How to Track Most Favored Nation After the Notice

How to track most favored nation is a dated ledger after the GP sends notice of other LPs' more-favorable side-letter terms, and you elect or leave them. Raziel's side-letter tracking page is the letter as a document (counterparty, date, MFN yes/no, rights labels). This page is the MFN election: notice of better terms, election window, what you elected, what you left. It is not a side-letter primer. Raziel's excuse-rights tracking page is a later skip of a call, not this row.

This is not legal, tax, or investment advice. Raziel does not provide it. Copy the signed side letter, the LPA, the MFN notice or compendium, and the election form you returned. Do not invent a notice period.

What this ledger is (and is not)

Cooley's fund-lawyer primer: an MFN is not itself authorization to enter into side letters. It is a mechanism that may apply once side letters have been granted, giving an investor the right (subject to the MFN's terms and limits) to elect certain more favorable side letter provisions granted to other investors. Goodwin (September 2023): the manager typically discloses all side letter terms after final close, then each investor can take advantage of terms agreed with other investors, often based on having committed the same amount as, or more than, that investor (subject to exceptions).

The ILPA Model LPA whole-of-fund term sheet (July 2020) is a different template: notice of all Side Letter terms reasonably promptly following the Final Closing Date, and each other Partner shall have the benefit of more favourable rights except four listed carve-outs. Copy which mechanic your documents use (automatic pickup versus an affirmative election). Do not paste Model automatic benefit onto a letter that requires you to initial a form.

Columns to log when the notice lands

Open one row per legal interest after the MFN notice arrives. Copy each field from the letter, the LPA, the notice, and the election you actually sent.

• MFN grant (yes/no). Whether your side letter (or the LPA) grants you an MFN. Copy the sentence. A notice you cannot elect under is not your MFN.

• Excluded terms. Terms the LPA or the MFN carves out. Log excuse, fee, capacity (commitment-size or co-investment), or other labels only if your documents print them. The ILPA Model term sheet carves out (1) rights granted solely for a particular regulatory, legal, or tax situation or policy applicable to that Partner but not to you, (2) affiliate-transfer consents, (3) excuse rights, and (4) Advisory Committee nomination. Cooley: an MFN rarely makes every provision electable. Do not paste the Model list as your exclusions.

• Notice of other LPs' terms. Date received (and sent, if different). What was disclosed: a compendium, redacted copies, or a summary. ILPA's March 2023 analysis: all LPs should receive a category-grouped compendium of relevant terms not in the LPA, with electable and unelectable terms broken out, regardless of commitment size or ability to elect. Copy what you were sent.

• Election window end. Compute from the notice and the signed MFN, not from a blog default. Mark calendar versus business days if the form distinguishes them.

• Terms you elected. Provision headings you initialed or affirmatively elected, with the date you sent the form. Cooley: some provisions may be automatically incorporated; others require the investor to initial or affirmatively elect them.

• Terms you declined. Electable terms you passed on in writing, or that lapsed by silence if the form treats nonresponse as a pass.

• Remaining unelected better terms. More-favorable terms still in the notice that you did not elect and that were not carved out. If the window has closed and the form treats late elections as ineffective, mark them closed, not live.

The window is copied from the form, not invented

Do not invent a notice period. The ILPA Model term sheet says "reasonably promptly following the Final Closing Date" and prints no day count. ILPA's March 2023 analysis recommends that GPs distribute the MFN compendium to all LPs within [60] calendar days of the final closing, and that LPs have a minimum [30] calendar days to review and elect. Those numbers are ILPA's brackets, not your window unless your documents say so. Copy the end date from the notice or election form you hold. Cooley: a well-drafted MFN should generally require an investor electing a provision to accept associated obligations. If you elect a term, log the burden that traveled with the benefit. If a later closing produces a new notice, start a new row.

After you elect or pass: close the row

When the window ends, rewrite three cells: terms you elected, terms you declined, and remaining unelected better terms. Keep the notice, the election form, and any confirmation with the row. ILPA Principles 3.0 (June 2019) tells GPs to include provisions common across the majority of a fund's side letters in the LPA itself. If a later LPA amendment absorbs a term you elected, stamp the row. The quarterly pack will not reprint your election list. Keep the list here.

A workbook holds this if each notice is a row, excluded terms are copied from the LPA or MFN, the window end is the form's, and elected versus declined versus leftover better terms are three cells. It fails when you invent a statutory period, paste the Model carve-out list as your elections, or treat the side-letter inventory as the election ledger. Raziel's alternative-asset dashboard is the book those notices should sit on: documents, dates, and portfolio context in one place. Raziel does not interpret your MFN. Copy the notice. Log the window. Record what you elected and what you left.