What is an investment committee
The Investment Committee is a special body, the functional direction of which is the high-quality development, management, study of declarations, analysis and implementation of the main financial processes of the current economic entity of the Russian Federation.
Such committees, as a rule, have a rather narrow specialization - their actions are aimed at searching for, as well as qualitatively assessing, all possible objects for profitable investments. This structure also organizes the full process of investment and additional supervision over the execution of this process.
The state committee can be single-level or multi-level - it depends on the detailed number of constituent entities. Also, the number of levels may depend directly on the wishes of investors who are part of the main composition of the investment cabinet. The structure of the investment committee is formed based on the current direction of the company's activities and the total number of representatives included.
Some committees have a structure with many levels, a special department is in charge of it, which independently proposes pre-approved ideas and workable plans. Additional activities are carried out by the department's division, which analyzes all areas and puts forward its own approval of the most effective programs in place.
The formed investment account is the most important part of any successful company and represents a kind of financial fund of any system. The authorized structure includes only professional specialists who have already dealt with competent investment. They are the ones who are able to study in detail all information resources on the possible benefits of investments - all this protects companies from possible financial risks. Thanks to the activities of authorized persons, a reliable financial fund is formed depending on the company’s income level.
Analyze this: how to control your mutual fund through an investor council
Mutual fund investors are not always silent witnesses to what is happening, waiting for the invested money to generate income according to the wishes of the management company. In fact, you can influence the strategy of your mutual fund and even change it. We tell you how to do this.
How to get on the investment committee of your mutual fund
If you are a qualified investor and are just choosing which closed-end fund is best to invest in, keep in mind: each management company may have its own rules for joining this not entirely secret, but still society.
For example, the rules of trust management of a fund may stipulate that all shareholders have the right to be members of the investment committee. Or a limited number of shareholders. Or shareholders who own a certain number of shares.
At the same time, the investment committee cannot include employees of the management company or people appointed by it, as well as the management company itself as a legal entity. But they still have the right by law to attend meetings of the investment committee.
They also pay for this
Since, by joining the investment committee, you take on part of the responsibility for wisely investing and distributing the fund's funds, you may get paid for it.
The rules of trust management may (but are not required to) provide for remuneration to members of the investment committee (clause 4, part 1, article 17.1 of the federal law on investment funds).
But the amount of payments to all participants should not exceed 5% of the average annual value of the fund’s net assets, so you will not be able to set your own salary.
What will you have to do?
The investment committee analyzes and gives (or does not give) consent to transactions proposed by the management company. The trust management rules set out the criteria for transactions that require committee approval.
For example, for all transactions worth more than one million rubles or more than 1% of the net asset value. The list of such actions is not limited by law, so the committee can have either a wide range of powers or rather narrow ones.
However, in order to make the most important decisions (for example, on closing a fund or transferring the rights and obligations of the fund to another trust), the law requires a general meeting of all unit owners. And not just those who are on the investment committee.
What if the management company doesn't listen to the committee?
In this case, according to the law, the management company will be liable to investors with the property it owns. That is, it will be obliged to compensate investors for losses from its decisions. But in practice, the company simply will not be able to pull this off, since the depositary will not approve the transaction without the consent of the investment committee.
A depositary is a structure in which the money of mutual fund investors is stored, which “gives the go-ahead” for mutual funds to carry out transactions and controls their legality.
Vyacheslav Ismailov, Deputy General Director of KSP Capital Asset Management:
It all depends on who owns the idea behind the fund and who initiated its creation. If it was an investor, then the investment committee for him is a form of control over the actions of the management company and an additional guarantee that his idea will be implemented.
In this case, the plan of actions and decisions that will be submitted to the investment committee is globally determined even before the formation of the fund. Therefore, we can say that this is more of a formality with the function of additional control.
If the idea was born within the walls of the management company itself, then the role of the investment committee is more serious: it is there that the specific directions for investing assets are determined.
It is important to take into account that without decisions of the investment committee, the circle of which is determined by the rules of trust management of the mutual fund, no actions with assets can be carried out. Therefore, it is important to take a thoughtful approach to defining the functionality of the investment committee, so as not to become bureaucratic in the procedure for making and executing decisions.
Conclusion:
The investment committee gives investors additional assurance of the safety of their funds and a sense of control over their investments.
However, in practice, there is a need for a committee only if the qualifications of all its members are higher than the qualifications of the employees of the management company. Then we can say that the investment is truly under reliable control.
If, in general, the qualifications of the committee members are quite low, there is a high chance that the committee will make the wrong decision, which will entail losses.
