21 ILPA Principles 3.0 Fund Governance Fiduciary Duty Limited Partnership Agreements should reinforce rather than dilute the fiduciary duties of GPs to LPs. The “gross negligence, fraud, and willful misconduct” or breach of the agreement should be the minimum in terms of the exculpation standard agreed by LPs without any qualifiers with respect to prior knowl- edge or material and adverse effect. GPs should not acquiesce to counsel recommendations to lessen the fiduciary duty owed LPs. Within the partnership agreement and the PPM, GPs should clearly, affirmatively and prominently disclose the standard of care they owe to the private fund as a whole and the individual LPs within that fund, including both any standard owed under statute as well as any conflicting standard owed under the laws of where the fund is domiciled. LPs should reject provisions allowing the GP to reduce all fiduciary duties to the fullest extent allowable by law, as well as any waivers of broad categories of conflicts of interest. Provisions award- ing the GP sole discretion should be permissible only where the LP has sufficient comfort and an at- testation that the interests of LPs and the partnership as a whole will not be adversely affected. LPs should note that such disclaiming language may appear in unanticipated sections of the LPA or in documents other than the LPA. GP breach of the agreement or behavior constituting “gross negligence, fraud or willful misconduct” should be excluded from the protections of indemnification and exculpation clauses, even if the governing law would permit it. Individuals that have committed such behavior, in breach of contract or of relevant securities or other laws, and are subsequently removed from the fund or separated from the firm should not be eligible to receive carried interest or retain other residual economic interests in the fund. GPs should endeavor to provide an equivalent standard of care to all partners in the fund and ensure that arrangements with any one or subset of LPs do not disadvantage other LPs in the fund or dispropor- tionately advantage the GP. LPs should reject provisions within the LPA that allow the GP or its affiliates to be indemnified for conduct constituting a material breach of the partnership agreement, breach of fiduciary duties or other “for cause” events. Indemnification expenses should be capped as a percentage of total fund size. As a general rule, GPs shouldn’t undertake action that constitutes or could potentially constitute a conflict of interest between the fund, a portfolio investment, and/or a portfolio manager on one hand and the GP, key persons, affiliates, etc. on the other, without prior written approval from the LPAC. Conflicts of interest disclosed in the fund’s offering documents should not be deemed permissible conduct and should not reduce or eliminate the requirement of prior written approval from the LPAC, nor should failure of the LPAC to act be deemed to clear the conflict on behalf of the GP. FUND GOVERNANCE