The role of investment trust boards is set to change significantly with the introduction of the Alternative Investment Fund Managers Directive (AIFMD) in July next year, according to BNP Paribas Securities Services (BNP Paribas).
In a series of events held in London and Edinburgh over the last week, BNP Paribas advised that the appointment of depositary banks, compulsory under the new rulings, risks duplication of roles with Investment Trust Boards, as depositaries assume functions akin to non-executives.
With less than 250 days until the AIFMD comes into force, BNP Paribas is urging Investment Trust Boards to begin working through the challenges the rules present or risk a duplication of effort, needless complexity and possible breaches of fiduciary duty.
Florence Fontan, head of public affairs at BNP Paribas Securities Services, said: Under the new rules investment trusts will have to appoint a depositary bank in order to be compliant. Ensuring that the asset management decisions are compliant; asset valuation; compliance with the AIFMD itself these are oversight duties where duplication can occur.
Boards need to fully understand the new parameters or they risk eroding their own value and could possibly breach their fiduciary duties if roles are ambiguous. They need to work with their chosen depositary to clarify these oversight tasks, so that when July 2013 comes around and transposition takes place, the roles are clear, all duties are fulfilled and there is no overlap.
(JDC)