Fiduciaries’ Obligations and Climate Governance

2020 ◽  
pp. 63-110
Author(s):  
Janis Sarra
Keyword(s):  
Financial Risk ◽  
Service Providers ◽  
Fiduciary Duty ◽  
Investment Funds ◽  
Climate Governance ◽  
Securities Law ◽  
Disclosure Requirements ◽  
Proactive Measures ◽  
Directors And Officers ◽  
Asset Managers

Chapter 4 carefully examines the precise contours of the legal duties of directors and officers of companies, of pension fund trustees, their investment managers and service providers, and of asset managers and investment funds. It explores how these duties arise in respect of climate-related financial risk and opportunities. It discusses potential corporate law remedies for failing to address material climate-related risks, including liability for breach of directors’ duty of care and fiduciary duty, as well as oppression remedy provisions in the corporate laws of some countries. It examines fiduciary duties of pension fiduciaries and other institutional investors, exploring how these duties can be met with effective climate governance, oversight of managers, and proactive measures to address climate risk. It explores securities law disclosure requirements and the notion of materiality that guides what corporate officers need to disclose to investors.

Hong Kong Securities and Futures Commission (SFC) highlights operating, control and compliance deficiencies in asset management industry

2018 ◽  
Vol 19 (1) ◽  
pp. 63-68 ◽  
Author(s):  
Anne-Marie Godfrey
Keyword(s):  
Hong Kong ◽  
Asset Management ◽  
Service Providers ◽  
Governance Structures ◽  
Investment Fund ◽  
Extensive Experience ◽  
Investment Funds ◽  
Content Type ◽  
Best Execution ◽  
Asset Managers

Purpose To examine the nine common areas of non-compliance in managing investment funds and discretionary accounts, detailed in a Hong Kong Securities and Futures Commission (SFC) circular dated September 15, 2017, directed at SFC-licensed asset managers. Design/methodology/approach Discusses a July 2017 circular indicating the SFC’s general concerns and analyzing the following nine common areas of non-compliance cited in the September 15, 2017 circular: (1) inappropriate receipt of cash rebates giving rise to apparent conflicts of interests, (2) failure to follow investment-suitability and discretionary account mandates during solicitation, (3) failure to implement liquidity-risk management processes, (4) deficiencies in governance structures and fair-valuation procedures, (5) deficiencies in systems for ensuring best execution, (6) failure to safeguard fair order allocation, (7) inadequate controls for protection of client assets, (8) inadequate systems to comply with investment restrictions, and (9) inadequate safeguards to address market misconduct risk. Findings The nine examples of non-compliance provide a useful insight into key “problem areas” indicated to currently be of particular concern to the SFC. Practical implications All SFC-licensed asset managers would be well advised to revisit their internal governance structures and operational policies and procedures in order to ensure that they are compliant with applicable standards and requirements. Originality/value Practical guidance from a lawyer with extensive experience advising investment managers and advisers, fund administrators, trustees and other fund service providers on investment fund-related issues.

Inline Inspection: Both Effective Data Collection and Interpretation Needed to Achieve High Quality Reporting Results

2010 ◽  
Author(s):  
James R. Walker ◽  
Paul Mallaburn ◽  
Derek Balmer
Keyword(s):  
Financial Risk ◽  
Service Providers ◽  
Holistic Approach ◽  
Poor Quality ◽  
International Standards ◽  
Quality Reporting ◽  
Certification Standard ◽  
Consensus Standard ◽  
Inspection Data

Historically, pipeline operators have tended to place more weight on inline inspection tool specifications than on the inherent design and reporting capabilities of the service providers themselves. While internal collection of integrity data is very important, it’s imperative that vendors, also, have high levels of expertise and effective quality control systems in place to successfully analyze exceedingly high volumes of inspection data. The quality of inspection information is vital to assessing if a pipeline is fit for purpose now and/or into the future. Integrity managers attempting to reduce overall operating risk by making decisions based on inaccurate or poor quality reporting are in fact exposing their networks to greater safety and financial risk. Recognizing these risks and that inline inspection (ILI) is an overall system that needs to be formally qualified, operators and ILI service providers have collaborated to develop several international standards. The most recent is the umbrella API-1163 industry consensus standard, which is now being widely adopted, primarily in USA. This standard provides requirements and recommended practices for qualification of the entire ILI process. Two companion standards: ASNT In-line Personnel Qualification and Certification Standard No. ILI-PQ and NACE Recommended Practice In-Line Inspection of Pipelines RP0102 combine to address specific requirements for personnel who operate and analyze the results of ILI systems. In Europe, the Pipeline Operators Forum (POF) has, also, established specific requirements for ILI reporting processes and data formats. However, these standards do not define how operators and vendors must meet these requirements. To follow will be a story about how an ILI service provider embraced a holistic approach to address these standards’ requirements, in particular in the areas of data analysis, reporting, and dig verification due to their significant importance in assuring the final quality of its deliverables. A key outcome desired will be to provide operators with greater insight into what best practices and technologies ILI service providers should have embraced and invested in to insure reliable service delivery.

