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Hedge Funds and Corporate Governance: Who is driving the car? Examining your hedge fund directors: Executive, non-executive, interested or independent - what does it mean?
Gabriel Kurland, director of Geneva-based Hedge Fund Appraisal, examines the formal relationship between investors, shareholders, investment managers and hedge fund directors:
...According to the Bermuda Monetary Authority, once a company has been incorporated the signatories to the memorandum,
normally nominees resident in Bermuda, are the provisional directors of the company who act as
such until the first members of the board of directors are elected. At the first annual general
meeting, the shareholders will confirm the bylaws, elect the first members of the board of directors
and appoint auditors. At that stage, depending on the share structure of the company, the voting
rights can be held by either:
- the fund’s trustee in the case of a trust;
- the founder in the case of a structure with Founding shares; or
- the seed investors.
Practically, the investment manager will usually be the only decision maker and will therefore be free
to decide on the composition of the board of directors. A manager that seeks to build strong
corporate governance will most likely hire directors based on certain criterion such as their
independence, experience, qualifications, etc. In reality, most of the funds’ board of directors are
composed of manager’s friends, emplo......................To view our full article Click here
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