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These indemnification clauses are important to investors, as they highlight the circumstances or events where the fund may be required to reimburse the asset manager for losses related to the investment management of the fund. This memo discusses the scope of wording that can be used, potential issues that can arise from broad or vaguely worded language, and questions that investors should consider as part of their due diligence process.

Alex Williamson, General Counsel at Fiera Capital Europe said: "Subtle changes in the wording used in these indemnification clauses can have significantly different outcomes in the rare event that an indemnification clause needs to be relied upon. Therefore, it is important that all parties to these documents understand these implications. This Toolbox memo is a great educational starting point."

Craig Dewberry, Partner and Operational Due Diligence Analyst at Albourne Partners said "A robust and clearly written indemnification clause can provide comfort to an investor that this indemnity will only be relied on in appropriate circumstances. As such, investors should review this language as part of their initial due diligence processes to understand the implications of the specific way that it has been worded. This Toolbox memo is an important tool to help investors understand potential implications and due diligence questions they should be asking."

Anabelle Perez Gray, General Counsel and CCO of HealthCor Group LLC said "Within the SBAI community, strong and appropriate governance is a key theme underpinning working group discussions and publications. This memo, along with previous publications, aids both asset managers and investors in understanding how to practically approach good governance and the necessity of robust documentation to support this."

The SBAI Governance Working Group consists of over 65 individuals from 43 different asset manager and institutional allocator firms, including Albourne Partners, APG Asset Management, Fiera Capital, Healthcor Management LP, HPS Investment Partners, Ionic Capital Management, Ontario Teachers' Pension Plan, Pictet Asset Management, and Winton Capital Management. Our Governance Working Group is responsible for the production of this Toolbox memo and has previously published practical guidance on topics, such as Cash Handling and Cyber Security, Conflicts of Interest in Parallel Funds, and a Standardised Board Agenda.