Governance

Under Luxembourg law, the Board of an investment fund is liable towards investors for the proper discharge of the mandate it has received from them.

Corporate law unequivocally mentions negligent management as a reason for invoking the liability of Board members.

In the investment fund environment, the broad understanding of the term “management” encompasses the diversity of Luxembourg funds’ set-ups and their decentralised organisation, where all functions are traditionally outsourced to their management company/AIFM and/or directly to service providers (asset managers, fund administrators and distributors).

This set-up makes it difficult to identify the fund Board’s effective scope of activity, which clearly should not be limited to supervising delegated activities.

Allocation of tasks and understanding how the Board responsibilities may be materialised are some of the aspects which are covered by our experts.

Today’s legal and regulatory environment offers a plurality of options with regards to the set-up and the interaction between investment vehicles and their service providers.

This applies in particular to the relation between funds and their management companies and/or AIFM. The regulatory and legal toolbox allows solutions tailored to the specific needs and aspects of every project.

However to benefit from such flexibility, every project will require a clear definition and allocation of responsibilities between the different stakeholders. In the light of the above, the development and maintenance of effective governance frameworks becomes crucial.

Our regulatory consulting expertise driven by Arendt Regulatory & Consulting S.A. (ARC) has extensive experience in structuring and implementing governance frameworks, which comply with the increased regulatory and legal requirements as well as with the specific client’s needs.

Thanks to our long-standing exposure to governing bodies of regulated firms, our regulatory consulting expertise driven by Arendt Regulatory & Consulting S.A. (ARC) proposes independent reviews of governance models and challenges, if need be, the functioning of boards and management committees.