The GP takes decisions concerning the operations of the SCSp through its board of managers (BOM). With respect to the SCSp’s investments and exits, the BOM’s decisions are implementational in nature, as regulatory responsibility for such decisions rests with the appointed fund manager.

The BOM is typically composed of two Luxembourg-based managers and one US-based manager, with the latter sourced from the USFM’s organization. The GP’s articles of association (AoA) typically provide that decisions are taken by majority vote, with the affirmative vote of the US-based manager. This system strikes a balance between Luxembourg footprint and control by the USFM over the BOM.  Decisions taken by circular resolutions require unanimous approval.

With respect to representation vis-à-vis third parties, the AoA generally provide that the GP may be bound by the joint signatures of the US-based and a Luxembourg-based manager. This representation arrangement avoids the need to involve all managers each time the GP enters a transaction with a third party. Representation in respect of an act that has not (yet) been approved by the BOM may raise concerns regarding managers’ liability. Managers are, however, generally comfortable representing the GP without a specific board decision, particularly where the managers signing on behalf of the GP could jointly pass a board decision ratifying the relevant act or when backed by a decision of the investment committee.  

In addition to a representation clause, the USFM may also rely, as a back stop solution, on a POA issued by the GP to facilitate matters such as closings and deal execution from the US time zone. A Luxembourg POA is by default revocable. The USFM’s use of such a POA should be structured to preserve the GP’s Luxembourg nationality for substance purposes.

Investors typically grant a POA, as per the limited partnership agreement, to the GP covering routine administrative, filing and operational matters that require their agreement. For a fund with dozens of investors, obtaining each investor’s signature separately would be impractical for both the GP as well as the LPs. Revocation by an LP of this POA would make the fund difficult to operate. To mitigate this risk, it may be argued that the POA is granted in the mutual interest of the parties, which could support its irrevocability, or it can be provided that revocation would trigger consequences. 

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