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The Hedge Fund Partnership Agreement is essential for establishing and operating hedge funds within Saudi Arabia's regulatory framework. This document is typically used when setting up new hedge fund vehicles or restructuring existing ones, providing the legal foundation for the fund's operations. It must comply with Saudi Arabia's Capital Market Authority (CMA) regulations, Companies Law, and Shariah principles, making it unique compared to conventional Western hedge fund agreements. The agreement covers crucial elements including capital structure, investment strategies, management responsibilities, profit distribution, and investor rights. It's particularly important in Saudi Arabia's evolving financial landscape, where increasing sophistication in investment products meets traditional Islamic finance requirements. The document serves as both a regulatory compliance tool and an operational blueprint for the fund.

1. Parties: Identification of all partners, including General Partner(s) and Limited Partners

2. Background: Context of the partnership formation and its intended purpose

3. Definitions: Detailed definitions of terms used throughout the agreement

4. Partnership Formation: Legal establishment of the partnership, including name, purpose, and principal place of business

5. Capital Contributions: Terms regarding initial and subsequent capital contributions, commitment periods

6. Partnership Interests: Classes of partnership interests, rights, and obligations attached to each class

7. Investment Strategy and Restrictions: Defined investment objectives, permitted investments, and investment restrictions

8. Shariah Compliance: Requirements and mechanisms for ensuring compliance with Islamic financial principles

9. Management and Administration: Powers and duties of the General Partner, investment manager, and key personnel

10. Profit and Loss Allocation: Distribution waterfall, allocation of profits and losses among partners

11. Fees and Expenses: Management fees, performance fees, and partnership expenses

12. Transfer Restrictions: Limitations on transfer of partnership interests and withdrawal rights

13. Reporting and Valuations: Financial reporting obligations, NAV calculations, and valuation procedures

14. Risk Factors: Disclosure of investment and operational risks

15. Representations and Warranties: Standard representations by partners and the partnership

16. Term and Termination: Duration of partnership, termination events, and winding-up procedures

17. Governing Law and Dispute Resolution: Choice of law and dispute resolution mechanisms