Asking questions is an important part of providing governance oversight

Corporate Governance

Good governance for most organisations relates to the four elements that can be captured by the 'Tricker Model' of governance:

  • Policy Making
  • Strategy Development
  • Monitoring & Supervising
  • Providing Accountability 

In addition to these, we believe culture and capability should also be considered.

Investment Specific Governance

In addition to the usual corporate governance issues, some organisations are responsible for material capital allocation or investment decisions.  We believe the governance process for these entities can benefit from combining standard corporate governance principles along with a sensible due diligence process.

Before undertaking investment specific due diligence, we ask investment fiduciaries to make sure the organisation has a good understanding of the following:

  • What will help meet our Purpose & Objectives?
  • What opportunities are available?

A due diligence process then can be viewed as the way the organisation can take investment and capital allocation risks with eyes wide open.  Broadly, the process we recommend asks:

  • If this particular opportunity does what it says on the tin - how will it help?
  • Does it actually do what it says on the tin?
  • If we proceed, what issues will we need to monitor?

Here's five Equity Market questions from our Online Tools - Ask database below:

  1. Objectives: Are you measuring this portfolio against a benchmark or index?
  2. Mechanics: Do the top 10 or 20 securities in the portfolio differ from the top 10 or 20 in the index/benchmark?
  3. Returns: Would you describe this as an index aware or a high conviction portfolio?
  4. Risks: How long are you prepared for this portfolio to underperform its benchmark/index?
  5. Check: What investment opportunities did you pass on before settling on this one?
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