The Board of the International Organisa-tion of Securities Commissions has published a consultation report on Good Practices for the Termination of Investment Funds, which proposes a set of good practices on the voluntary termination process for investment funds.
IOSCO, in a statement, said it recognised the importance of investment funds to have termination procedures in place from an investor protection perspective, adding that the decision to terminate investment funds could have a significant impact on investors in terms of cost or their ability to redeem their holdings in a timely manner during the termination process.
It said both retail and professional investors could be affected by the ultimate value of their investment in a fund at the time of termination, stressing that the report targeted a broad range of investment funds including collective investment schemes and other fund structures such as commodity, real estate and hedge funds.
It explained, ?Most regulatory regimes have certain criteria for the termination of investment funds in their jurisdiction, ranging 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.
?But legislation at a national level in most jurisdictions addresses involuntary terminations (for example, in the case of insolvency of an investment fund).?