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In addition, each Fund ManCo will be required
to designate an independent director (who
could be the chairperson of the board) to
undertake an organisational effectiveness
role and who should not perform any of the
six managerial functions.
The purpose of the organisational effectiveness
role is to keep the effectiveness of the
organisational arrangements of the Fund ManCo
under review, and it will also include monitoring
conflicts of interest and internal audit unless
monitoring of internal audit is allocated to a DP.
The types of matters covered under this role
include (but are not limited to):
• Reviewing the organisational structure and
arrangements of the Fund ManCo, including
those concerning managerial functions, and
suggesting improvements for consideration
by the board.
• Keeping board composition under review and
reporting to the board.
• Organising periodic board effectiveness
evaluations and overseeing how well the
decisions taken by the Fund ManCo and the
arrangements for the supervision of delegates
are working in the interests of investors.
• And considering the conflicts of interest
affecting the Fund ManCo and its funds under
management and initiating action, such as
escalation to the board, where these are
having, or are likely in the near future to have,
an adverse impact.
These changes will require Fund ManCos who
are not in compliance to decide how to allocate
responsibility for the revised managerial
functions and the organisational effectiveness
role and to update their BP/PoA within the
transitional timeline detailed below. It will also
be necessary to consider the adequacy of the
policies and procedures that the Fund ManCos
have in place to support the BP/PoA in light of
the new requirements and guidance.
Managerial functions guidance
Who can be a DP?
Prior to CP86, a DP for a Fund ManCo had to be
located in Ireland. The new guidance allows a DP to
be a director or employee of the Fund ManCo, or to
be seconded to the Fund ManCo, on a full- or part-
time basis, from another firm, such as the asset
manager or a firm that specialises in the provision
of DPs, but it does not require the DP to be located
in Ireland. This is an important change as it will
allow Fund ManCos to appoint DPs who are based
outside Ireland and who may be employees of their
promoter/asset manager with relevant expertise,
provided that the Fund ManCo complies with the
location requirements outlined below.
What is the role of a DP?
While a director can also be a DP, the guidance
distinguishes between the role of a director being
part of the governing body that is not involved in
managing the Fund ManCo on a day-to-day basis
and that of a DP that is described as the Fund
ManCo’s line of management between the board
of directors and its delegates.
In brief, the guidance provides that DPs should:
• Monitor and oversee compliance by a Fund
ManCo with its obligations and ensure that the
strategies, policies and directions issued by the
board are acted upon and complied with.
• Report to the board on a regular basis and
escalate issues where predefined parameters
agreed with the board are exceeded or where the
DP judges that immediate escalation is warranted.
• Monitor and oversee Fund ManCo employees
or delegates who carry out the tasks that fall
within the scope of their responsibility, and
review their work on an ongoing basis in a
manner agreed with the Fund ManCo.
• Have experience and expertise in the managerial
function and enough knowledge of the area
to constructively challenge both information
received and the people providing it.
• Be sufficiently senior in their role regarding
delegates and for the purpose of engagement
with the CBI.
• And have enough time available to carry out
their roles thoroughly and to a high standard.
The CBI has acknowledged in its guidance that,
while DPs should monitor the tasks for which
they are responsible on a day-to-day basis, this
does not necessarily mean that monitoring and
oversight has to take place daily. The frequency
of monitoring and oversight by DPs, including the
frequency of receipt of information from delegates,
should be determined based on the activities of
the Fund ManCo and its funds under management.
In addition to regularly scheduled monitoring and
oversight, more frequent review should occur on an
ad hoc basis where circumstances demand this, for
example where breaches are occurring or where
market volatility has increased.