For-cause removal is the LP-triggered ouster of a general partner or designated key person for specified bad acts or material breaches of the limited partnership agreement—not for poor performance alone.

How it works

LPA cause definitions typically include fraud, criminal conviction, gross negligence, willful misconduct, material misrepresentation to LPs, unauthorized commingling, or abandonment of duties. Removal often requires supermajority LP vote or LPAC recommendation followed by vote. Consequences may suspend investment authority, accelerate key person clauses, or force sale of management company interests depending on negotiation.

Contrast no-fault or without cause removal (higher vote threshold, sometimes available after key person departure) and voluntary retirement. For-cause events may trigger forfeiture of unfunded carry or require GP buyout of LP interests at fair value—highly negotiated.

Portfolio companies rarely invoke GP removal directly but feel effects if firm leadership collapses amid cause proceedings—key person risk materializes.

Why it matters

• LPs: Cause standards are the ultimate governance backstop; document incidents meticulously if invoking removal.
• GPs: Negotiate narrow, objective cause definitions and cure periods for curable breaches to avoid weaponized removal disputes.

Common mistake

LPs assuming underperformance alone satisfies for-cause removal. Unless the LPA explicitly ties cause to sustained violation of investment policy, bad returns lead to no re-up, not automatic removal.

Related ideas

See key person risk, LPA, no-fault removal, and suspension period.