United States: Some Considerations For Fund Directors In 2013

Last Updated: April 26 2013
Article by Diana E. McCarthy and Mark F. Costley


In the past year, the SEC has been continuing its enforcement efforts in the investment management area, some of which even involve mutual fund directors. At the same time, despite the U.S. Supreme Court's decision in Jones v. Harris, plaintiffs have enjoyed some success in early stage shareholder litigation filed under Section 36(b) of the Investment Company Act. We also observed last year a few sweep exams, including one regarding sub-transfer agency fees and services and another with respect to exemptive order conditions. The SEC has also announced a 2013 sweep exam with respect to distribution and sub-transfer agency fees.

It's clear that the mutual fund industry as a whole has been experiencing a good deal of change. In 2012, for example, there was a very large uptick in ETF applications, particularly active ETF applications after the SEC lifted its derivatives ban on these types of ETFs. The increasing popularity of all types of ETFs has drained assets from traditional mutual funds, a trend that is likely to continue and intensify.

Another trend in 2012 was the increase in the number of omnibus account holdings where the omnibus intermediary performs transfer agency services traditionally provided by the transfer agent. These intermediaries have had a significant financial impact on mutual funds and their sponsors because many channels charge much more than what a transfer agent for what may be the same services. This trend can potentially diminish shareholder returns and service provider profitability.

Against this backdrop, below are some of our thoughts on issues mutual fund boards will face in 2013 in one form or another.


Independent Director Liability for Registration Statement Disclosures

Many mutual fund boards of directors are revisiting their role in overseeing fund registration statement disclosures in the wake of the U.S. Supreme Court's 2011 ruling in Janus Capital Group, Inc. v. First Derivative Traders. You will recall that the Janus Court found Janus Capital Management, the investment adviser and administrator to the Janus Investment Fund, was not liable under Section 10(b) of the Securities Exchange Act of 1934 or Rule 10b-5 thereunder for its role in creating and providing allegedly false disclosures in connection with the fund's registration statement.

Section 10(b) and Rule 10b-5 are not the only sources of liability for fund directors. Section 11(a) of the Securities Act of 1933 provides that directors, officers, underwriters and the funds' accountants may be jointly and severally liable for material misstatements of fact in a registration statement or omissions to state a fact necessary to make a statement not misleading. Directors and officers are entitled to a due diligence defense under this section, although the burden is on the defendant to prove that he or she exercised appropriate due diligence. In contrast, Section 10(b) and Rule 10b-5 do not provide a statutory due diligence defense, but they do require scienter (intent), which is usually difficult to prove.

We believe that it is probably appropriate for mutual fund boards to review their roles in overseeing disclosure to ensure that their due diligence activities and methods of oversight over the disclosure process are robust.

The method of oversight will vary by fund complex based on various factors, including the types of funds and their investments, the level of risk associated with the investment adviser's style of investment, the size of the fund complex, the number and types of persons involved in the disclosure controls process, the board's committee structure, the purpose of the registration statement (i.e., annual update versus a new fund), as well as other factors. A one-size-fits-all oversight approach does not seem to fit well within the mutual fund industry. Thus, we think that boards should discuss with their counsel what oversight method seems most appropriate for their fund complex.

At the very least, though, boards should be familiar with the principal investment objectives, strategies and risks of the funds they oversee such that they can ask intelligent questions of management with respect to registration statement disclosure. A few recent SEC enforcement cases1 have highlighted the fact that portfolio managers sometimes may engage in strategies that materially contravene the prospectus to the detriment of shareholders. It is incumbent on directors to request assurance regularly from investment and compliance personnel that prospectus disclosures are accurate and being adhered to. The board's discussions with management should also incorporate information that has been presented throughout the year to the directors and the relevant committees with respect to compliance, risk, performance and other issues. It is important to note that director oversight of the disclosure process cannot be delegated to management, but line-by-line review of disclosure is also not necessary nor required to discharge a director's reasonable investigation duty under Section 11. Rather, directors should focus on the reasonableness of the process by which the disclosed information is collected, processed and analyzed.

