MFDF - Mutual Fund Directors Forum - Dear Board Doc: New Director Seeks Familiarity with Regulatory Responsibilities test

Member Login

Request an account

Sample Banner 1

Dear Board Doc: New Director Seeks Familiarity with Regulatory Responsibilities

The MFDF’s Board Doc is an occasional feature of the Daily News Feed that features questions from our readers. The answers and commentary provided in our responses do not constitute legal advice and should not be treated as such. Please consult with your independent counsel on questions of compliance with the securities laws and director fiduciary duties. If you would like the Board Doc to consider your questions, please e-mail This email address is being protected from spambots. You need JavaScript enabled to view it..

Q. I am the newest independent director on a fairly large board. While I have significant corporate experience, I am unfamiliar with the 1940 Act and what it requires of directors.  What are some ways I can become more familiar with my regulatory responsibilities as a fund director?

A. The regulatory aspects of the asset management industry can seem quite intimidating, even for seasoned veterans. The good news is there is no requirement of competence with the Investment Company Act of 1940 to faithfully execute your fund director duties. A practical and helpful way to familiarize yourself with these regulatory duties is to study carefully the 15(c) request letter your independent counsel sends to management, which covers most of the key areas required for director oversight. In addition, getting to know the adviser’s business, the investment philosophy, and the funds in the complex can help inform your analysis of the data and many reports you will review. Your meaningful contributions will stem from the business judgment you have developed in your decades of experience, which will help you work in the best interests of the fund and its shareholders. In the meantime, attend industry events, listen to webinars, and read as much about the industry as you can. The MFDF web site has resources on fund director duties, including the contract approval process, working with independent counsel, and board members. Moreover, you have at your fingertips a wealth of knowledge and experience in your independent counsel, CCO and fellow board members.

RESOURCES: MFDF’s New Director Training Manual.

  • All
  • Accounting and Audit
  • Advisory Contracts
  • Board Governance
  • Board Governance: Board Leadership
  • Board Governance: Compensation
  • Board Governance: Oversight of CCO
  • Board Governance: D&O Insurance
  • Board Governance: Self-Evaluation
  • Closed-end Funds
  • ETFs
  • Other Oversight
  • Other Oversight: Alternative Investments and Derivatives
  • Other Oversight: Custody
  • Other Oversight: Fixed Income funds
  • Other Oversight: Distribution
  • Other Oversight: Portfolio Trading
  • Other Oversight: Proxy Voting
  • Other Oversight: Securities Lending
  • Legislative News
  • Money Market Funds
  • Reference
  • Regulatory News
  • Risk
  • Shareholder Disclosure
  • Valuation
  • Webinars
  • Aaron New Tag