In the venture capital sector, we have seen the market move towards equilibrium in the models put into circulation by the National Venture Capital Association (NVCA). From the first term sheet to the final share purchase agreement, these standard documents are the basis – and provide the standard conditions – for negotiations between investors and the portfolio undertaking concerned. For some time, well-established companies and funds have been clinging to the use of their proprietary forms. But the efficiency gains achieved from a jointly agreed starting place have, in the long run, unsurprisingly caught up. While each agreement is exclusive, the importance of the NvCA model as a basis for negotiation should not be underestimated. Retransmission rights are particularly relevant in the context of closed-end funds when an investor cannot repay the fund if they wish. AIFAs negotiating letters of credit on behalf of a fund should ensure that a transfer right provides them with sufficient comfort as to the identity and nature of the transferee (this is particularly the case where the Fund has a credit facility and does not wish to compromise its credit base) and that, in the context of each transfer, appropriate information regarding the duty of care towards customers shall be provided. General consent is therefore not desirable. Portability is particularly important for some investors, for example some German pension funds4 which, for regulatory reasons, may be able to prove free portability (or as close to free portability as the Fund can offer in practice). 4Asset Managers Committee. “Best Practices for the Hedge Fund Industry, Report of the Asset Managers,” Committee to the President`s Working Group on Financial Markets, January 15, 2009. The Managed Funds Association (AMF), an American association The interprofessional organization recommends that hedge fund managers disclose to investors ancillary letters that have been granted to preferred investors and that have a “significant impact” on other investors. 3 The Committee of Asset Managers, a U.S.

industry body, proposes that “in cases where secondary letters may affect other investors in the fund, the AIFM should advertise reasonably necessary to enable other investors to assess the potential impact of such secondary letters on their investments”. For example, subsidiary letters that may have negative effects on other investors are: (a) extensive control rights (through investment decisions or key personnel), (b) preferential liquidity/withdrawal rights (significant provisions for staff and withdrawal door waivers), (c) availability of preferential fees and (d) conditions that materially modify the investment program disclosed in the Fund offer documents. 4 The above is a summary of the usual mail requests. Whether it is appropriate to accept such requests should be considered on a case-by-case basis. A supplement in Canada is generally considered to be in trust vis-à-vis the limited partners. Such an obligation would generally imply an obligation to treat sponsors fairly. To the extent that there is a subsidiary letter in favour of one or more commanders, the question arises as to whether the supplement treats all sponsors fairly. . . .