Increasingly fund sponsors are using document sharing sites to share materials with their investors. Reading the fine print on the ‘click through’ consents, however, investors can discover some unpleasant surprises. These can include broad indemnity provisions (not only with respect to the investor’s use of the portal but also for damages arising otherwise, and in some cases include damages stemming from the sponsor’s negligence and/or consequential damages). Users also are often asked to make representations about the user’s IT systems. Sponsors also may squeeze in additional disclosures and limitations of liability provisions, and in some cases will include within the click-through agreements to types of LPA amendments beyond those contemplated by the original LPA.
Many of our mega investor clients refuse to agree to these click through provisions, while others will include wording in their side letters that contemplates that in the event of an inconsistency between such click through provisions and the investor’s side letter and LPA, the latter control. In some cases, investors also try to disapply specific types of click through provisions, such as modifications to the confidentiality standards. It behooves all investors to consider how they want to approach these provisions as an institution and to make sure that their teams are trained to read the fine print rather than merely clicking accept.
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