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SWF’s and GRE’s

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Corporate governance within the context of a sovereign wealth or government related entity should be rigorously pragmatic. Legitimate concerns are raised about the influence of these funds and by the opaqueness of their operations. In response, SWF’s and GRE’s must balance the desire to implement policies designed to protect the economic objective of creating long-term wealth for its citizens while encouraging high standards of environmental, social and governance performance. This challenge is significant for the management teams that must meet their fiduciary duties across many management styles, cultures, geographies, jurisdictions, strategies and differing ownership stakes.

There is emerging consensus that best practice necessitates the publishing of sufficient material to satisfy the corporate governance requirements of institutions in which they invest, exchanges on which they trade and stakeholders including media, suppliers and financial institutions. A balance must be struck between listed company reporting requirements, which can be excessive, and the de minimis reporting generally prevalent.

A pragmatic value driven approach will embrace the following questions:
  • What is appropriate internal corporate governance within the context of each SWF/GRE?
  • Are expectations of stakeholders understood by SWF/GRE and what is optimum way to meet those expectations?
  • What standards/requirements for corporate governance are or should be provided to the investee company? Are these appropriate? How are they monitored?
  • What allowance is made for unsophisticated markets?
Majlis Partners can provide expert assistance to a SWF/GRE in relation to corporate governance including: assessing legitimate stakeholder expectations – current and future
  • determining the appropriate response
  • determining the appropriate internal corporate governance structure for the needs of SWF/GRE
  • determining the optimum corporate governance for the investment portfolio
  • ongoing validation, assurance and monitoring
A Sovereign Wealth Fund or SWF is a “government investment vehicle which is funded by foreign exchange assets, and which manages these assets separately from official reserves of the monetary authorities.”

For more information please contact the Corporate Governance Department of Majlis Partners