Chester 01244 405555

Grosvenor Court
Foregate Street Chester
Cheshire CH1 1HG
DX: 19990 Chester

Shrewsbury 01743 443 043

Lakeside House
Oxon Business Park
Shrewsbury SY3 5HJ
DX: 148563 Shrewsbury 14

Airport City, Manchester 0844 800 8346

Office 129
Manchester Business Park
3000 Aviator Way
Manchester M22 5TG

Send us a message
Our Offices

Investment Partners Entitled to View Documents

21st December, 2011

Is an investor in a co-investment venture that is owned and managed by connected companies entitled to find out what has happened to its money beyond what is reported to it? This question was raised in a recent case in the High Court.  This case is also relevant to all partners in general partnership or limited partnerships.

The case concerned an investment partnership, Colyzeo Investors II LP, a limited partnership in English law (under the 1907 Limited Partnership Act) which was set up to co-invest with Colony Capital LLC and its affiliates. A complicated arrangement of partnerships and companies was established in order to manage the investments – real estate and related assets, and ventures in Europe.

Such a structure is not unusual for this type of investment and the status of the individual investors was that of limited partner, with the overall management being assumed by a general partner, whose liabilities were unlimited. In this case, the general partner was Colyzeo Capital II LLP, a limited liability partnership in English law.

Spanish company Inversiones Frieira SL was the largest investor in the partnership and, with its smaller sister company, handed over some €100 million out of a total of €854 million committed by investors. Unfortunately, as a consequence of major investments in two projects proving unsuccessful, including one involving French supermarket giant Carrefour, the venture lost about half of its investment funds.

Following these losses, in July 2009 Inversiones requested access to documents relating to the failed investments. This request was granted over the following months, with more and more detailed information being sought until, in March 2010, the company was told that it only had access rights to the financial records and books of the partnership.

The High Court held that this view was wrong. The investors were legal partners in the venture who had put capital at risk in the business. As such, any partners, limited or not, had a right to disclosure by the co-partner of all matters relating to the partnership dealings and transactions.

It was also argued that Inversiones only wanted access to detailed investment documents in order to mount litigation against Colyzeo Investors. The judge held, however, that because Inversiones had a statutory right to inspect the documents, its motive for so doing was irrelevant.

 

 

You might also be interested in...

Villiers v Villiers (2018) EWCA Civ 1120

3rd July, 2020

Brief Background Mr & Mrs Villier married in 1995, and lived in Scotland together until separation in 2012. Once separated, the wife moved to England, but the husband remained living in Scotland. In July 2013 the wife issued a divorce petition in England, but in October 2014 the husband lodged a writ for divorce in Scotland. As the... Read More »

Why claiming inheritance tax relief is not simply horseplay

1st July, 2020

Agricultural property relief from Inheritance Tax has long been a valuable relief for estates, which when available can... Read More »

Governments Calls For Responsible Contractual Behaviour – What Does This Mean For You?

29th June, 2020

In May 2020 the UK Government released additional guidance in connection with the Covid-19 pandemic, this time in... Read More »

Contact Us
Secured By miniOrange