A consent threshold is a percentage of a defined base, and the base, not the percentage, decides who holds the veto.
To block an LPA amendment, limited partners need more than the share of the voting base that the threshold leaves over, measured in commitments, not in heads. On an illustrative $750m fund whose voting base is 725 once the GP, its affiliates and a defaulting LP are excluded, a 75 per cent consent is blocked by more than 181.25: three LPs if the three largest act together, 24 of the 36 if the smallest do.
Worked in full in How to Read a Limited Partnership Agreement by Julian R. Sterling, with every figure reproduced in a free workbook.See the book on Amazon →
Most LPAs let the GP amend the agreement with the consent of a stated percentage in interest of the limited partners: a majority for routine matters, a supermajority of two thirds, 75 or 80 per cent for the economics, and every affected LP for changes that increase an LP's obligations or alter its share of distributions. Three defined terms decide the arithmetic:
| Input | Value |
|---|---|
| Total commitments | 750 |
| GP commitment and affiliated feeder, excluded | 15 |
| Commitments of the 37 limited partners | 735 |
| One LP in default, excluded | 10 |
| Voting base, 36 LPs | 725 |
| Eight largest LPs | 90, 75, 60, 50, 45, 40, 35, 30 |
The largest LP holds 12.4 per cent of the base. The remaining 28 voting LPs hold between 2 and 30 each.
Voting base = LP commitments − excluded interests
Amount needed to block a test of at least x% = more than (1 − x) × voting base; for "more than 50%", at least half the base
Minimum blocking coalition = the smallest number of LPs, largest first, whose commitments exceed that amount
Excel, commitments sorted descending in B2:B37 with a running total in C: =MATCH(TRUE,C2:C37>(1-x)*Base,0), entered as an array formula
For a 75 per cent test: 25 per cent of 725 is 181.25. The two largest LPs hold 165, short of it; adding the third gives 225, 31.0 per cent of the base. Three LPs out of 36 hold the veto.
| Consent threshold | Block needs | LPs needed | Their commitments | Share of voting LPs |
|---|---|---|---|---|
| More than 50% | 362.50 | 7 | 395 | 19.4% |
| 66.67% | 241.67 | 4 | 275 | 11.1% |
| 75% | 181.25 | 3 | 225 | 8.3% |
| 80% | 145.00 | 2 | 165 | 5.6% |
| 90% | 72.50 | 1 | 90 | 2.8% |
At a 90 per cent threshold the largest LP blocks alone, which is why anchor investors ask for it on fee and carry amendments, and why GPs resist it. At a simple majority the six largest hold 360, just short of the 362.50 needed, so the seventh is pivotal. The arithmetic runs the other way for small LPs: blocking a 75 per cent vote from the bottom of the list takes the 24 smallest, together holding 200.
Many LPAs measure consent against interests that respond, or deem consent from LPs who do not reply within a notice period. That changes the blocking arithmetic more than any threshold. If 70 per cent of interests reply and the test is 75 per cent of votes cast, the amendment passes with 52.50 per cent of the base, and opponents who replied need more than about 126.9 to stop it, which is easier, but only if they reply. Silence that counts as a no under one drafting counts as a yes under the other. The same distinction runs through the cost of a fund term extension, which is usually approved by this kind of vote.
Counting heads or using the fund size. "Three quarters of our LPs" is not a test any LPA applies, and dividing by the full $750m instead of the 725 voting base overstates the blocking amount, 187.50 instead of 181.25. On this list the coalition is still three LPs, but near a boundary the excluded interests decide the outcome. The opposite error is forgetting that the base moves: an LP that defaults, transfers to a GP affiliate or is excused drops out, and the remaining LPs' shares rise. The same base sets the blocking position on a no-fault removal vote.
The amendment clause usually carves out changes that require each affected LP's consent, such as increasing its commitment or reducing its share of distributions. No coalition, however large, can impose those. Check which list an amendment sits on before counting votes.
Voting, removal and amendment clauses are read with the economics they protect in the book, and the free workbook for this case sets out the fund's terms.
Limited partners holding more than half of the capital commitments, or capital accounts if the LPA says so, of the limited partners entitled to vote. It counts money, not heads. On an illustrative 725 voting base, a majority needs more than 362.5, and the seven largest LPs alone hold 395.
Usually not. Most LPAs exclude the GP, its affiliates and any defaulting LP from the voting base for consents that protect the LPs. On a $750m fund with 15 of GP and affiliate commitments and a 10 LP in default, the base falls to 725, and a 75 per cent consent needs at least 543.75 in favour.
It depends on the drafting. If the threshold is a share of all voting interests, silence works as a no. If it is a share of interests that respond, or there is a deemed consent clause, silence helps the GP: with 70 per cent of interests replying, a 75 per cent of-votes-cast test passes with 52.5 per cent of the base.
This article is one calculation from How to Read a Limited Partnership Agreement. The book takes the same case from first principles to the decision, chapter by chapter, and every figure it prints is a live formula in the free companion workbooks.
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