The AIC Code of Corporate Governance A framework of best practice for Jersey-domiciled member companies

In February 2015 the JFSC offered a Statement of Support in relation to the adoption of the AIC Code by Jersey-domiciled investment companies. In doing so it stated the following

The Commission welcomes the AIC Code of Corporate Governance and commends it to Jersey-domiciled investment companies as one of the tools available to them to target good compliance and best business practice.

As financial services supervisor, the Commission takes a great interest in the corporate governance of investment companies. As companies where shareholders are the customers and the majority of the board is both non-executive and independent of the fund managers, there are particular issues which directors need to address that go beyond the usual governance topics for a trading business. It is in the interests of shareholders, the directors themselves and the reputation of Jersey that investment companies do not produce unpleasant surprises. Of course, that is not to say that they cannot fail.

Markets do sometimes fall by huge amounts and some investment strategies may not survive in such circumstances.

But that is the market and transparent investment policies should ensure that collapsing share values and failing companies are distressing rather than scandalous.

The Commission believes that the AIC Code of Corporate Governance is an excellent framework that provides confidence to shareholders, directors and regulators.

The AIC Code of Corporate Governance provides a comprehensive approach to best practice on all the key issues facing investment companies.

It is principle-based and its format encourages boards to think about these issues and then to explain to shareholders their policy for dealing with them.

Because it is not a rulebook, with detailed and prescriptive requirements, it provides boards and directors with a good deal of flexibility in how they tackle issues.

At the same time, it also places the onus on them to ensure that they both cover all the bases and that they are then transparent with shareholders as to what they have decided. Properly used, we believe that the AIC Code of Corporate Governance will help boards to do a better job. This should lead both to better performance over time and a reduced risk of catastrophic failure for any reason.