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Side-stepping side letters?
In a market where fundraising has been challenging, side letters providing tailored terms to investors can be helpful tools to attract capital, writes James Gaden of Maples and Calder.
While advisers highlight issues arising from side letters, including the risks of breach of fiduciary duties or inconsistency with constituent documents, two recent cases in the Cayman Islands have highlighted a more fundamental issue: whether the side letter actually works.
In the past, side letters commonly included provisions such as a reduction in fees, approval of transfers to parties related to the investor and undertakings to use best efforts not to pay redemption proceeds …
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