Guideline 18. Due diligence completed on investments by an investing institution

Submitted by Anonymous (not verified) on Tue, 07/10/2018 - 09:46

Investment proposals generated internally or externally are subject to appropriate due diligence.

Guideline code

INVEST_02100

Mechanism

There should be procedures manuals on how to conduct due diligence across all types of allowed investment instruments.
The management should ensure that staff compensation provides incentives to do right and not to do wrong.
The board should establish and abide by a workable code of conduct that should include a policy on the disclosure and management of conflicts of interest on the part of any board member. There should also be consideration of how potential conflicts of interest for members of the investment committee or social security institution staff, as well as for consultants and external investment managers, are to be identified, anticipated and treated.
The management should adopt and abide by a board-approved, workable code of conduct for its officers and staff that should include a policy on the disclosure and management of conflicts of interest.
Where the board, management or investment committee lacks sufficient resource, expertise or governance budget to make fully informed decisions about due diligence, the board, or the management or investment committee with board authorization, should seek expert advice or appoint external professionals to carry out these functions.

Parent

Structure

The investing institution should have a clear, implementable and verifiable definition of what due diligence means in general, and set due diligence guidelines for each type of investment instrument in particular.
The investing institution should have clear, transparent and verifiable methods to implement the due diligence guidelines set by the board and/or management.
A competent office external to the investing institution should monitor compliance with the due diligence guidelines. This may be the internal or external audit office.