Friday August 19 2016

News Source: Fund Regulation

Focus: Other

Type: General

Country: International




On 18th August 2016, the Board of the International Organization of Securities Commissions (IOSCO) published a consultation report on Good Practices for the Termination of Investment Funds. This proposes a set of good practices on the voluntary termination process for investment funds. The report targets a broad range of investment funds including collective investment schemes (CIS) and other fund structures such as commodity, real estate and hedge funds.

Most regulatory regimes have certain criteria for the termination of investment funds in their jurisdiction. These range from the overarching obligation to act in the best interests of investors, to prescriptive requirements for liquidating the portfolio and the payment of final distribution proceeds. However, legislation at a national level (in most jurisdictions) addresses involuntary terminations (for example, in the case of insolvency of an investment fund).

IOSCO’s work focuses on voluntary terminations, with the objective to develop a set of good practices for the termination of investment funds which take into account investor interests during this process.  Voluntary terminations typically occur because an investment fund, although still solvent, is no longer economically viable or can no longer serve its intended objectives.  The decision to terminate in these cases is taken by the responsible entity(although this decision may be based on factors outside its direct control).

IOSCO is consulting on 15 good practices for the termination of investment funds that are categorised under the following headings:

  • Disclosure at Time of Investment
  • Decision to Terminate
  • Decision to Merge
  • During the Termination Process
  • Specific Types of Investment Funds

Public comments on this consultation paper should be submitted on or before 17 October 2016.

Click on the above link for further information.