9 ILPA Principles 3.0 Alignment of Interest • Alignment of interest is best achieved when the GP’s wealth creation is primarily derived from a percentage of the profits generated from the GP’s substantial equity commitment to the partnership, after LP return requirements have been met. • Decisions made by the GP, including management of conflicts of interest, should take into account the benefit to the partnership as a whole rather than to the sole or disproportionate benefit of the GP, affiliates or a subset of investors in the partnership. • GPs should establish and disclose written policies and procedures to identify, monitor and appropri- ately mitigate conflicts of interest. • The source and value of any material benefit accruing to the GP as a consequence of being the investment manager to the partnership should be disclosed at least on an annual basis. Transparency • LPs should have timely access to and notifications on relevant information pertaining to the GP and management of the partnership’s investments, including changes in GP ownership; material decisions and actions involving affiliates and relat- ed parties; arrangements between the GP and underlying portfolio companies; non-routine inter- actions with the regulator of record; material ESG matters pertaining to the portfolio; and policy violations. • All disclosures provided to investors, including those on costs and charges, should be clear, complete, fair and not misleading. • Fees and expenses charged to individual LPs and the partnership as a whole as well as carried interest calculations should be regularly and consistently disclosed and subject to periodic review by the Limited Partner Advisory Committee (LPAC) and certification by an independent auditor. • Fees should be reasonable and based on the normal operating costs of the fund; the partnership should not incur expenses that could rationally be expected to be covered by the management fee as a cost of operating the fund. Governance • GPs should neither undertake nor seek to “pre-clear” actions through overly broad disclo- sures that constitute 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 the approval of the LPAC. • GPs should make an affirmative statement of the standard of care owed to the fund and should avoid language allowing for the disclaiming of fiduciary duty to the fullest extent of the law. • LPACs should be thoughtfully constructed, mandated and managed as an important adviser to the fund, particularly around conflicts of interest, without obligating LPAC members to serve as fiduciaries of the fund themselves. • LPAC members should be held to minimum participation standards. • LPAC meetings should be followed by an in camera session organized by the GP. Principles in Summary PRINCIPLES IN SUMMARY