scholarly journals The Influence of Large Investment Funds

2021 ◽  
pp. 231-244
Author(s):  
Helen Campbell Pickford
Keyword(s):  
Financial Performance ◽  
Institutional Investors ◽  
Natural Capital ◽  
Active Role ◽  
Investment Funds ◽  
Asset Managers ◽  
Large Investment ◽  
The Way

The adoption of the Economics of Mutuality will depend on institutional investors promoting it through active engaged investing. Chapter 18 describes how some investment funds are taking an active role in managing the companies in which they are invested. It involves them acquiring significant blocks of shares that are held for extended periods of time and managed directly by asset owners themselves instead of by intermediary asset managers. Critical to this is the way in which the performance of their investments is monitored and measured. Alongside measuring financial performance over longer periods of time than is conventionally the case, performance needs to be assessed in relation to other indicators of performance related to human, social, and natural capital.

scholarly journals Responsible investing in South Africa: Drivers, barriers and enablers

2008 ◽  
Vol 39 (4) ◽  
pp. 37-49 ◽  
Author(s):  
S. Viviers ◽  
N. S. Eccles ◽  
D. De Jongh ◽  
J. K. Bosch ◽  
E. V.D.M. Smit ◽  
...  
Keyword(s):  
South Africa ◽  
Service Providers ◽  
Responsible Investing ◽  
Telephone Interviews ◽  
Advisory Service ◽  
Barriers And Enablers ◽  
Increased Risk ◽  
Fiduciary Responsibility ◽  
Key Drivers ◽  
Asset Managers

Given growing interest in the phenomenon of responsible investing (RI) in South Africa, this study set out to identify and empirically evaluate the most pertinent drivers, barriers and enablers of RI locally. Telephone interviews were conducted with a sample of pension funds, asset managers and advisory service providers during 2007. All three groups of respondents viewed fiduciary responsibility as one of the most important barriers to RI in South Africa. More legislation/regulation and evidence for increased risk-adjusted returns from local RIs were identified as key drivers of RI in South Africa, whereas the two most important enablers were seen as mainstream RI benchmarks and co-operative initiatives.

7 Governance Issues in Offshore Companies Used as Private Investment Funds

2018 ◽  
Author(s):  
Spangler Timothy
Keyword(s):  
Board Of Directors ◽  
Private Investment ◽  
The United States ◽  
Fiduciary Duty ◽  
Duty Of Care ◽  
Cayman Islands ◽  
Investment Funds ◽  
The Board Of Directors ◽  
The Uk

This chapter examines issues of governance arising from the use of offshore companies as private investment funds. Funds established in offshore jurisdictions are often structured as limited companies that issue shares to investors. Governance issues can arise in offshore companies when voting rights are separated from economic participation. The chapter first considers the role of the board of directors in private investment funds before discussing taxation issues affecting offshore companies used as private investment funds in the UK and in the United States. It then explains the duties of directors under Cayman Islands law, including fiduciary duty, duty of care, diligence, and skill, and duty of confidentiality. It also describes the composition of the board of directors, its meetings, relationship with the fund manager, and responsibility for approval of fund documentation.

5 The Regulatory Duties Arising from the Provision of Investment Advisory and Management Services

2018 ◽  
Author(s):  
Spangler Timothy
Keyword(s):  
Financial Services ◽  
Public Investment ◽  
Private Investment ◽  
The United States ◽  
Fiduciary Duty ◽  
Regulatory Regime ◽  
Investment Funds ◽  
Investment Advisers ◽  
The Uk ◽  
Management Services

This chapter examines the regulatory duties of investment managers arising from the provision of investment advisory and management services. Managers of private investment funds that are authorised or regulated as investment advisers or managers can owe regulatory duties arising under the Financial Services and Markets Act 2000 (FSMA) in the UK and the Investment Advisers Act of 1940 in the United States. The chapter begins with a discussion of the UK Financial Conduct Authority’s (FCA) regulation of the conduct of firms authorised under the FSMA, including collective investment schemes, public investment funds, and fiduciary duty in the financial services regulatory regime. It then considers the FCA’s regulatory response to private investment funds as well as the U.S. Securities and Exchange Commission’s compliance programme for investment advisers and managers primarily under the Advisers Act. It concludes with an analysis of financial services regulation of fiduciary duties.