In light of the Janus decision, boards should also consider with their counsel the terms of their insurance coverage to ascertain whether they have sufficient coverage both in terms of amount and coverage itself. More importantly, we think it is important for directors to understand the differences in coverage available under different kinds of policies and to consider what mix of coverage is appropriate for their circumstances. Some important points to consider include the following:

  • Independent director liability (IDL) is available to cover independent directors only in cases where a fund is financially unable or refuses to indemnify the directors.
  • Side A coverage covers directors and officers in case a fund is financially or legally unable or refuses (including wrongfully denying coverage) to indemnify the directors and officers. Side A also covers officers and directors in case an insurance carrier is unable to pay on a claim due to financial insolvency. Side A coverage covers all directors and officers (not just independent directors).
  • Counsel may recommend that any liability policy that covers independent directors as well as interested directors and officers and/or fund service providers contain a provision reserving an amount of coverage just for independent directors. This recommendation is usually based on the fact that interested directors may, and officers usually will, have access to other insurance liability coverage through their firms who may be service providers to the fund.

Directors may also want to discuss with their counsel certain coverage issues, such as whether their policy will: (1) require them to settle a claim, (2) cover investigative expenses prior to a formal SEC or other regulatory proceeding, and (3) permit them to hire their own counsel and, if so, under what circumstances.


One end-of-year SEC enforcement case, involving independent mutual fund directors, highlights what is surely one of the most important duties of a director – to ensure that the values of a fund's securities are calculated pursuant to a good process. As articulated by the SEC many times in past guidance, that duty is to be exercised in "good faith." Good faith implies a standard of reasonableness.

The Morgan Keegan2 action against fund directors has highlighted once again the importance of board duties with respect to valuation. It's worth remembering that SEC enforcement actions against fund directors over the years have been few and far between. But the vast majority of the actions have involved an inattentiveness to valuation, usually in connection with fixed income securities, and especially during volatile markets and uneven economies. Set forth below are some thoughts on various valuation issues.

Stale prices: A fund's pricing procedures should set forth how long a security price may remain unchanged before the relevant service provider must check the price with other brokers and/or pricing services. It is not uncommon for thinly traded security prices to remain unchanged for days and, often, weeks. Directors' duties with respect to these securities are to: (1) revisit the pricing procedures periodically and ask whether the timeframes appear reasonable (fund auditors and counsel or consultants can be helpful in advising on the appropriateness of timeframes); (2) understand what procedures are followed to confirm a stale price; and (3) receive reports at least quarterly from the service provider on any stale-priced securities. Directors who oversee funds with large amounts of thinly-traded securities should understand how frequently and thoroughly stale-priced securities are repriced.

Fair Value Procedures: Fair value pricing procedures should be reviewed periodically to ensure they are thorough and appropriate for the types of securities held by the fund. The SEC's past pricing guidance is instructive with respect to some common fair value situations. Boards should discuss any additional fair value provisions that might be appropriate with fund personnel – including compliance staff, fund accountants and independent auditors – and consultants, if helpful. Directors are not expected to be valuation experts, but they are expected to seek out expertise to help them perform their monitoring responsibilities over the fair value pricing process.

Approval of Fair Value Methodology: Directors are responsible for approving the fair value methodology used to price fund securities. Pricing personnel need to provide specific descriptions of the methodology used to fair value securities to enable directors to perform their oversight responsibilities. Generalized descriptions (e.g., "fund pricing personnel considered all of the facts and decided on x price") are not sufficient for this purpose. The methodology should be described in terms of what factors were specifically considered and why these factors were appropriate and relevant. If directors do not understand the methodology or why it was used, they are obligated to follow up until they have the necessary information.

Fair Value Process: One well-known annual industry fair value survey indicates that boards structure the fair value process in a number of different ways, with the vast majority delegating fair value to an adviser's internal pricing committee. These committees sometimes have an interested director as a member. Independent directors are not commonly involved in actually setting fair value prices. Regardless of the structure, there are some issues about which boards should be alert:

  • Portfolio manager involvement: This is an area of conflict that warrants close attention by boards. The extent of portfolio manager involvement in fair valuing fund securities should be described in writing, along with the procedures employed to mitigate conflicts of interest. Directors should seek assurance that adviser pricing committees have sufficient independence controls and safeguards in place so as to mitigate conflicts of interest present in the pricing process. Advisers should be able to articulate in writing these controls and safeguards.
  • Continuously fair valued securities: Directors should be alert to securities that are fair valued over long stretches of time. In these circumstances, directors should consider whether there is a robust process around confirming the fair valued prices on a regular and frequent basis.
  • Matrix or model-priced securities: Securities that are priced pursuant to a service provider matrix or model are fair valued securities for all intents and purposes. Directors should understand why the matrix/model is designed to produce reasonable security prices. Service providers should prepare reasonably detailed, written explanations for matrices/models to facilitate director understanding.
  • Backtesting of fair valued securities: No fair value process is foolproof so backtesting is a best practice, and directors should understand the adviser's backtesting program. The SEC cited the Morgan Keegan directors for reviewing testing of only a portion of fair valued securities. Directors may consider asking: "what is not covered by the backtesting?"
  • Board/committee reports: Reports to boards should be clear, concise, thorough and understandable. The Morgan Keegan case cites brief, boiler plate-type reports to the board. The circumstances requiring a security to be fair valued, the price used and the specific methodogy applied should be evident.
  • Price confirmations: In some fair value situations, advisers will seek prices from brokerdealers or others. Directors should ask questions about the reliability of these pricing sources.
  • Pricing policies: The SEC faulted the Morgan Keegan funds' pricing procedures for not being specific enough. Directors and advisors should glean from this claim that at least as to thinlytraded securities, especially derivatives, the pricing procedures and processes may need to be revisited with an eye to providing more specifics about the fair value methodologies that may be applied and the testing and verification that will be performed. It should be noted, however, that the SEC has stated that mechanistic or formulaic pricing methodologies are not appropriate for fair valuations.


Omnibus Account Oversight Issues

Directors who oversee mutual funds that distribute significantly through third-party intermediary channels may need to consider several emerging issues with respect to oversight of intermediary omnibus accounts. Intermediaries may be broker dealers, retirement plan record keepers, banks or others. Intermediary omnibus accounts are those in which there may be one account on the fund transfer agent's books that is held of record in the name of the intermediary but which may have hundreds or thousands of sub-accounts consisting of the intermediary's clients. The intermediary in these omnibus arrangements performs fund services for the sub-accounts that the transfer agent would normally provide if the sub-accounts were held directly with the transfer agent. These services consist of, for example, performing sub-accounting and transaction processing, providing prospectuses, annual reports, proxy statements and tax forms, and forwarding dividend checks.

There are good reasons why fund directors should be mindful of these types of omnibus account arrangements. First, they have been growing exponentially over the past several years and they can be – and often are – much more expensive for funds than paying the transfer agent to perform similar services.3 The increased expense reduces shareholder returns. Second, omnibus arrangements present risks to funds because of the potential for shareholders to receive subpar services. In that regard, it should be noted that there have been several recent SEC enforcement actions against large broker-dealers (acting as fund intermediaries) for failing to deliver fund prospectuses within the required three-day time period after a fund trade. Smaller record keepers can present somewhat similar issues because of potentially reduced operational capabilities. In one recent enforcement action, the Financial Industry Regulatory Authority (FINRA) and several state securities regulators fined a fund intermediary and ordered restitution to shareholders for operational and compliance failures in the processing of fund orders, which resulted in mispriced fund shares. Finally, there is the risk that the compensation payments to some intermediaries with omnibus accounts, who may also be selling fund shares, may be related to distribution. If so, that portion of the payments cannot be paid out of fund assets, except through a board-approved Rule 12b-1 Plan.4

The SEC conducted a "targeted review" in 2012 of payments to fund intermediaries explaining "...the SEC OCIE staff has announced their interest in closely examining mutual fund distribution arrangements with a view towards ensuring that, as broker-dealers experience declining revenue streams, they not look to increase their [fund service] fees to compensate them for distribution expenses." The SEC recently announced that its exam priorities in 2013 will focus, among other things, on payments to intermediaries and distributors and the services they provide. The SEC has also announced that it will conduct a sweep exam this year on the same subject. For all of the foregoing reasons, we believe that some fund directors may need to consider whether the current level of oversight of omnibus arrangements is appropriate for their fund complexes.

Questions that fund directors may want to ask include: What is the appropriate fee level for the intermediary? What impact will the shift to omnibus arrangements have on transfer agent economics? What assurance can the board have that fund shareholders will not receive subpar services? Are sub-transfer agency fees really disguised distribution fees?

Appropriate Compensation

Boards have addressed the question of appropriate compensation in different ways. Some boards have taken the position that intermediaries should receive no more in fees than the fund's transfer agent. Other boards have recognized that different intermediaries may provide different bundles of services for fund shareholders and may have different capabilities and scale, and these boards have set fees accordingly. In that regard, an analysis of average underlying account size among intermediaries may help provide some perspective on exactly how much each type of intermediary is being paid for performing the same services. If each intermediary is performing roughly the same bundle of services but with dramatically different account sizes, a board may conclude, for example, that a flat asset-based fee may not be appropriate for all types of intermediaries.

Transfer Agent Economics

Another but perhaps less obvious issue related to the compensation paid to intermediaries is what effect the growing number of omnibus arrangements have on the economies of scale that the fund's transfer agent can achieve in its operations. That is, as more assets move to omnibus arrangements, the transfer agent will have fewer assets against which to spread its fixed costs of providing its services. Fund boards may want to inquire as to the steps that fund service providers are taking to monitor this issue to ensure that the fund's direct shareholders are not harmed by rising costs.

Quality of Services

Funds must take reasonable steps to ensure the quality of the recordkeeping and transaction processing services provided to fund shareholders through omnibus arrangements. Currently, there are no regulations requiring fund intermediaries to provide a board with the information necessary to oversee the intermediary's quality of services. Such requirements, if any, would need to be included in the intermediary's service contract with the fund. Fund boards may consider how they can monitor the service providers' due diligence, if any, on intermediaries and assessments of their capabilities. Moreover, as additional omnibus arrangements are entered into with less sophisticated intermediaries, boards may want to consider whether and how fund service providers can assess their capabilities.

Specific areas of inquiry for a board may consist of the following, as applicable:

  • What standards are required to be met by the intermediary prior to being approved for an omnibus arrangement and to continue once approved? Are they reasonable?
  • What do the agreements with intermediaries require in terms of service standards?
  • Do the relevant fund service providers have a clear understanding of the operational and compliance capabilities and the financial wherewithal of intermediaries?
  • How much transparency do the service providers have to sub-account data?
  • What rights does the fund have to monitor the quality of services being provided (e.g., annual audit, exception reporting, SSAE 16 (formerly SAS 70), or Financial Intermediary Controls & Compliance Assessment (FICCA)), and are these sufficient oversight mechanisms?
  • If the monitoring of intermediaries is not uniform (e.g., risk-based monitoring), how are the monitoring decisions made?
  • Do the service providers have the operational capability to manage and monitor an increasing number of omnibus arrangements?
  • What contingency plans are in place to address the failure of an intermediary to reasonably fulfill its omnibus arrangement obligations?
  • What information will the board receive regarding these relationships on an on-going basis?

The answers to these questions, among others, will help fund boards to exercise appropriate oversight over omnibus arrangements based on their circumstances.

We recognize that some of the foregoing practices may not be practicable for all fund groups, especially smaller ones. For example, some funds may not have the staff or resources to evaluate the quality of services provided by fund intermediaries or their capabilities or to hire consultants to do so. Many smaller funds also may not have the necessary leverage to obtain information, even certifications, from some intermediaries.

Unauthorized Distribution Payments

In order to determine if intermediaries are being indirectly compensated for distribution, boards need to have a good understanding of intermediaries' costs of shareholder servicing. But this cost information is generally not available in the industry. Intermediaries themselves provide varying levels of transparency into the number of sub-accounts they have, and their costs of providing services to these sub-accounts is largely unavailable. This leaves boards to rely largely on their service providers' or consultants' assessments of reasonability of service fees.

Intermediaries have considerable leverage at the current time because of the increasing consolidation of assets under their control. So they generally are in a position to command prices for sub-accounting services that in some cases may be in excess of the cost of providing them and a reasonable profit to the intermediary. Often, the investment adviser is shouldering payments to intermediaries in addition to those payments made by a fund. The specter of ever-increasing revenue sharing payments by the fund sponsor brings with it concerns with respect to whether advisory fees are being directly or indirectly used to pay for distribution.

The topic of intermediary services to funds and compensation for fund servicing is one that would seem ripe for the SEC to address.

Governance Issues

SEC Exam Priorities – Fund Governance

The SEC recently released its exam priorities for 2013. Among other things, the release emphasizes the staff's interest in ensuring that advisers are providing complete and accurate disclosures to fund boards and that "fund directors are conducting reasonable reviews of such information in connection with contract approvals, oversight of service providers, valuation of fund assets, and assessment of expenses or viability." We know from recent experience with clients and SEC exams that the staff is focusing significantly more than in the past on requesting and reviewing documentation around these types of issues, including board and committee agenda materials, board and committee minutes, fund and adviser procedures and other similar documents. For this reason, it is important that the documentation with respect to the disclosures and the board's or committee's deliberations with respect to the issues reflect a robust process. Particular attention should be paid to the current areas of focus, as outlined above. In light of the SEC's recent exam focus, boards may want to consider reviewing with their counsel the following questions:

