Guidelines

The investment manager, together with the governing body of the vehicle, should demonstrate how they are actively engaged with and accountable to investors.

The investment manager and the governing body of the vehicle are accountable to the investors of the vehicle as a whole. Demonstration of this accountability could include, for example, being available upon reasonable notice, defining the specific role of independent non-executive directors towards investors where applicable and meeting investors and investor representative groups to review and discuss matters relating to the vehicle.

The investment manager and the governing body of the vehicle are also expected to maintain relations with and oversee the work of external advisers and service providers, including external auditors, valuers, portfolio and property managers and risk managers. 
 

The investment manager and the governing body of the vehicle should be willing to accept a certain level of liability subject to reasonable indemnifications.

There should be a fair allocation of risk between the investment manager, the governing body of the vehicle and the investors. The extent of the liability should be in accordance with the relevant laws and regulations and described in the constitutional documents of the vehicle. At the same time, the investment manager and the governing body of the vehicle can expect to be indemnified by the vehicle for losses, except in cases of fraud and culpable behaviours such as wilful misconduct or gross negligence.
 

The investment manager should enable investors to perform compliance audits, where appropriate.

Investors should have the right, in appropriate circumstances, to request an inspection of the books and records of the vehicle or have a third-party auditor conduct an audit.

Where multiple investors acting together through investor representative groups or committees, or the governing body of the vehicle, request and agree on an independent audit, the cost should be borne by the vehicle.
 

The investment manager should ensure that the constitutional documents of the vehicle include clear provisions for the rights and obligations of all relevant parties involved in the removal of the investment manager and the early termination of the vehicle.

The constitutional documents may provide that the investors, through the governing body of the vehicle, have the right to replace the investment manager. This may occur in a range of situations which include but are not limited to key changes of control in the investment manager organisation, un-resolvable performance issues or conflicts of interest.

For cause removal: Vehicles should have a ‘removal for cause’ clause in place that gives investors, dependent on a defined threshold, the right to call at any time for a vote to remove the investment manager. The vehicle documentation should clearly describe how cause can be established. The documentation should clearly disclose the investment manager’s rights regarding management fees and reasonable expenses, including consideration of the transition period in such situations.

No fault removal: The constitutional documents of the vehicle should contain a removal at will or ‘no fault removal’ clause, whereby the manager’s mandate can be terminated due to the request of a majority or qualified majority of investors (see G29). The documentation should clearly disclose the investment manager’s rights regarding management fees and reasonable expenses, including consideration of the transition period in such situations.

Termination of the vehicle: The constitutional documents of the vehicle should provide the right for investors to terminate and dissolve the vehicle in certain circumstances. This decision is generally subject to a qualified majority vote of investors. The documentation should clearly disclose the manager’s rights regarding management fees and reasonable expenses, including consideration of the transition period in such situations.

For specific guidelines related to the wind up of a vehicle, see the inrev-guidelines">Liquidity module.