law indentifies the responsibilities of the fund committee in general.
Those are taking care of the fund, appointing the asset management
committee and being a fund representative dealing with others.
However, those responsibilities can be called "fiduciary duty",
which can be classified into 3 categories:
asset management company offers any gifts to fund committee if it is selected for the next contract
employer asks the asset management company to stop payment
to resigned member who still has debt with the employer
You must have a manual which includes the practice for dealing with any transaction with parties in interest. This practice must be in accordance with the ethics including the topics below:
of Interest Transaction : You
should have an investment procedure dealing with conflict of
service providers : When you select service providers such as
Payment to member : You are responsible to give payment to
member within 30 days after termination.
lack of guideline in selecting asset management company could
lead to considering only low management fee and ignoring the quality
2. Setting investment policy : Basicly, members have different background and need. It is difficult to set investment policy that meets all members' need. Therefore, you should concern the majority demand and make a decision. You must also consider diversification to minimize risk and maximize return that would benefit to members. Moreover, the benchmark must be set in accordance with your investment policy in order to compare with your fund's return.
3. Selecting auditor : You are responsible to select and appoint an auditor. You should check whether he/she is qualified. For fund with 100 members or less, you may appoint any auditor who has a Certified Public Accountant certificate (CPA). However, for fund with more than 100 members, you must appoint an auditor from the SEC list.
4. Proxy voting : Every shareholder of the shares receives proxy resolution and voting materials, via the asset management company, to inform fund committee of issues for consideration at the company's annual general meeting (AGM) each year. Fund committee, as a fund representative, is a fund's proxy. Then, you should vote your proxy ballots in accordance with your values and what you believe will improve the company's bottomline. You may set the guideline for the proxy voting. If you do not vote, you should authorize asset management company to vote for the fund and monitor the result..
5. Disclosure : Members are entitled to receive all information of the fund. Your continuing communication with members will create more confidence to members. You should disclose sufficient information to members whenever you need their decision involving the fund's operation by setting guideline that contains topics, details, frequency, and communication channel.
Record keeping : You should keep the fund's records in a
safe and easy-access form. These records are memorandum of the fund
committee meeting, payment bills, member information, investment
records, or governing rule modification document. They
must be shown whenever members or authorities make a request.
2. Asset valuation : Principally, the asset management company must calculate the daily asset value using the mark-to-market method according to the notice of the Association of Investment Management Companies (AIMC). Using any other appropriate calculation methods is possible depending on the approval of the fund committee. and get approval from fund committee.
3. Fund performance : Practically, past performance doesn't guarantee the future performance. However, it is one important factor that reflects the efficiency of asset management company. You may monitor your fund performance with benchmark or other funds' performance.
update : April 3, 2006