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What is the Proper Allocation of Class A and Class V Shares in a General Partner Agreement for LPs, GPs, and Venture Partners?

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May 03, 2023
Hi team does anyone know how to divvy up the shares in the general partner agreement? specifically a) Are class A shares to be given to the respective LPS in proportion to how much contribute ? i.e. assuming 1000000 class A shares with an LP contributing 10% of the fund translating to 100000 shares ? I assume 'Active investor' means the LP.s + the GP commit? b)Do class A shares represent the carry portion of the fund only or the entire fund ? c) Who exactly gets class V shares i.e. what exactly does membership interest mean? c) Assuming a venture partner received 1% from the total 20% carry. how exactly would that be expressed from a share allocation perspective? It might help to have an example to mimic as we craft these agreements unless there is a specific session on this coming up.
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Accepted Answer
May 03, 2023
The General Partnership Entity manages the carry and is governed by the Stewardship agreement that you are referring to. The Limited Partnership Entity is where the LPs invest and it allocates the carry to the General Partnership Entity. The Limited Partnership Entity is governed by the Cornerstone LPA. Class V shares are typically reserved for investors in the General Partnership Entity. So, if you have an investor that wants to make an investment in the General Partnership Entity, you would use Class V shares. Class A are for everyone else (GPs, VPs etc..)

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