Conflict of Interest Policy Summary
FundRock Management Company S.A. (“FRMC”) as management company under Chapter 15 of the Law of 17 December 2010 and AIFM under Chapter 2 of the Law of 2013 is required to establish, implement and maintain an effective policy on conflicts of interest that is appropriate to FRMC’s size and organisation and the nature, scale and complexity of its business and the materiality of the risk of damage to the interest of clients.
The policy applies to FRMC and its subsidiaries.
The Policy sets out the potential material conflicts that have been identified by FundRock Group together with the high level overview of the procedures and arrangements adopted to manage those potential conflicts. FundRock Group continuously ensures that all reasonable steps have been taken to prevent conflicts of material detriment to clients’ business and to investors’ interests.
FundRock Group will take appropriate measures to ensure on an ongoing basis that delegates have appropriate measures in place to comply with the applicable laws and regulations.
Conflicts of Interest
A conflict of interest is a situation in which a person has a duty to more than one person or organization, but cannot do justice to the actual or potentially adverse interests of both parties. This includes when an individual’s personal interests or concerns are inconsistent with the best for a customer, or when a public official’s personal interests are contrary to his/her loyalty to public business.
For the purposes of this Policy, “Client” refer to the Funds to which FundRock Group provides services, the Fund Board members and the initiator or the Fund.
For the purposes of this Policy, “Client” includes:
- Existing Clients of FundRock Group;
- Prospective Clients (where FundRock Group is seeking to enter into a contractual relationship in respect of its business activities);
- Historic Clients, to whom FundRock Group may owe ongoing duties.
In the context of UCITS and AIFs, conflicts of interest are those that may arise between:
(a) FundRock Group, including its executive and supervisory managers, employees or any person directly or indirectly linked to Group by control, and the Fund managed by FundRock Group or the investors in that Fund;
(b) the Fund or the investors in that Fund and another Fund or the investors in that Fund;
(c) the Fund or the investors in that Fund and another Client of FundRock Group;
(d) two (or more) Clients (whether current, former or prospective) of FundRock Group;
(e) two (or more) service providers/delegates (whether current, former or prospective) of FRMC, or between such delegate(s) and the Fund, client of FundRock Group as Management Company or AIFM.
(f) FundRock Group and a Client when the Management Company is carrying on activities as defined in the UCITS and the AIFM Laws.
Factors giving rise to conflicts of interest
When identifying potential conflicts of interest, FRMC will consider all of the factual circumstances and will take into account whether FRMC, its Clients/service provider/delegate or a Fund:
- is likely to make a financial gain, or avoid a financial loss, at the expense of another party;
- has an interest in the outcome of an activity provided to a third party or of a transaction carried out on behalf of a third party, which is distinct from the third party’s interest in the outcome;
- has a financial or other incentive to favor the interest of a third party or group over the interest of another third party;
- carries on the same business as the third party; and/or
- receives, or will receive, from a person other than the third party an inducement in relation to a service provided to the third party, in the form of monies, goods or services, other than the standard fee for that service and which has been properly disclosed to the third party.
Independence in conflicts management
The procedures and measures established for the prevention of management of conflicts of interest are designed to ensure that relevant persons engaged in different business activities involving a conflict of interest carry on those activities at a level of independence appropriate to the size and activities of FundRock Group and to the materiality of the risk of damage to the interests of the Funds or their investors.
These procedures and measures include the necessary and appropriate for FundRock Group to ensure the requisite degree of independence.
If the adoption or the implementation of one or more of those measures and procedures does not ensure the requisite degree of independence, FundRock Group adopts alternative or additional measures and procedures as are necessary and appropriate for that purpose.
Managing conflicts of interest – general arrangements
FRMC takes all reasonable steps to identify, record and manage potential conflicts of interest that arise or may arise in the course of providing its services to Clients, whether such potential conflicts are impacting FundRock Group, FundRock Group Clients, Funds and Fund investors as listed above.
It is important to note that conflicts of interest listed by FundRock Group might not be exhaustive as it is extremely difficult to identify all potential conflicts of interest that could arise.
FundRock Group has in place arrangements designed to ensure that potential conflicts of interest are identified promptly and are managed fairly and effectively.
In addition to this, as part of its senior management governance framework, FundRock Group has established a number of key organisational and administrative arrangements and internal control systems within its business which are designed to manage these potential conflicts and to prevent a material risk or damage to the interests of its Clients or third parties.
Conflict of interest Log
Actual and relevant potential conflicts which have been identified by FundRock Group are maintained in a log together with the procedures and measures in place to manage these.
Disclosure of Conflicts
Where a conflict of interest, or potential conflict, is identified, the conducting officers of FundRock Group must ensure that steps are taken to ensure that the conflict does not negatively impact FundRock Group and/or the Funds that it manages or the investors of the Funds. This may include additional independent oversight by management of the specific situation.
Where the organisational or administrative arrangements made by FundRock Group for the management of conflicts of interest are not sufficient to ensure, with reasonable confidence, that risks of damage to the interests of UCIs or of its unitholders will be prevented, the management committee and board of directors of the UCIs are promptly informed in order for them to take any necessary decision to ensure that in any case the Management Company acts in the best interests of the UCIs and of its unitholders.
For the above situations where a conflict of interest cannot be avoided and/or that require particular actions, FundRock Group or the board of directors of the relevant Fund will report to investors by any appropriate durable medium and give reasons for the decision.
A paper version of this Policy is made available free of charge to investors at FundRock Group’s registered office.