Updated Corporate Governance Manual for Directors of Investment Companies and Collective Investment Schemes
News    ·   29-09-2014

AUTHOR: General

In the post-AIFMD regulatory environment, fund directors will play a nuanced role in overseeing and monitoring fund operations. In lieu of the aforesaid, the Malta Financial Services Authority (the “MFSA”) has recently amended the Corporate Governance Manual for Directors of Investment Companies and Collective Investment Schemes (the “Manual”) in order to align its contents with the requirements imposed by AIFMD. 

Although the amendments made are not extensive, they provide directors with a basic ‘blueprint’ which will assist them in navigating the new regulatory architecture. Chief amongst the amendments, the Manual requires directors to: (i) disclose conflicts of interest to the board; (ii) establish the extent to which responsibility will be delegated to the AIFM; and (iii) liaise closely with external AIFMs (where appointed) in order to ensure the AIFMD’s requirements are complied with. Moreover, to the extent that the fund deals in derivatives falling within the remit of EMIR, the board of directors will need to appoint a service provider (this is likely to be the investment manager) in order to ensure compliance with the Regulation. 

The novel, AIFMD-inspired standards will function as an important bulwark to ensure the application of high-quality corporate governance standards within the fund industry. 

In concluding, it is also apt to note that a number of sporadic, non-material amendments were made to other areas of the Manual including: (i) directors’ roles; (ii) board proceedings; (iii) board structure, size and composition; (iv) the contents of reports from the investment manager, custodian, administrator and auditor; (v) indemnity and insurance; (vi) anti-money laundering; (vii) crisis management; (viii) fund termination; and (ix) director resignation.

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