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In its final report titled IOSCO Report on Good Practices for the Termination of Investment Funds, IOSCO highlights the importance for investment funds of adopting termination procedures that take into account investor protection issues. Indeed, the decision to terminate an investment fund can have a significant impact on investors, including their ability to withdraw their funds in a timely manner.
The good practices apply to voluntary terminations, as legislation at a national level in most jurisdictions addresses involuntary terminations, such as those caused by insolvency. Voluntary terminations typically occur because an investment fund, although still solvent, is no longer economically viable or can no longer serve its intended objectives.
Today´s report sets out additional good practices for the voluntary termination of investment funds with illiquid or hard-to-value securities, such as commodity funds, real estate funds or hedge funds.
The 14 good practices are categorised under the following five headings: