Global travel bans and lengthy quarantine periods in the midst of the COVID-19 pandemic have created a significant challenge for operators of investment funds. With numerous travel restrictions still in place, alongside the uncertain trajectory of the pandemic, boards of directors and service providers are continuing to introduce alternative solutions that enable them to follow structuring advice and maintain high standards of corporate governance whilst improving operational efficiency on a go forward basis. With increasing demands on an investment manager's time and attention in turbulent market conditions and a constantly evolving regulatory environment, a strong governance framework can deliver material efficiencies and afford a renewed focus on core management activities.
Board Composition - Independent Directors
Board composition is and has always been an important decision. The appointment of a professional, independent director can be invaluable in creating an appropriately qualified, balanced and diverse governing body. A well-composed board will include directors that have seen and helped resolve various situations a fund may face, are able to bring unique perspective to examining issues from a fiduciary viewpoint, and have the necessary knowledge and experience1 to provide effective leadership. Furthermore, the presence of experienced independent directors sends a strong signal to both investors and regulatory authorities that the board is applying corporate governance best practices and remaining abreast of local legislation.
Thoughtful board composition can also provide a solution to the limitations imposed by current travel restrictions where the fund's governance framework or constitutional documents contain requirements or restrictions on the convening of meetings. A board of directors that meets regularly, where the majority of the directors reside in the jurisdiction of the fund's establishment, protects against any challenges that may arise from onshore tax authorities or regulators as to where 'mind and management' and 'decision making' occur. In addition, while high quality, engaged independent directors add value throughout the life of a fund, these individuals play an especially important role when a fund is facing challenges. This may prove critical given the current environment which may require board meetings to be convened more urgently.
Company Secretarial & Board Support Services
A strong governing body can be significantly enhanced with professional company secretarial services and board meeting support. Good governance dictates that board meetings should be held regularly - at least annually or semi-annually and ideally quarterly depending on the activities of a particular fund. This can create a heavy administrative burden for the investment manager, especially during volatile periods and when coupled with specific policies and procedures regarding record keeping and documenting the process of decision making during board meetings. However, this can largely be mitigated by engaging a diligent industry partner who can assist with scheduling and coordinating attendance at meetings, disseminating notices and agendas to participants, providing teleconference and / or videoconferencing details, preparing and securely delivering board packs to meeting participants, preparing an action point list from each meeting and preparing and finalising meeting minutes.
Advances in technology and its application towards board meetings continues to evolve governance standards, while reducing the strain on a manager's internal resources. Furthermore, with the distinct possibility that in-person board meetings may not be possible for some time, the use of technology and videoconferencing has becoming increasingly important and may be a pivotal part of an effective meeting support package. The Maples Group utilises Nasdaq Boardvantage2 for bespoke online meeting and entity document management. This best-in-class software, with a highly intuitive interface, simplifies the storage and distribution of synced meeting materials and documents, allowing authorised representatives to access via a range of platforms, including smartphones and tablets, both online and offline, and allowing users to add private and shared annotations, highlights or drop pins to any file. The features and flexibility of this platform are especially necessary and useful as remote working continues.
Investor-driven demands for the highest standards of corporate governance have further intensified through the recent period of significant regulatory change and this dynamic is likely to prevail as funds face fresh challenges from the COVID-19 pandemic and the potential impact on performance, liquidity issues and operational challenges that may arise. With the actions of funds under ever-increasing scrutiny, managers can gain comfort from outsourcing activities such as board support to an industry partner with a robust infrastructure who takes a tailored approach to keeping clients ahead of regulatory changes and at the forefront of governance.
As a proactive industry partner who understands that flexible solutions may be required in this unprecedented environment, the Maples Group can provide any combination of experienced independent directors and tailored board support, including company secretarial services and hosting of board meetings. This can be done to meet specific client requirements, create additional capacity and also to ensure adherence to the highest standards of corporate governance.
2. Read more here: Nasdaq Boardvantage Board Portal & File Repository
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