Page 34

Cayman Funds 2016

34 CAYMAN FUNDS | 2016 “There is certainly a greater depth of high quality directors in the space to choose from than there was a few years ago.” Geoff Ruddick is head of funds at International Management Services. He can be contacted at: gruddick@ims.ky skillsets who can work collectively irrespective of whether they come from the same shop. The collaborative aspect is as important as the individual expertise. There should ultimately be synergies gained so that the board’s collective value equates to more than the sum of its individual members. Good governance and the right board composition is really what it is all about. What should people be focusing on when constructing a board and how do investors, funds, etc, go about this process? Constructing an effective and diverse board does not have to be an arduous, time-consuming process, but the decision should not be taken lightly. The directors are accountable for leading and directing the fund’s affairs, so effective corporate governance is essential and the appointment of experienced and qualifi ed independent directors who collectively provide a diverse and complementary board composition is essential. The industry needs to ensure the focus remains on the underlying fundamentals of good governance and the right board composition and not simply on retaining directors from different fi duciary fi rms. Where the main consideration or key focus is only to engage independent directors from different fi duciary fi rms, this narrow focus, for the most part, misses the fundamental objective of establishing an effective and diverse board. They should go beyond the ‘split board’ sales pitch and have a thoughtful, measured, balanced approach and give all aspects due consideration. Are there enough directors available with the requisite experience? There has been an infl ux of individuals with varying skillsets into the fi duciary space which is a positive development, and there is certainly a greater depth of high quality directors in the space to choose from than there was a few years ago. Most are senior people who have excellent experience, qualifi cations, pedigree, etc, and are able seamlessly to make the transition from being an administrator, lawyer, auditor, regulator, risk or investment professional, etc, to being a director. Others, however, have diffi culty making the transition, as although they have impressive technical skills, they are unable to transition into a leadership and oversight role that goes beyond their area of expertise. Individual personalities can come into play as well. Why have we seen an infl ux of new directors, and what do you mean by that comment about individual personalities? The credit crisis was really the infl ection point where governance started to be taken more seriously. As a result, there has been a fl ood of new entrants into the fi duciary space, which can be partially attributed to a supply shortage as long-standing individuals are reaching capacity. Other newcomers are simply being opportunistic as they are looking for a career transition. With regard to individual personalities coming into play, for example, some people are too passive, or lack the intellectual curiosity or gravitas to effectively and appropriately challenge management or their fellow directors, while others have domineering and controlling personalities or simply lack the aptitude to participate in a collective approach. The right balance of individualism and collectivity is paramount to an effectively functioning board. In your opinion then, what are the key characteristics and considerations of a good fund director? There is a wide range of attributes and characteristics to consider, such as background (accountant, lawyer, ex-regulator, investment or risk expert), independence, qualifi cations, stage of career/life, level of engagement, technical abilities, personality and interpersonal skills, jurisdictional residence/familiarity/knowledge of and experience within the industry, capacity, support infrastructure, etc. The list goes on but I would emphasise again, that perhaps most important is how the individual personally views his or her role as a fi duciary. What skillsets should a director ideally have—what constitutes the right skillset? One important skillset that is often overlooked is corporate governance in itself. Possessing one or more of the aforementioned attributes in isolation does not necessarily make someone a good director. Perhaps even more important than having a director with a specifi c skillset, expertise, or being from a different fi duciary fi rm is to select directors who have a broad range of experience, have the innate ability to ask intelligent and probing questions, and know when and where to fi nd expert advice when needed. It is often more effective to engage someone with specialised expertise when needed rather than recruit it on to the board. The ability to put issues into the appropriate context is also very important— sometimes the board has to provide high level oversight and other times a more detailed approach is required. Effective and experienced directors will be able to maintain perspective and context in such situations, regardless of their specifi c skillsets.


Cayman Funds 2016
To see the actual publication please follow the link above