Source: https://zen.yandex.ru/media/fintolk_pro/analizirui-eto-kak-kontrolirovat-svoi-pif-cherez-sovet-investorov-5dae90b2a660d700ad15d241
Composition of the investment committee
First of all, the committee includes a pre-authorized chairman of the commission, who is appointed only from among persons who have been active in the financing system for a long time. In this case, the standard term of office of this person is at least 1 year. The committee also includes directly authorized representatives of the main members of the committee, who can replace representatives at main meetings, perform voting and other functions related to investment activities.
The cabinet may include commission members involved in legal activities. They decide on the legal aspects of the investment committee’s activities and monitor the quality of performance of duties in accordance with contractual terms, as well as the timing of major decisions.
Additionally, the composition includes members who are engaged in financial and administrative work, including the preparation of basic documentation and the direct attraction of investors. Members of the commission search for possible investors and analyze all provisions put forward for consideration and subsequent approval by the chairman.
Responsibility
The Investment Specialist is responsible for:
- For improper performance or failure to fulfill one’s job duties as provided for in this job description - within the limits established by the current labor legislation of the Russian Federation.
- For offenses committed in the course of their activities - within the limits established by the current administrative, criminal and civil legislation of the Russian Federation.
- For causing material damage to the enterprise - within the limits established by the current labor and civil legislation of the Russian Federation.
Functions and tasks
Each investment office has its own powers and functions:
- detailed analysis and identification of profitable solutions for financial investments;
- analysis and detailed design of the current strategic plan for the qualitative distribution of all proposed investments in the selected territorial district of the Russian Federation;
- discussion and further development of special government regulations that can attract investors of any level;
- creation and high-quality execution of basic requirements for developed projects, which are fully financed by the state treasury;
- development and creation of master plans for the construction of innovative investment facilities, as well as infrastructure;
- detailed consideration of the effective improvement of the selected region;
- high-quality control of the timely implementation of projects with the help of a specially organized commission (particular attention is paid to the most significant objects of the selected region);
- detailed collection of all financial information on ongoing projects in a specific area;
- work to increase the competitiveness of the selected region;
- drawing up annual reports on the activities of the council, as well as on the results of the development of the competitive environment of an individual entity.
Among the main tasks of the office are the following areas:
- search for main sources of financing;
- high-quality development of a general strategy for the development of an individual company’s investment policy;
- timely control of the implementation of general investment activities.
Thanks to the effective activities of authorized specialists, the standard percentage of implementation of major plans related to financial investments increases significantly.
Requirements for candidates for the position
- higher mathematical, financial and/or economic education;
- experience in developing complex financial models;
- knowledge of investment analysis tools and methods for calculating investment projects;
- knowledge of the principles and fundamentals of corporate finance > ;
- Excellent command of MS Excel , Word, PowerPoint.
Very often, companies are looking for an investment analyst with experience in a specific sector of the economy or industry, since without excellent knowledge of the specifics of legislative regulation and market risks of a specific industry, it is impossible to successfully cope with the responsibilities of an investment project manager.
Differences between a board and a committee
The committee does not directly allocate all proposed investments - this is the main difference from the existing council. The main part of the committee’s activities is the direct approval of projects through the interaction of the legislative and executive powers.
The committee ensures and monitors the implementation of major federal programs in a certain region, and also coordinates the activities of all authorized enterprises. Additionally, functional responsibilities may include the creation of new investment objects. Also, the committee can engage in the presentation of a certain region or region abroad, significantly increasing the interest of foreign investors.
The committee organizes various exhibitions and conferences and presents significant projects. It is he who plays a unique role as an intermediary between investors and the executive company. Thus, it represents a kind of management body.
The Investment Council, on the contrary, is an executive body and is responsible for the implementation of all approved projects after receiving investments. The committee preliminarily legitimizes all investments, and the council fully distributes them in accordance with the needs of the selected territorial region.
Career development
Investment analysts in their work gain extensive experience in implementing business projects “from scratch” and take part in real transactions, which gives them the opportunity to gain knowledge and competencies from colleagues from numerous related areas of company activity (such as commerce, law, taxation, logistics and development), which contributes to their career growth up to the financial director ( CFO ) of companies or the successful construction of their own business.
Where can you get the knowledge you need for your job?
Education in the field of economics and finance can be obtained at the Kiev Economic University (formerly the Institute of National Economy), the Taras Shevchenko National University (Faculty of Economics), the Kiev-Mohyla Academy (Faculty of Economic Sciences), Donetsk State Academy of Management (Faculty of Management in the Non-Production Sphere) , Kharkov (Faculty of Economics) and Odessa Economic Universities.
Education in the specialty “financial management”, obtained in Western business schools, is valued much higher than domestic ones.
However, if you have a higher degree in mathematics, you may well try your hand at investing: after the theory of differential equations and other intricacies of the Faculty of Mathematics, formulas for calculating investment returns will seem like mere nonsense. And you will receive special knowledge if you are lucky and you are accepted as an intern at an investment company.