The Tax Framework of Hedge Funds

2017 ◽  
Author(s):  
François-Serge Lhabitant ◽  
Michel Brocard
Keyword(s):  
Hedge Funds ◽  
Government Regulation ◽  
Cayman Islands ◽  
Investment Funds ◽  
Foreign Investors ◽  
Limited Partnership ◽  
Disclosure Requirements ◽  
Size Number ◽  
Tax Exempt ◽  
Set Up

Hedge funds have grown in size, number, and complexity, but continue to operate largely outside the scope of government regulation and with limited disclosure requirements. This provides them with several advantages over institutional investors such as traditional investment funds. Hedge funds also often reap substantial benefits from special tax provisions that are increasingly criticized and deemed no longer appropriate. This chapter reviews the legal and operational structures typically used by hedge funds and their managers, sponsors, and investors to optimize their tax setup. In particular, it discusses the case of U.S. domestic hedge funds set up as a limited partnership as well as the case of offshore funds based in the Cayman Islands. It also analyzes the specificities of U.S. taxable and U.S. tax-exempt investors as well as foreign investors.

scholarly journals On the Impossibility of Fair Risk Allocation

2016 ◽  
Vol 16 (1) ◽  
pp. 143-158 ◽  
Author(s):  
Péter Csóka ◽  
Miklós Pintér
Keyword(s):  
Performance Evaluation ◽  
Financial Risk ◽  
Capital Allocation ◽  
Equal Treatment ◽  
Insurance Companies ◽  
Strong Monotonicity ◽  
Risk Allocation ◽  
Investment Funds ◽  
Coherent Measures Of Risk ◽  
Measures Of Risk

AbstractAllocating risk properly to subunits is crucial for performance evaluation and internal capital allocation of portfolios held by banks, insurance companies, investment funds and other entities subject to financial risk. We show that by using coherent measures of risk it is impossible to allocate risk satisfying simultaneously the natural game theoretical requirements of Core Compatibility and Strong Monotonicity. To obtain the result we characterize the Shapley value on the class of totally balanced games and also on the class of exact games as being the only risk allocation method satisfying Strong Monotonicity, Equal Treatment Property and Efficiency. Moreover, we clarify and interpret the related game theoretical requirements that have appeared in the literature so far and have been applied to risk allocation.

4 The Legal Duties Arising from the Provision of Investment Advisory and Management Services

2018 ◽  
Author(s):  
Spangler Timothy
Keyword(s):  
Private Investment ◽  
Fiduciary Duty ◽  
Duty Of Care ◽  
Fund Manager ◽  
Investment Funds ◽  
Fund Managers ◽  
Legal Relationship ◽  
Legal Structures ◽  
The Impact ◽  
Management Services

This chapter discusses the legal duties owed by investment managers to their clients arising from the provision of investment advisory and management services. It first considers the key documents that establish the legal relationship between fund managers and investors before explaining the investment manager’s duty of care and fiduciary duty of loyalty to the client. It then examines the contracts involved in private investment funds between the fund vehicle and the fund manager, along with the fiduciary duties of directors of limited companies. It also analyses the impact of structure of investment management firms on legal duties, taking into account multiple management vehicles, the effect of fund management economics on legal structures, and the dividing line between fund manager and investors.

1 Introduction to Private Investment Funds

2018 ◽  
Author(s):  
Spangler Timothy
Keyword(s):  
Corporate Governance ◽  
Hedge Funds ◽  
Financial Services ◽  
Private Equity ◽  
Private Investment ◽  
Fiduciary Duty ◽  
Regulatory Regime ◽  
Investment Funds ◽  
Equity Funds ◽  
Investment Manager

This chapter provides an introduction to private investment funds. It first considers the governance challenge in private investment funds that can be regarded as a need to improve the standard of corporate governance in the legal vehicles that comprise such funds. In particular, it examines the manner in which hedge funds and private equity funds affect the corporate governance of the portfolio companies in which they invest. The chapter proceeds by discussing governance issues arising from the use of partnerships vs. corporations as private fund vehicles, along with the consequences of governance failures and the function of private investment funds. It also analyses legal and regulatory issues surrounding the structuring and operations of private investment funds, the legal and fiduciary duties of the investment manager, and fiduciary duty in the financial services regulatory regime. Finally, it describes alternatives to centralised, top-down regulation of private investment funds.

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