Investors unwise to rely on side-letter transacted with manager

Caymans court: question manager's authority and letter’s interaction with fund constitution

Cayman ruling means investors check authorisation for side-letters

Side-letters are generally viewed by managers as a key fundraising tool by which they can bestow ‘most favoured nation status' fee rebates, preferential redemption terms and a host of other benefits in return for investments. However, the latest in a series of decisions from the courts of the Cayman Islands demonstrates that in many cases side-letters do neither investors nor managers much good.


In the matter of Lancelot Investors Fund, the investment manager and an investor had agreed a