This article provides a detailed explanation of several key aspects about funds that are established and maintained by a variety of different business entities, including structure, duration and hurdle rate.
An investment structure for investing in various equities is referred to as an equity fund. Most of the time, the term of the fund is 10 years. These kinds of funds are attributed to a limited partnership in which its partners guarantee the firm a certain capital to be invested by them. These partners would and should expect a return on their investment and the capital is normally distributed over the term of the fund (making it an ‘equity fund’).
Equity and all the related funds are structured as limited liability partnerships. Such funds are governed by the general rules applicable to the limited liability partnerships. General partners are vested with the responsibility of raising capital by coming into contract with the potential investors, endowment and insurance plans and many more. The legal position of individual investors is that of limited partners of the entity. Many rules are regulations should be taken care of while dealing with the fund. If you are interested in knowing some of the important factors, concerning and relating to such funds, then refer below for details.
Professionals who manage the equity funds are entitled to remuneration. Generally, most common and accepted remuneration is 2% of the capital invested. This may not be considered as a rule of thumb, as certain legislations provide for other rules to account for the management remuneration.
It is the minimum rate of return of investment that must be achieved before managers get entitled to their remuneration. Therefore, a specific hurdle rate has to be achieved by managers in order for them to receive their remuneration. It is the normal course of proceedings of the market that are referred to while determining a particular hurdle rate. The rate set should be neither too high, nor too low, and it should meet the general criteria set by the authorities for the determination of hurdle rate. Hurdle rate is very important figure in connection to certain types of funds maintained by a business entity.
These are just some of the requirements and guidelines that a business entity must adhere to when considering the establishment and maintenance of various funds for their business.
Dealmarket are a global leader in the private equity marketplace looking to establish connections between entrepreneurs and investors for private equity funding.
Photo By betsyweber on Flickr License By http://creativecommons.org/licenses/by/2.0/deed.en
An investment structure for investing in various equities is referred to as an equity fund. Most of the time, the term of the fund is 10 years. These kinds of funds are attributed to a limited partnership in which its partners guarantee the firm a certain capital to be invested by them. These partners would and should expect a return on their investment and the capital is normally distributed over the term of the fund (making it an ‘equity fund’).
The Management & General Structure
Various equity funds are managed and raised by professionals employed by the entity. These professionals are responsible for decisions regarding equity funds. A single entity can have more than one equity funds, and in general, every entity does manage more than one such fund. New funds are raised every 4-5 years.Equity and all the related funds are structured as limited liability partnerships. Such funds are governed by the general rules applicable to the limited liability partnerships. General partners are vested with the responsibility of raising capital by coming into contract with the potential investors, endowment and insurance plans and many more. The legal position of individual investors is that of limited partners of the entity. Many rules are regulations should be taken care of while dealing with the fund. If you are interested in knowing some of the important factors, concerning and relating to such funds, then refer below for details.
Duration, Management Remuneration & Hurdle Rate
Duration of the limited liability partnership in connection to an equity fund is an important topic to know about. Such partnership usually comes with a term of 10 years. Some variation can be expected, but the generally accepted term is 10 years. Concerned authorities can grant certain extensions, but you need to write a written application for an extension in time duration. Same is the case when you consider certain types of equity funds, such as a private equity fund.Professionals who manage the equity funds are entitled to remuneration. Generally, most common and accepted remuneration is 2% of the capital invested. This may not be considered as a rule of thumb, as certain legislations provide for other rules to account for the management remuneration.
It is the minimum rate of return of investment that must be achieved before managers get entitled to their remuneration. Therefore, a specific hurdle rate has to be achieved by managers in order for them to receive their remuneration. It is the normal course of proceedings of the market that are referred to while determining a particular hurdle rate. The rate set should be neither too high, nor too low, and it should meet the general criteria set by the authorities for the determination of hurdle rate. Hurdle rate is very important figure in connection to certain types of funds maintained by a business entity.
Legal Title Change & Transfers
A fund is not allowed to be transferred or traded in any manner, whatsoever. However, transfer of funds to one investor to another is allowed under the eye of law. Permission has to be sought from the relevant and concerned authorities in case of transfer of general funds and private equity funds from one investor to another.These are just some of the requirements and guidelines that a business entity must adhere to when considering the establishment and maintenance of various funds for their business.
Dealmarket are a global leader in the private equity marketplace looking to establish connections between entrepreneurs and investors for private equity funding.
Photo By betsyweber on Flickr License By http://creativecommons.org/licenses/by/2.0/deed.en
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