Definition
Transfer Restrictions
Operating-agreement limits on an LP's ability to sell or assign their SPV interest.
Transfer restrictions are the provisions limiting whether and how a limited partner can dispose of their interest in an SPV. Typical terms require the manager's written consent, grant a right of first refusal to the sponsor or other members, require that the buyer be an accredited investor who clears KYC, and prohibit any transfer that would breach the securities exemption the offering relied on or push the vehicle past a structural investor limit. Restrictions also serve the underlying company, whose own shareholder agreement often forbids indirect transfers. The practical effect is that SPV interests are illiquid by design, and any secondary sale runs through the sponsor rather than around them.