Fund oversight by supervisory or advisory committees

A - Best practice

  1. It is best practice for the chair to be independent of the manager and investors.
  2. It is best practice for the manager not to be represented on the committee, but consulted upon when required.
  3. The Fund's annual report should contain a statement from the committee chair outlining the contribution the committee has made to the governance of the fund over the preceding year.
  4. We would expect members of the supervisory committee to be covered by appropriate liability/professional indemnity insurance arrangements, which will be a valid fund cost.
  5. Members of the advisory committee have no liability to the investors of the fund and it is usual for the fund documentation to provide members with an indemnity.

 

B - Minimum compliance

Additional information on the role and constitution of the supervisory/advisory committeee is set out in Annex 1. 

  1. Each fund should have oversight by either a supervisory committee with one or more representatives independent of the fund manager and investors or an advisory committee comprised of a mixture of manager and investor representatives. The oversight committee could be either internal or external as long as it is independent of the fund manager who is making the investment decisions. A trustee or depositary appointment is capable of satisfying this requirement. 
  2. The committee should not be involved in the day to day decision making of the fund.
  3. The committee should represent the interests of all investors, including small investors.
  4. The committee should have defined terms of reference.
  5. The cost of the committee is a valid cost to the fund.
  6. The manager has primary responsibility for sound governance of the fund which should not be delegated to the committee.
  7. The fund documentation should clearly set out the processes for appointment of the representatives to the supervisory/advisory committee, including duration of appointment and voting arrangements.
  8. The manager should ensure that contact details of the supervisory/advisory committee are supplied to all investors on request.
  9. The manager should disclose to the investors on request the following information for each representative:
    - Name
    - Contact details
    - Date and term of appointment
    - Remuneration, if any.
  10. The manager should advise all investors of the dates and times of all supervisory and advisory meetings.  Minutes should be produced promptly and supplied to all investors on request.