Glossary · Manager type
General Partner (GP)
Also called: GP entity · general partner entity
In market usage "GP" often means the whole private equity firm or sponsor; legally it is the specific entity that is the general partner of a fund partnership.
A general partner (GP) is the partner of a limited partnership that manages and controls it and bears unlimited liability for its obligations; in private funds it is usually a sponsor-controlled special-purpose entity that receives the carried interest.
Every limited partnership needs at least one general partner to run it. Because the general partner is liable for all the fund's debts without limit, sponsors set up a separate company for the role, usually one per fund. The investment team's day-to-day work and the management fee usually sit in a different entity, the management company.
Legal role
The general partner has authority to act for the partnership: it admits partners, calls capital, makes and sells investments (usually on the advice of the manager), and administers distributions under the LPA. In exchange for control it carries unlimited liability for the partnership's obligations (for example, Luxembourg Companies Law Article 320-1 and, in Delaware, 6 Del. C. 17-403(b), which gives a general partner the liabilities of a partner in a general partnership), which is the defining difference from a limited partner.
How sponsors structure the GP
To contain unlimited liability, the GP is normally a limited liability company or limited partnership with no other business, owned by the sponsor's principals or a holding entity. A new GP entity is commonly formed for each fund so that liabilities and carried interest of different funds stay separate. Where the fund is in Luxembourg or another EU jurisdiction, the GP may appoint an external alternative investment fund manager (AIFM), and the GP and the AIFM are then different entities with different regulatory roles. The limited partnership page sets the GP beside the fund, the sponsor's management company and the LPs.
Economics: carry, not the management fee
The carried interest is typically allocated to the GP, or to a separate "special limited partner" or carry vehicle owned by the deal team, for tax and liability reasons. The management fee is normally paid to the separate management company under an investment management agreement, though in some funds it is paid to the GP and passed on. The GP commitment to invest alongside LPs is usually made by the GP entity or affiliates. In the US, Internal Revenue Code section 1061 treats a taxpayer's net long-term capital gain on an "applicable partnership interest" (one held in connection with substantial services in an investment business, which covers a typical carried interest) as short-term to the extent it would not be long-term under a three-year, rather than one-year, holding period.
Duties and accountability
The GP owes duties to the partnership defined by partnership law and the LPA. Delaware law lets a partnership agreement expand, restrict or eliminate a partner's duties, including fiduciary duties, and limit or eliminate liability for their breach, but it may not eliminate the implied contractual covenant of good faith and fair dealing or limit liability for a bad-faith breach of it (Delaware Revised Uniform Limited Partnership Act section 17-1101(d), (f)). LPs' main contractual protections against the GP are removal for cause, no-fault divorce, key person provisions and LPAC consents for conflicts.
Not the same as
- Management Company: The management company employs the team, is usually the registered adviser and receives the management fee; the GP is the fund's controlling partner and usually receives the carry.
- Fund Manager: "Fund manager" describes the sponsor firm or its professionals commercially; the general partner is a specific legal entity in a specific fund.
- Limited Partner (LP): Limited partners provide most of the capital, have limited liability and do not manage the fund.
How it is classified
- Legal sense: the entity named as general partner in the fund's formation documents.
- Commercial sense ("the GP"): the sponsor firm; record it as a manager, not as the legal GP entity, when building entity data.
Common mistakes
- Saying the GP receives the management fee. Usually the management company does.
- Classifying the GP as an allocator or investor type; it is the manager side of the fund.
- Assuming the sponsor firm itself is liable for fund debts; the special-purpose GP entity exists to prevent that.
Edge cases
- Funds organised as companies (common for hedge funds) have no general partner; a board and an investment manager fill the roles.
- On GP removal, a replacement GP may be appointed, or the GP's interest converted into a limited partner interest, with carry consequences set by the LPA.
Sources
- Loi modifiée du 10 août 1915 concernant les sociétés commerciales - Art. 320-1 (société en commandite spéciale, SCSp). Grand Duchy of Luxembourg, Legilux (consolidated version applicable 2 March 2025), SCSp introduced by Law of 12 July 2013; now Art. 320-1 (last amended by Law of 7 August 2023). Status: In force (checked 2026-10-01). Art. 320-1(1) (consolidated text of 2 March 2025) — supports: General partners of an SCSp have unlimited and joint liability for the partnership's obligations
- 26 U.S.C. 1061 - Partnership interests held in connection with performance of services (carried interest). U.S. Congress (Internal Revenue Code; LII mirror), Added by Pub. L. 115-97, sec. 13309 (2017-12-22); current text as published by LII (accessed 2026-10-01). Status: in force (checked 2026-10-01). Sec. 1061(a)(1)-(2), (c)(1)-(2) — supports: Net long-term capital gain on applicable partnership interests treated as short-term to the extent not long-term under a 3-year holding period; applicable partnership interest = interest held in connection with substantial services in an applicable trade or business
- ILPA Model Limited Partnership Agreement (Whole of Fund and Deal-by-Deal versions). Institutional Limited Partners Association, ILPA, Whole of Fund first released October 2019, updated July 2020; Deal-by-Deal version and term sheet released 22 July 2020. Status: Current (checked 2026-10-01). WOF Art. 8 (Management); Art. 10 (Removal of the General Partner); Sec. 20.5 — supports: Management of the fund by the GP; LP removal rights for cause and without cause; GP may not place its interests ahead of the fund's or LPs'
- Directive 2011/61/EU on Alternative Investment Fund Managers (AIFMD). European Parliament and Council, Official Journal of the EU, L 174, 1.7.2011, Adopted 8 June 2011; transposition by 22 July 2013. Status: In force; amended by Directive (EU) 2024/927 (AIFMD II) (checked 2026-10-01). Art. 4(1)(b), Art. 5(1)(a)-(b) — supports: AIFM = legal person whose regular business is managing AIFs; each AIF within the Directive has a single AIFM, either an external manager appointed by or for the AIF or the AIF itself
- 6 Del. C. s.17-1101 - Construction and application of chapter and partnership agreement (DRULPA). State of Delaware (Delaware Code Online), Delaware Code Online, Title 6 ch. 17 (accessed 2026-10-01). Status: in force (checked 2026-10-01). 6 Del. C. Sec. 17-1101(d), (f) — supports: Partnership agreement may expand, restrict or eliminate duties and limit liability for their breach, but not the implied covenant of good faith and fair dealing or liability for its bad-faith violation
- 6 Del. C. Sec. 17-403 - General powers and liabilities of a general partner (Delaware Revised Uniform Limited Partnership Act). State of Delaware (Delaware Code Online), Delaware Code Online, current text as fetched 2026-10-02. Status: in force (checked 2026-10-02). 6 Del. C. Sec. 17-403(b) — supports: A general partner has the liabilities of a partner in a general partnership to persons other than the partnership and the other partners