21st October 2014
Ronan Daly, Partner at Centaur Fund Services, led a panel at the prestigious GAIM Ops conference in Wicklow, Ireland on 10th Oct 2014, discussing developments in fund governance. The discussion focused on ‘Designing a Balanced and Equitable Board’.
Ronan drew on his expertise gained over twenty years in the hedge fund industry and discussed three key areas to be considered when designing a board:
All too frequently, not enough thought is given to the mix of skill sets and expertise of board members. There is also a tendency towards assigning directors from similar backgrounds, which can lead to “group think” which can blind funds to potential challenges ahead.
“It is important to consider the fund structure, strategy and regulatory status when establishing a board”, says Ronan. “Individually, the directors must display strong business acumen and together they should display a balanced skill set. All too often, boards lack investment and investor experience, which can cause difficulties down the line when mangers need to be challenged on portfolio and compliance issues.”
In theory, the board of directors is continually reviewing and assessing itself at each board meeting in an informal manner. However, in practice, this evaluation process can be fairly weak. The Irish Funds Industry Association (IFIA) Corporate Governance Code now requires formal evaluation of board members and this new requirement is starting to change board behaviour.
“It is becoming more common for boards to assess board performance themselves and to make necessary changes. Directors are typically assessed under four criteria: meeting attendance, meeting contribution, comprehension of board materials and awareness of the market. Directors must fulfill these four criteria to ensure that the board reaches its full potential”, comments Ronan.
Regulation and Best Practice
The role of the board of directors has evolved significantly over the years. Regulation and increasing investor scrutiny have brought about meaningful change in board governance.
“Investor due diligence is now commonplace and to be welcomed. However, there is a danger of regulation becoming too restrictive, which could lead to a ‘box ticking’ culture”, remarks Ronan. He concludes, “It is imperative to widen the talent pool for funds and to ensure that boards display the experience, confidence and skills to ensure the decision making process is both effective and efficient.”
About GAIM Ops
GAIM Ops is the pre-eminent event in Europe for operational and due diligence executives. The conference draws a large crowd from the United States together with industry experts from across Europe.
About Ronan Daly
Ronan is a founding Partner of Centaur Fund Services He is a non-executive director of a number of investment funds.
Ronan has spoken at many conferences and written extensively on the funds industry.
[/vc_raw_html][/vc_column][/vc_row][vc_row full_width=”” parallax=”” parallax_image=”” sid=”” padding=”medium” vpadding=”medium” color_scheme=”” section_type=”” sp_top=”0″ sp_bottom=”0″ enable_border=”” enable_bottom_border=”” bg_type=”image” equal_height=”” background_style=”stretch” fixed_bg=”no” enable_parallax=”no” height=”content” video_ratio=”” bg_overlay=”” bg_overlay_color=”” bg_overlay_opacity=”0.4″ bg_overlay_dot=”no” enable_triangle=”” triangle_color=”” triangle_location=”top”][vc_column width=”1/1″ p_top=”0″ p_bottom=”0″ p_left=”0″ p_right=”0″ color_scheme=”” bg_overlay=”” bg_overlay_color=”” bg_overlay_opacity=”0.4″ text_align=”none”]