Distribution Notice
A distribution notice is the formal statement describing an upcoming or completed distribution and its key details.
Allocator relevance: High — the audit trail for realized cash, DPI math, and characterization (income vs gain vs return of capital).
Expanded Definition
Distribution notices specify the amount, date, LP allocation, and often the characterization components and withholding/tax notes depending on vehicle structure. For in-kind distributions, notices detail asset description, valuation approach, and transfer mechanics. Notices are essential for reconciling bank receipts to capital accounts and for verifying quarter-to-quarter cashflow integrity.
Decision Authority & Governance
Governance includes timeliness, clarity, consistency with quarterly statements, and transparent characterization rules. Allocators expect notices to align with LPA provisions, reserve policies, and any recall/recycling mechanics.
Common Misconceptions
- Bank receipts replace notices (they don’t provide characterization).
- All distributions are profits.
- Notice quality is cosmetic (it’s a trust and control signal).
Key Takeaways
- Notices create the institutional audit trail for distributions.
- Characterization improves performance attribution and compliance.
- Consistency with capital accounts is non-negotiable.