Fund Governance: Defining New Board Practices
ILA and PwC 7th annual conference on fund governance highlights governance frameworks and best practices as key focus
The 7th annual Fund Governance Conference held by the Luxembourg Institute of Directors (ILA1) in conjunction with PwC Luxembourg raised regulatory complexity, governance frameworks and professional standards as key matters in the fund industry. The conference, held on 26 January 2012 at the Chamber of Commerce, was attended by more than 130 ILA members, fund board directors and industry representatives.
Summarising key topics addressed during the conference, John Parkhouse, ILA Fund Committee Chairman and Partner with PwC Luxembourg, reaffirmed: "We have a need for a more defined governance model, a key challenge of which is to introduce suitable guidance while avoiding excessive regulation."
In the wake of the recent crisis and political interest in governance matters, ILA sought to provide practitioners with up-to-date information on recent regulatory developments as well to offer a forum for discussion.
Updates on the recent regulatory agenda
A wide variety of subjects were presented, including board responsibilities with regards to the KIID2, UCITS IV and AML requirements; developments in fund regulation in the jurisdictions of Ireland, UK and the US; board oversight responsibilities over the Risk Management function; the impact on cost and performance of different fund governance models; and ILA’s initiative regarding best practices. Pierre Krier, President of IRE3, also explored the potential impact on the fund industry of the current European Commission proposals to further regulate the external audit profession.
Role of directors and application of a code of conduct
As a result of the 2008 crisis, political interest in governance matters has intensified. With an array of new regulations coming into force over the past few years at national and supra-national levels, the complexity of the director’s job has undeniably increased. In this context, it is extremely important to ensure that boards understand their tasks and responsibilities.
The practice of fund governance may be greatly impacted by a recent jurisprudence known as the "Weavering Case"4. For the first time, a judge provided a detailed roadmap of best practices for fund governance. This case demonstrates that regulation need not necessarily be augmented as long as best practices are clarified and widely adopted. Similarly, in Ireland, a voluntary Corporate Governance Code was developed by the industry represented by the fund association (IFIA), at the invitation of the Central Bank.
In Luxembourg, ILA is working with ALFI and the CSSF5 to establish an enhanced governance framework. In this regard, the premise of institutionalising a profession for directorship was also debated during a panel session which included the CSSF. In addition, a major initiative by ILA to help raise the awareness of best practices is a tool called “Frequently Asked Questions”. It is designed to help directors, in particular those coming from foreign jurisdictions, become up-to-date with the Luxembourg fund governance framework.
"The development of a best practice governance framework is going to be a joint effort of the whole industry. However, I am confident that the Luxembourg fund industry is well positioned internationally to lead the debate on developments in fund governance practices in the future" said Mr Parkouse at the close of the event.
The annual ILA conference is one of the most significant events in the fund industry calendar for directors, dirigeants and all others involved in the governance of funds. The conference is a focal point for discussion and idea exchange. Panellists and speakers are drawn from fund boards, prestigious law firms, asset management firms, service providers and regulatory bodies. For further information, please contact ILA (www.ila.lu).
Editor’s notes:
- PwC Luxembourg (www.pwc.lu) is the largest professional services firm in Luxembourg with more than 2,100 people employed from 57 different countries. It provides audit, tax and advisory services including management consulting, transaction, financing and regulatory advice to a wide variety of clients from local and middle market entrepreneurs to large multinational companies operating from Luxembourg and the Greater Region. It helps its clients create value they are looking for by giving comfort to the capital markets and providing advice through an industry focused approach.
- The global PwC network is the largest provider of professional services in audit, tax and advisory. We’re a network of independent firms in 158 countries and employ close to 169,000 people. Tell us what matters to you and find out more by visiting us at www.pwc.com and www.pwc.lu.
1: Institut Luxembourgeois des Administrateurs
2: Key Investor Information Document
3: Institut des Réviseurs d’Entreprises
4: The Weavering case is a judgment delivered by the Grand Court of the Cayman Islands in the case of Weavering Macro Fixed Income Fund v Peterson and Ekstrom. It was the first time that a Cayman court recognized directors to be personally liable for the losses of a fund. The ruling was also remarkable as it gave a clear roadmap of how directors should have exercised their responsibilities at each stage of the fund life
- Carole de Samucewicz
Media Relations - Tel: +352 49 48 48 2507
