Sometimes an investment company will appoint another entity to act as fund management company. In these circumstances, the investment company is referred to as an ‘externally-managed investment company’. In these structures, there are two separate boards of directors – the board of the externally-manged investment company and the board of the fund management company. Regulatory obligations under the UCITS and AIFMD regimes are primarily focussed on the fund management company. However, the board of the externally-managed investment company also has responsibilities to discharge. It retains ultimate responsibility for its management (other than in respect of matters reserved to shareholders), including the appointment and oversight of the fund management company.
The relationship between an externally-managed investment company and a fund management company is governed by a management agreement between the two parties. The purpose of this Template Amendment Management Agreement is ensure that the relationship between the two parties operates in the way contemplated by the Fund Management Company Guidance and to ensure that the management agreement reflects the provisions of that guidance.
How to use this template
This template amendment management agreement amends an existing management agreement. The amendments being made are directly linked to the provisions of the Fund Management Company Guidance and the recommendations set out therein concerning how an externally-managed investment company should oversee the activities performed by its fund management company.
The Template Amendment Management Agreement contains an Annex which lists the additional provisions which are being inserted into the management agreement. It also includes a reference to the provision of the Fund Management Company Guidance upon which each additional provision is based.