If the fund management contract remains silent on the level of diligence of the manager, the law implies a standard of care. The agreement implies that the AIFM must exercise the standard of competence and diligence of an advisor duly competent in this field. The key elements are that advice must be given carefully and should be reasonable. If agents with a sufficiently large fund try to impose a higher level of care, the manager will often find it difficult to resist. In other words, no risk control or performance statement in the legal agreement guarantees a level of performance of the Fund! Suddenly, following the announcement of litigation by Unilever`s pension trustees, underperformance is a “hot topic”. Directors must now think carefully about how they assess the relative and absolute performance of executives based on the performance criteria they have set out in the agreements. How clean is the “clean” tax? Does it include, for example, commissions, management fees for the manager`s internal investment funds and deposit fees? These are all questions you should raise if the position is not clear to you! Most AIFAs would oppose any recovery of basic administrative costs, but could grant a clawback on previously paid performance fees. It should be ensured that, in areas where there is a separate conservation agreement, that agreement fits perfectly into the fund management agreement. When concluding a new contract for the management of discretionary fund management funds, the ability of the Fund to conclude the agreement and, in particular, to transfer the investment powers, indemnities, etc. set out therein should be examined.
In practice, this should not be a problem. However, consider whether the appointment can also give the manager special powers to lend shares. B or lend against funds assets that may not have been previously discussed during the presentation of the beauty parade. This is something that I find quite difficult to understand. Unfortunately, this is not a temporary fad, although the Labour pension fund may have made some politically incorrect investments. . . .