What documents do hedge fund investors sign?
Beginners · Video 9 of 12 · 0:40 ·
Three, usually. The offering memorandum explains the fund: its strategy, fees and risks. The operating agreement sets the rules of the Fund LLC: who decides, how profits are split and how money comes out. The subscription agreement is what each investor signs: how much they're investing, and confirmation that they qualify.
Everything here is for educational purposes only and is not legal, tax or investment advice, or an offer to buy or sell any security. Laws and thresholds change and depend on your facts, so talk to a qualified attorney before acting.
Key facts
- Offering memorandum: strategy, fees and risks.
- Operating agreement (or partnership agreement): governance, profit split and withdrawals.
- Subscription agreement: the investor's commitment and eligibility representations.
- If something goes wrong, these documents are what everyone reads first.
Transcript
Operator: Before anyone invests a dollar, three documents land on their desk.
Founder: Three? I was going to do a handshake.
Operator: Handshakes don't hold up well in court. Document one: the offering memorandum.
Operator: It explains the fund: the strategy, the fees, and every risk you can think of.
Operator: Document two: the operating agreement. The rules of the Fund LLC. Who decides, how profits are split, how money comes out.
Founder: And three?
Operator: The subscription agreement. Each investor signs it, says how much they're putting in, and confirms they qualify.
Founder: So one explains, one sets the rules, one signs them up.
Operator: Exactly. And if anything ever goes wrong, those pages are the first thing everyone reads.
Founder: So before anyone invests a dollar...