  • Is the documentation of our deliberations satisfactory or could/should it be enhanced? In particular, does the documentation evidence the board's/committee's follow up on issues from one meeting to the next where appropriate?
  • Are the advisers and other service providers giving the board clear and adequate disclosures about their material conflicts of interest?
  • Is the documentation provided in connection with oversight of service providers sufficiently detailed as to their activities so as to provide the board/committee with a basis for exercising its oversight?
  • Do reports on valuation need to be more detailed and/or clearer? Are the reports timely given?
  • Can the board/committee do a better job of overseeing fund expenses? If so, how?
  • Does the board appropriately consider liquidating funds that are not viable? Does the board have regular discussions about fund viability? Are those discussions appropriately memorialized in minutes of the proceedings?

Improving Director Performance

There is no question that regulators have increased the regulatory burden on independent directors in recent years as a result of multiple scandals in the mutual fund industry, market and economic downturns and recent regulatory actions. These events have, in turn, increased director responsibilities, workload, performance expectations and time commitments. Consequently, boards generally appear to be more concerned than in past years with director performance.

The board chair or lead independent director, or in some cases a committee charged with governance responsibilities, is usually the responsible party for dealing with director performance. Yet individual director performance is one of the more sensitive and difficult issues for a mutual fund board, in large part because of the collegial, peer relationships among directors that are so important for an effective board.

Most mutual fund boards engage in an annual self evaluation, but the standard evaluation generally focuses more on overall board and committee functioning, relationships with service providers and board meeting related issues than it does with individual director performance.

We have observed that some boards have engaged outside consultants to help perform a peer review, whereby each director evaluates himself/herself, in addition to evaluating other members of the board. This peer review can be an effective way of confidentially gathering factual information from the entire board with regard to improving individual director performance and may assist the board and its chairs and committees in dealing with any issues.

Managing Fund Underperformance

Every fund board struggles to some degree with respect to striking the right balance between oversight and management. On the one hand, fund directors (especially independent directors) are required to be aggressive watchdogs on behalf of fund shareholders. But fund directors also have a role in helping and coordinating fund management to improve the prospects of the funds they manage.

Striking the appropriate balance may seem especially difficult when fund performance seriously lags the benchmark and/or peers. A board may be tempted to penalize the adviser by lowering advisory fees. But one possibly more constructive, and, in our experience, usually more productive, first response may be to ask the adviser to produce a performance remediation plan, which the board should be prepared to critique and oversee. The board may also want to consider inviting the portfolio manager and chief investment officer to report on the plan's operation at Board meetings until the performance problem is resolved.

Forcing the adviser to produce a written remediation plan may have a better long-term impact on performance because it causes the adviser to think critically about the cause of the underperformance and how to correct it. This type of response permits fund directors to provide the adviser with the benefit of their management skills and insights through their critiques and suggestions with respect to the remediation plan and can potentially foster a better relationship between the directors and the adviser. It also benefits the shareholder in the long run, who is usually more interested in better performance than fluctuating advisory fees.

Risk Management

Risk management practices continue to evolve in the mutual fund industry. By way of background, there is no regulatory requirement that a mutual fund, investment adviser or other service provider have a risk management program in place. Nevertheless, SEC examiners ask for the funds' risk management program and related information during routine examinations; it has become an accepted best practice in the industry and can be one effective tool in assisting boards in overseeing fund complexes. The more effective risk management reports we have seen tend to be those that are specifically targeted to the key risks of the fund complex, presented in a format that is easily digestible for directors. We encourage directors to request that management's risk management reports contain key operational, reputational, financial and investment risks and not just compliance risks.


Fund directors' responsibilities and workloads continue to increase. It is therefore important that directors be aware of industry practices and current regulatory developments in order to meet their obligation of representing shareholders.


1 E.g., In the Matter of Top Fund Management, Inc. and Barry Ziskin, (manager engaged in options trading for speculation when prospectus limited investments in options to hedging); In the Matter of Claymore Advisors, LLC (adviser failed to disclose investments in and risks of put options and variance swaps, which resulted in large losses).

2 In the Matter of Morgan Keegan Asset Management, Inc.

3 It should be noted, however, that some intermediaries may be charging higher fees because they are providing additional services to their customers that are not provided by the transfer agent. But, if so, this then raises the question of whether fund shareholders should be subsidizing these additional services.

4 See SEC Letter to Investment Company Institute Regarding Fund Supermarkets (Available Oct. 30, 1998).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Diana E. McCarthy
In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions