THE CHRYSALIS PERIOD POSITIONING FOR RECOVERY

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THE CHRYSALIS PERIOD POSITIONING FOR
RECOVERY WORLD ALTERNATIVE INVESTMENT
SUMMITNIAGARA FALLS, SEPTEMBER 2009
Ingrid Pierce Partner
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OVERVIEW

• Updating documents improving disclosure
• Gate
• Side pocket
• Suspend
• Consent issues
• Changing service providers independence issues
• Liability for mistakes

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GATE

• What is contemplated
• Stacked or not?
• Disclose implications for all investors

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SIDE POCKET

• Side pocket on acquisition or designate as
  illiquid any time?
• Restrictions - no more than x of funds assets?
• Realisation events upon fixed event or
  discretion of the Investment Manager?
• Fees during accrual - how and when paid out?

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SUSPEND

• Purpose exceptional circumstances or management
  tool?
• Length - when can it (must it) be lifted?
• Requirement to suspend calculation of NAV if
  suspending redemptions of shares

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INVESTOR CONSENT

• Improvements to offering document or articles
• Changes by voting, non-participating shares alone
• Variation of rights of non-voting, participating
  shares
• Level of consent class by class or fund as one
  class?
• Negative consent concept

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SERVICE PROVIDERS INDEPENDENCE ISSUES

• Independence requirement vs investor expectation
• Management control of board / voting shares
• Charitable / STAR trust
• Administration in house or outsource?
• Offshore issues
• Cost implications

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LIABILITY FOR MISTAKES

• Directors
• indemnity in articles
• exemption clause in director services agreement
• Investment Manager
• contractual limit on liability and indemnity from
  fund assets
• Administrator / other providers
• contractual limit or cap on liability
• directors duty to negotiate clauses in best
  interests of fund
• Investors
• recourse against fund / third parties

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INGRID PIERCE, PARTNER

• Ingrid is head of the Cayman Islands hedge fund
  practice at Walkers.
• Walkers is a global law firm undertaking legal
  and management services, with offices in the
  British Virgin Islands, Cayman Islands, Dubai,
  Hong Kong, Jersey, London and Singapore.

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Walker House 87 Mary Street, George Town, Grand
Cayman KY1-9001 Cayman Islands 1 345 949 0100
Ingrid Pierce, Partner T 1 345 814 4667 E
ingrid.pierce_at_walkersglobal.com