency in terms of the rights and obligations of both the general partner (GP) and the LP.

The ILPA model subscription agreement is a comprehensive document that covers a wide range of topics, including:

– Investment terms: The agreement outlines the amount of the LP`s capital commitment, the timing of capital calls, and the investment period.

– Management fees and expenses: The agreement sets out the management fee to be paid by the LP, as well as any other expenses that may be incurred.

– Confidentiality and disclosure: The agreement outlines the confidentiality obligations of both the GP and the LP and regulates the disclosure of information.

– Transferability: The agreement governs the transfer of LP interests.

– Indemnification and liability: The agreement outlines the indemnification provisions and liability limitations for both the GP and the LP.

The ILPA model subscription agreement is designed to be flexible and can be adapted to meet the specific needs of each fund. The agreement also takes into account best practices in the industry, such as the inclusion of clawback provisions that require the GP to return any excess carried interest.

Using the ILPA model subscription agreement can be beneficial for both the GP and the LP. For the GP, it provides a clear and consistent framework for managing the fund and ensures that they are meeting industry standards. For the LP, it provides a level of protection and transparency, as well as the ability to negotiate specific terms within the agreed framework.

In conclusion, the ILPA model subscription agreement is an important document for any private equity fund. It provides a comprehensive framework for investment terms, fees, confidentiality, transferability, indemnification, and liability. By using the ILPA model subscription agreement, both the GP and the LP can benefit from increased clarity and consistency in their investment agreements.