In the context of the Qualified Opportunity Fund (QOF) industry, a General Partner refers to an individual or entity that has management authority and responsibility for the fund.
The term “general partner” is commonly used in various types of partnerships such as Limited Partnerships (LPs) and Limited Liability Partnerships (LLPs). Within these partnership structures, the general partner is responsible for the day-to-day management of the partnership, including making investment decisions, and is personally liable for the partnership’s financial obligations.
In a QOF, the general partner typically has the same roles. These funds are investment vehicles that are set up with the goal of investing in eligible property located in an Opportunity Zone. The Opportunity Zone program is a federal tax program in the United States, introduced as part of the Tax Cuts and Jobs Act of 2017, that is designed to spur economic development and job creation in distressed communities.
The general partner of a QOF has significant fiduciary duties to the fund and its limited partners. This can include everything from selecting investments, overseeing the fund’s operation, ensuring regulatory compliance, providing financial reporting to investors, and more.
The general partner is typically compensated through a management fee and a share of the fund’s profits (often called “carried interest”), but unlike limited partners, the general partner can have unlimited liability for the actions of the partnership. Therefore, the role of a general partner requires both significant expertise and careful management.