Bondkick fund structure

Fund hosting solutions powered by blockchain

Bondkick hosts alternative investment funds, registered in the EU under the Limited Partnership regime.

Flexible, tax-transparent investment vehicles to operate leveraged buyouts (LBOs), mezzanine debt, private placement loans, distressed debt or to setup a portfolio of a fund of funds. Registered in digitised, decentralised public ledger (Ethereum blockchain) capable for complex transactions.

Limited Partnership Fund

Limited Partnership Fund (LPF) is an investment vehicle designed for private equity, venture capital investments or investments in a variety of assets, often with complex portfolio-construction and risk-management techniques. Bondkick offers limited partnership funds under the Investment Funds Act of 14 December 2016 (IFA) of the Republic of Estonia (member of EU).

Normally, the assets of the fund are managed by Bondkick, the fund manager. Bondkick may represent the limited partnership fund in all transactions within the competence granted to it by the management contract, unless otherwise provided for in the partnership agreement or the management contract. Entry into and termination of the management contract shall be decided by the managing general partners of the limited partnership fund by at least a two-thirds majority of the votes, unless otherwise prescribed in the partnership agreement.

Flexibility

Limited Partnership Fund has remarkable flexibility in terms of the rules agreed between its partners. Among others, the fund partners may regulate the following terms of the limited partnership fund:

  • a purpose and duration of a fund
  • an investment policy of a fund
  • partners’ contributions, allocation, removal and withdrawal of the general and limited partners
  • payment of carried interest and/or dividends
  • power of partners, transferability of the fund units (shares)
  • fees and expenses, including a fund setup fee, management fee, performance and over-performance fee, etc.

Limitation of the fund

Limited Partnership Fund units may not be publicly offered. However, an offer is not deemed to be public in the case of:

  • an offer is addressed solely to qualified investors, or
  • an offer is addressed to fewer than 150 persons per Contracting State, other than qualified investors, or
  • an offer is addressed to investors who acquire securities for a total consideration of at least €100,000.00 per investor, for each separate offer, or
  • an offer of units with the nominal value of at least €100,000.00 per unit, or
  • an offer of securities with a total consideration of less than €2,500,000.00 per all the Contracting States in total calculated in a one-year period of the offer of the securities.

Units of the fund

A unit of a limited partnership fund is a set of a partner’s rights and obligations which are associated with the legal relations between the limited partnership fund and its partners. Upon application of the investment restrictions and conditions provided by legislation, acquisition of one unit of a limited partnership fund shall be deemed to be equal to acquisition of one unit of a fund.

Every unit of a limited partnership fund under Bondkick supervision is registered in the decentralised public ledger (Ethereum blockchain) as a blockchain token. The partnership agreement of the fund is prepared in cooperation with the general manager and submitted to the blockchain as a smart contract.

A unit of a limited partnership fund may be freely transferred, unless otherwise provided for in the partnership agreement. The partnership agreement may provide for restrictions on transfer and encumbrance of the units of the limited partnership fund and other conditions and procedures. Transfer and encumbrance of a unit is deemed to be effected with respect to the limited partnership fund after notification of the limited partnership fund of the transfer or encumbrance.

Any unit of a fund which is registered as a token, may be offered for sale on the Bondkick Market or transferred privately via a direct sale. The terms and conditions of the transfer are prescribed in the smart contract.

Partners of a limited partnership fund must make their contributions under the agreed conditions and pursuant to the procedure provided for in the partnership agreement.

A certificate may be issued for a unit of a limited partnership fund. The partnership agreement may provide an opportunity to issue securities of different classes and with different rights and obligations for the units of a limited partnership fund. Any such right or restriction may be programmed into a smart contract for further automatic and transparent control.

A new partner may be admitted into a limited partnership fund under the agreed conditions and pursuant to the procedure provided for in the partnership agreement.

Unless otherwise provided for in a partnership agreement, partners of a limited partnership fund decide on the amount and payment of the profit share subject to distribution after the end of the financial year on the basis of the approved annual report or on the basis of the consolidated report of the consolidation group, if the limited partnership fund belongs to a consolidation group.

Disbursement of profit is prohibited if, as a result thereof, the limited partnership fund would not be able to fulfil its obligations once they fall due.

A partner has the right to withdraw from a limited partnership fund and request redemption of the unit only under the agreed conditions and pursuant to the procedure provided for in the partnership agreement. This does not exclude or restrict the right of a partner to transfer the partner’s unit in accordance with the partnership agreement.