Fund & Expense Limitations
Fund & Expense Limitations
The undersigned consisting of the majority of the general and limited partners of _______________, a limited partnership agree:
That the general partners of _______________ shall maintain a reserve account with a minimum balance of $______(_______________& ___/100 dollars) from initial capital which shall be placed in a separate, interest bearing account.
That the general partners, once the partnership begins operations shall establish a reserve account, which shall be deposited in a separate, interest bearing account. All profits from operations shall be deposited in this account until it reaches the sum of $____(_________________&___/100 dollars).
The reserves shall accumulate and may only be invaded by the general partner upon the following occurrences:
________________________________________________________________and may only be used for the following purposes:
________________________________________________________________Dated: ____________________________
_______________ ________________
General Partner General Partner (if more than one; all must sign)
Limited Partners shall sign the attached Exhibit One or duplicate originals of the same.
Exhibit One: Names & Addresses of Limited Partners and their signatures
____________________ ______________________ ___________________
Limited Partner Signature Printed Name and Address Social Security Number____________________ ______________________ ___________________
Limited Partner Signature Printed Name and Address Social Security Number____________________ ______________________ ___________________
Limited Partner Signature Printed Name and Address Social Security Number____________________ ______________________ ___________________
Limited Partner Signature Printed Name and Address Social Security Number____________________ ______________________ ___________________
Limited Partner Signature Printed Name and Address Social Security Number____________________ ______________________ ___________________
Limited Partner Signature Printed Name and Address Social Security Number____________________ ______________________ ___________________
Limited Partner Signature Printed Name and Address Social Security Number____________________ ______________________ ___________________
Limited Partner Signature Printed Name and Address Social Security Number____________________ ______________________ ___________________
Limited Partner Signature Printed Name and Address Social Security Number____________________ ______________________ ___________________
Limited Partner Signature Printed Name and Address Social Security Number____________________ ______________________ ___________________
Limited Partner Signature Printed Name and Address Social Security Number____________________ ______________________ ___________________
Limited Partner Signature Printed Name and Address Social Security Number____________________ ______________________ ___________________
Limited Partner Signature Printed Name and Address Social Security Number____________________ ______________________ ___________________
Limited Partner Signature Printed Name and Address Social Security Number____________________ ______________________ ___________________
Limited Partner Signature Printed Name and Address Social Security Number____________________ ______________________ ___________________
Limited Partner Signature Printed Name and Address Social Security NumberNote: Include as many more lines as there are Limited Partners.
Fund & Expense Limitations
Review ListThis review list is provided to inform you about this document in question and assist in its preparation. This kind of document is often developed after a partnership gets into trouble. It relates to restricting General Partners use of funds.
1. Make multiple copies. Give them to each related party. Keep one with the partnership records.
Frequently Asked Questions
What is a fund and expense limitation agreement in a limited partnership?
A fund and expense limitation agreement is a document signed by the majority of the general and limited partners of a limited partnership. It sets forth requirements for maintaining a reserve account and limitations on expenses. The agreement is intended to ensure financial stability and proper management of partnership funds.
Who is required to sign a fund and expense limitation agreement?
The agreement must be signed by the majority of the general and limited partners. The general partners sign the main document, and limited partners sign the attached Exhibit One or duplicate originals. All general partners must sign if there is more than one.
What are the reserve account requirements under this agreement?
The general partners must maintain a reserve account with a minimum balance specified in the agreement, funded from initial capital. This account must be placed in a separate, interest-bearing account. Once the partnership begins operations, a reserve account must be established and all profits from operations deposited until it reaches a specified sum.
When can the general partner invade the reserve account?
The general partner may only invade the reserve account upon the specific occurrences listed in the agreement. These occurrences are to be filled in the blank spaces provided. The agreement does not specify any default occurrences, so they must be explicitly stated.
What purposes can the reserve funds be used for?
The reserve funds may only be used for the purposes specified in the agreement. These purposes are to be filled in the blank spaces provided. The agreement does not list any default purposes, so they must be explicitly stated.
How are profits from operations handled according to this agreement?
All profits from operations shall be deposited into the reserve account until it reaches the sum specified in the agreement. This ensures that the reserve account is adequately funded before profits are used for other purposes. The agreement does not specify what happens after the reserve account reaches that sum.
Is the reserve account required to be interest-bearing?
Yes, the reserve account must be placed in a separate, interest-bearing account. This applies both to the initial reserve from capital and to the reserve established once operations begin. The agreement explicitly requires the account to be interest-bearing.
What happens if the general partner needs to use reserve funds?
The general partner may only invade the reserve account upon the occurrences specified in the agreement. The funds may only be used for the purposes specified. The agreement does not provide for any other use or invasion.
Are limited partners required to sign the agreement?
Yes, limited partners shall sign the attached Exhibit One or duplicate originals. This indicates their agreement to the terms. The main document is signed by the general partners, while limited partners sign the exhibit.
What is the minimum balance required for the reserve account?
The minimum balance required for the reserve account is specified in the agreement as a dollar amount to be filled in. The agreement provides blank spaces for both the initial minimum balance and the sum that profits must reach. The exact amount depends on what is filled in.
