In the matter of Neoma Manager (Mauritius) Limited et al (Cause Nos. FSD 322 of 2020; FSD 141 of 2021; FSD 52 of 2022 (RPJ)), Walkers acted as Cayman Islands counsel to Abraaj ABOF IV SPV Limited ("ABOF IV") in respect of its successful application for summary judgment on its counterclaims under section 22 of the Exempted Limited Partnership Act (as amended) ("ELP Act") for the disclosure of true and full information regarding the state of the business and financial condition of Neoma Private Equity Fund IV L.P. (the "Partnership").
In December 2020, the investment manager of the Partnership, Neoma Manager (Mauritius) Limited (the "Manager"), issued proceedings against ABOF IV (and other limited partners of the Partnership) seeking declarations from the Court on the accuracy of its calculations of the limited partners' capital account balances. ABOF IV, who considered the Manager's calculations to be inaccurate, subsequently issued counterclaims against both the Manager and the general partner of the Partnership, Abraaj General Partner VIII Limited (the "GP"), including under section 22 of the ELP Act seeking true and full information regarding the state of the business and financial condition of the Partnership, including, inter alia, various categories of information and documents which underpinned the Manager's calculations (the "S.22 Counterclaims").
Section 22 of the ELP Act provides that "Subject to any express or implied term of the partnership agreement, each limited partner may demand and shall receive from a general partner true and full information regarding the state of the business and financial condition of the exempted limited partnership". ABOF IV's section 22 rights were not altered by the limited partnership agreement (the "LPA"). Despite this, the Manager and the GP refused to provide the information requested on the basis that, inter alia, ABOF IV was not entitled to the information, the information already provided to ABOF IV was sufficient to satisfy section 22, the requests were disproportionate and / or the Manager and the GP did not possess such information and were therefore not required to obtain it from third parties. Accordingly, ABOF IV made an application for summary judgment with respect to its S.22 Counterclaims on the basis that section 22 provided a broad statutory right to limited partners and the GP (and Manager) did not have any triable defence in opposition to the S.22 Counterclaims.
On 10 March 2023, the Honourable Justice Parker handed down his decision and, having considered the conduct of the GP (and the Manager, by virtue of the LPA), was satisfied that they had not complied with their statutory duties under section 22 (and/or the LPA) and had not disclosed true and full information that ABOF IV had requested and was statutorily entitled to. On this basis, Parker J held that there was no reasonably arguable defence to both the Manager's and GP's position of non-disclosure and, accordingly, granted summary judgment of the S.22 Counterclaims in favour of ABOF IV.
Parker J's decision reaffirms the Grand Court's previous decisions in Dorsey and Port Fund which highlighted the wide and unqualified nature of a limited partners' statutory right to information under section 22. The decision reemphasised how "true and full" information about a partnership's business and financial condition is a "very wide target to aim at" and could not be resisted on the grounds relied upon by the Manager and GP. Parker J also made the following observations which provide helpful guidance on the ambit of section 22 and compliance with the same:
- A limited partner may make a relevant "demand" of a general partner for material under section 22. Once that demand is made, the general partner is then under an obligation to provide the requested material provided it falls within the wide ambit of the section. This obligation is an ongoing one.
- The entitlement under section 22 is to "true and full information" regarding "the state of the business and financial condition of the exempted limited partnership", which arises from the general partner's position as agent and fiduciary of the partnership (and each of the limited partners).
- Limited partners are entitled to the same information that is available to the general partner concerning the business and financial affairs of the partnership in this regard so that they may be properly informed as to what has been done on their behalf, as the economic owners of the partnership.
- A limited partner's ability to exercise its section 22 right is not impacted by its motives or the intended use of the documents.
- The right of limited partners under section 22 is a free standing statutory right.
- Where general partners do not have the information requested under section 22, they should make all reasonable efforts to try and obtain material from third parties to fulfill its / their obligations under section 22.
- It is not a requirement for the information to be in the possession of the general partner for the general partner to be required to disclose it under section 22.
- Where the general partner claims that the information requested does not exist, it should explain what searches have been conducted and why it is not possible to retrieve or find the relevant information.
This decision serves as a timely reminder that there is very limited scope for resisting requests made by limited partners under section 22 and helpfully sets out various practical considerations that have clarified the lengths general partners (and their agents) must go to in order to comply with demands made under section 22 of the ELP Act.
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