Fund governance report series: IMS
The NED continues its series covering the Independence and professionalism have paid a large firms that make up the alternative fund part in the firm’s success over the years. We hold governance industry. In this issue we look a company managers licence, a trust licence, an insurance managers licence and a fund administrator’s at IMS, a fund fiduciary pioneer, which licence. In addition our management and fiduciary was founded by Paul Harris in 1974. The teams are professionally qualified and are drawn from interview was with Gary Butler and Geoff well-known names in the financial services industry Ruddick as well as Paul Harris. including KPMG, PWC, Ernst and Young, Deloitte, Fortis, Roy West Trust, Ogier, Close Brothers, UBS The NED: When and why was IMS set up? Fund Services, Dresdner Fund Administrators, Kleinwort Benson, Citco Fund Services, Walkers SPV, IMS: International Management Maples Finance and the Cayman Islands Monetary Services Ltd (IMS) was formed Authority. 40 years ago to provide full corporate services to offshore We are firmly of the view that a companies including registered office, statutory requirements, strong element of independence Paul Harris - IMS provision of local directors and is a cornerstone of good officers and, in some cases, full governance operational services. The firm's founder was Paul Harris who, in 1967, was the first British chartered accountant The NED: What is the size of the firm? to practice full time on the Island and is today still IMS: We have a workforce of 30, composed of chairman of the company. professionally qualified and experienced fund directors, Paul saw a need for a firm to be set up which would client administrators and support staff. Thirteen of be independent from banks, trust companies, our employees serve on the boards of hedge funds lawyers and accountancy firms. This gives clients the and provide governance services to those funds and opportunity to choose their professional advisers and associated entities such as general partners and trusts. avoid possible conflicts of interest. Under Gary Butler, All fund directors employed by IMS have previous managing director, and Geoff Ruddick, head of funds, experience in the hedge fund industry. The board of this philosophy has survived and is still keenly observed directors of IMS itself comprises 7 individuals, all of today. whom have extensive expertise in their respective Since 1974 the history of IMS in many ways parallels fields, ranging from financial, accounting, banking, the history of the financial industry in the Cayman trusts and hedge funds. Islands. Specialising first in private clients, then captive We provide governance services to approximately 250 insurance, IMS has focused on providing directors and fund managers and the funds we provide independent corporate governance to hedge funds for nearly 20 directors to have approximately $250 billion assets years. It was the first independent service provider to under management. do so. Fiduciary fund services are provided through its Continued on page 17 >> subsidiary, IMS Fund Services Ltd.
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The NED: Do you have a connection or affiliation strikes a balance between support staff and our front- with any other entities? line professionals, which ensures the personal service IMS: No, we are an independent provider of corporate and quality governance that investment managers and governance, trust, captive insurance and corporate our clients have come to expect over the years. services. We have no affiliation with law firms or other The funds that we provide directors and other professional service firms and accordingly, can offer governance services to can be confident that their a truly independent service, although we have good communication will be with the directors themselves, relationships with all other service providers in the and not a deputy or assistant. Our directors have Cayman Islands and elsewhere. sufficient time and resources to properly discharge their fiduciary obligations in a timely manner. The NED: Are there any areas that IMS covers in relation to funds, in addition to governance? Actual fiduciary duties are not delegated within IMS. Rather, our qualified support staff are employed to IMS: Alongside the provision assist with initial reviews of quarterly financial and other of corporate governance we information obtained from the Investment Manager, provide board support services, Administrator and other service providers. This way which include everything from we can also ensure that investment managers and liaising with service providers, investors have direct contact with a fund’s directors. arranging meetings, compiling The directors we provide perform as individuals and Geoff Ruddick - IMS board packs and drafting are personally involved on a day-to-day basis with all minutes of meetings. Regulatory requirements are matters affecting a fund on which they serve. leading funds to hold more board meetings, which We are firmly of the view that a strong element of we see as a very positive development for corporate independence is a cornerstone of good governance. governance. As a result of these changes, we We have been promoting independence on the boards are experiencing an increase in the uptake of our of onshore master funds and general partners to qualified chartered secretarial service in the hedge onshore funds where we provide offshore governance fund sphere, which shows that more managers are services – and note an increase in managers seeing recognising the importance to investors of factors other the benefit of this. It’s something that many of the than pure performance (although we acknowledge institutional investors that visit us ask about. that performance is the driver behind hedge fund investment). We also provide liquidators where funds are placed into voluntary liquidation. What distinguishes us from other
The NED: How would you describe your approach firms is that we have 40 years of to governance? operating history IMS: We occasionally hear comments that managers can have problems making contact with their independent directors. IMS’ organisational structure Continued on page 18 >>
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The NED: Is there anything that distinguishes IMS from other firms? A continued push towards
IMS: We believe that what transparency by governments distinguishes us from other and investors seems to be firms is that we have 40 years inevitable of operating history and a great track record. Our take on of a database of directorships. We are unsure as to capacity constraints ensures that what form this will take or how ‘public’ access to it Gary Butler - IMS the average number of manager will be, but at IMS we are confident that the Cayman relationships that our fund directors have should not be fund industry can adapt and remain the market leader more than 30 to 40. At the moment the average is a by spearheading such initiatives for the benefit of little over 30. This builds in an element of spare capacity stakeholders generally. should times of stress arise Our Chairman, Paul Harris, is the President of the The NED: How do you envisage the Cayman Cayman Islands Directors Association, so we are able governance and the global alternative governance to keep our finger on the pulse of and be actively business will develop over the next 3 years? Is involved in industry developments. We are generally there anything that might be different about it in, supportive of the Cayman Islands Monetary Authority’s say, 2017 from today? and the Cayman Islands Government’s recent initiatives with regard to director registration and licensing, which IMS: A continued push towards transparency by will become law sometime in May; as an independent governments and investors seems to be inevitable. provider of governance services we are able to be In particular, it seems that the next step following the proactive and where necessary adapt to industry upcoming law requiring the registration and licensing trends. n of directors in the Cayman Islands will be the creation
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