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The NED has been consulting far and wide on developing a fund board capability rating system to help investors over the last couple of months. The result of that consultation is to start this process with a form of recognition for those funds that have passed a threshold in constructing a board that investors can have confidence in.

We would like to find a way of rewarding those funds that have made the effort to construct impressive boards and, at the same time, to encourage others that are not in this category to do more to move on up into it.

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Almost every entity connected to a fund is well-regulated – indeed over-regulated - except for the one that matters most: the board itself. Why is that?

The last thing that anyone needs right now is yet more regulation. Nonetheless it is worth asking why the focus of regulatory oversight in this business has always been on the role and responsibilities of a board’s directors rather than on the board itself.

It is of course the case that all the vital activities that a board carries out, and for which it is responsible, are regulated.

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Director selection offshore is still too often based on who you know, not what you know. References are not often checked and it still has the same clubby feel to it as it had decades ago. But the roles and responsibilities of directors have grown enormously since then. Shouldn’t there be more of a change in the way offshore fund directors are selected too?

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Jersey has introduced legislation to establish Limited Liability Companies. Jersey Finance says that  new legislation ‘has the potential to significantly enhance pan-Atlantic business with the US’. The Draft Limited Liability Companies Law has been approved by Jersey’s government meaning that limited liability companies (LLCs) can now be established in Jersey for the first time.

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The CSSF’s Circular of August 23 in Luxembourg is ostensibly all about combating money laundering and terrorist financing. But it covers pretty much every aspect of how a fund management company in Luxembourg should operate, formalising many practices.
 
The law firm Allen & Overy has covered what is included in this Circular. Allen & Overy’s coverage  goes on for 140 pages. There is a huge amount of detail in it. Implementation and compliance with the Circular looks like it will add significantly to costs.

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