Capital Call & Distributions: A Guide to Transparency and Best Practices
- Brandon Tan
- Sep 12, 2025
- 2 min read
Updated: Sep 16, 2025
Following our previous guides covering the key phases of a fund, fund structure and how subsequent close is performed for a newly closed fund, we’ll continue our series focusing on the contributions from investors into the fund, generally known as Capital Call or Drawdowns - a mechanism through which funds access investor commitments to execute their investment strategies.
To ensure industry best practices, we strongly advocate adopting the Institutional Limited Partners Association (ILPA) templates1. These represent the highest standard in reporting, providing consistency and comprehensive detail that institutional investors expect.
This article outlines the essential components of effective capital call notices, focusing on the specific information investors require to maintain clarity and confidence in fund operations.
What is a Capital Call?
A capital call (or drawdown) occurs when the fund requires capital from its investors. These calls are initiated to finance specific obligations of the fund. The primary drivers for a capital call include but not limited to:
The fund has identified a target investment(s)
Statutory, regulatory and necessary expenses incurred to operate the fund
Management fee or equivalent
Each notice should include the below key information:
Accurate breakdown of each component as described above
If estimates are provided, a subsequent notice to reconcile actual cashflow to those estimates should be provided
Breakdown of the following information at both fund and investor levels
Each component of the capital call amounts
Clear identification of capital call and distribution amount (including deemed call/distribution) in a net capital call/net distribution scenario
Illustrative 1 (Capital call breakdown)
Investor level of below information movement
Available commitment
Cumulative Distribution
Cumulative Carried Interest Distribution paid by investor to the General Partner
Illustrative 2 (Summary of commitment and cumulative distribution)
Clear identification of various components of proceeds distributed
Return of capital; preferred return; catch-up; carried interest
Subsequent/equalisation interest on management fee and non-management fee components
Carried interest reconciliation (between unrealised, realised and distributed carry interest)
Illustrative 3 (Subsequent close with equalisation interest)
Illustrative 4 (Distribution with carried interest)
Illustrative 5 (Waterfall calculation)
All investor notices must contain sufficiently detailed information to enable the clear recording, tracking, and reconciliation of investment activities and overall fund performance.
Return of excess capital occurs when the fund has drawn down more capital than required from the investors. For best practice, any return of excess capital shall be accompanied with a notice describing the reason for such return within the timeframe as stipulated in accordance with the fund’s legal documentation- usually Limited Partnership Agreement (“LPA”) for a LP-GP fund; Shareholder Agreement (“SHA”) for a Company structured fund.
Examples of such situations include, but are not limited to, the following:
The funding previously called for Investment is no longer necessary. This may be due to change in investment funding requirement or even pulling out of investment
The funds have excessively called for reserves and would like to return the funding to investors
Illustrative 6 (Return of excess capital)
How Kai Global Consulting can help
Fund closings, capital calls, and investor distributions don’t have to be complicated. At Kai Global Consulting, we bring hands-on experience and a practical approach to fund administration. We don’t just follow processes – we understand them, elucidate them and ensure your notices are professionally prepared, aligned with international standards, customised to your specific requirements.
Ready to Simplify Your Fund Administration?
Contact us now for a non-obligatory consulting session.