Coupland Cardiff Funds plc

1. Background

Regulation 24a of the UCITS Regulations (S.I. No 143 of 2016 – European Union Undertakings for the Collective Investment in Transferable Securities (Amendment) Regulations 2016  (UCITS Regulations) requires the Company to have in place remuneration policies and practices for those certain categories of Identified Staff. This Policy takes account of the European Securities Markets Authority (“ESMA”) Consultation Paper “Guidelines on sound remuneration policies under the UCITS V Directive” which is effective from 1 January 2017.  The Company has prepared this remuneration policy to demonstrate how it complies with the remuneration requirements set out in the UCITS Regulations. In preparing this remuneration policy, the Company has taken into account the nature, scale and complexity of its business and also the nature and expertise of persons engaged to carry out certain functions on behalf of the Company.

2. Objective

The objective of the remuneration requirements is to ensure that UCITS Management Companies have in place remuneration policies that are consistent with sound risk management principles to ensure common, uniform and consistent application of the provisions on remuneration in UCITS V, to ensure that practices do not encourage risk taking which is inconsistent with the risk profiles of the fund rules which govern the relevant  UCITS  and to act in the best interest of clients and to develop, implement and maintain a culture of ensuring the client’s best interests are met. 

This Policy together with an implementation process and ongoing monitoring is a tool which the Company uses to implement and comply with best practice and to eliminate and mitigate against behaviours which could lead to failing to act in the client’s best interest. 

 

3. Governance

The Board of Directors and in particular the Company’s non executive directors, as the Company’s management body, will have overall responsibility for the Policy.  The design and implementation of the Policy shall be the responsibility of the Board of Directors and shall include input from the relevant senior management including Compliance, Risk and HR where relevant. 

The Board of Directors shall review and approve the Remuneration Policy at least annually or more frequently where required.

The Non-Executive members of the Board of Directors receive a fixed fee set at industry standard. In addition Non-Executive members will be re-imbursed for appropriate expenses associated with their role as  outlined in each Director’s Letter of Engagement.

 

4. Identified Staff

ESMA’s Guidelines require that the Policy apply to certain “Identified Staff” as defined in the relevant Directive including but not limited to:

  1. Executive and Non-Executive members of the management body of the ManCo  g. CEO, Directors, Executive and Non-Executive partners
  2. Senior management
  3. Risk takers – staff who can exert material influence on the ManCo or on the UCITS it manages
  4. Those in control functions: Operations, HR, Compliance, Finance where applicable
  5. Staff whose total remuneration takes them into the bracket of senior management and risk takers, whose professional activities have a material impact on the ManCos risk position or those of the UCITS it manages and
  6. Categories of staff of the entities to which portfolio management or risk management activities have been delegated whose professional activities have a material impact on the ManCos risk position or those of the UCITS it manages.

5. Forms of Remuneration

  • Both UCITS V and AIFMD define the forms of payments or benefits which fall within the category of Remuneration. These are further described in ESMA’s Consultation Paper and Guidelines to include:All forms of payments or benefits paid by the ManCo
  • Any amount paid by the UCITS itself including performance fees
  • Any transfer of units or shares of the UCITS
  • Payments paid directly by the UCITS to the ManCo for the benefit of the relevant categories of identified staff for services rendered
  • Variable and fixed portions of remuneration
  • Cash, shares, options, pension benefits, mobile phone, health insurance
  • Retention bonus
  • Golden Parachute payments /termination payments (variance in the language between AIFMD/UCITS)
  • Remuneration paid by the UCITS Manager or the UCITS itself

 

6. Proportionality

UCITS V allows the application of the proportionality principle as required for CRD in a way and to an extent that is appropriate to their size, nature, internal organisation, scope and complexity.  On an exceptional basis proportionality may lead to the disapplication of certain requirements including:

  • Formation of a remuneration committee
  • The remuneration pay-out process

The Company will not automatically trigger disapplication but shall internally assess on an annual basis whether the disapplication can be applied.

In assessing proportionality the Company will consider the following:

  • Size
  • AUM
  • Number of staff
  • Liabilities of the Company
  • Number of branches
  • Risk appetite
  • Listing
  • Where aggregate set of UCITS leads the UCIT to become more complex or systemically important
  • Nature, scope and complexity
  • Authorisation in place
  • Investment policies and strategies managed
  • National or cross border/EU vs Non-EU
  • Management of multiple product types
  • Identified staff
  • Percentage of variable vs fixed remuneration
  • Size of obligations they may undertake

7. Assessment

The Company is a UCITS Self Managed Investment Company and has 6 sub-funds under management. The Company’s investment objectives and activities are set out in its Prospectus and are considered by the Board of Directors to be non-complex.

The Company operates a delegated model and as such has no employees.

As at 31 December 2018 the Company had AUM of USD 1,561m.

Having considered the criteria set out in Section 6, Proportionality, and having regard to the ESMA Consultation Paper and Guidelines, the Board of Directors is satisfied that it may disapply the requirement to have a Remuneration Committee in place and disapply the pay-out process in full.

The Company has determined that the following persons would fall into the category of “identified staff”:

  • Members of the Board of Directors
  • The Designated Persons

On the basis that neither the Directors nor the Designated Persons receive any element of variable payment, they fall outside the scope of this Policy.

8. Delegation

ESMA’s Consultation Paper and Guidelines require that entities to which portfolio management or risk management are delegated, are subject to the requirements on remuneration in a manner which is proportionate as outlined above.  Alternatively, the Company shall ensure that any delegate must be subject to equivalent remuneration rules in their home state or have in place documented contractual arrangements in order to ensure that there is no circumvention of the remuneration rules.

The Company has the facility to appoint delegates to carry out investment management functions (including risk management) on its behalf. In accordance with the Guidelines, where the UCITS remuneration rules would otherwise be circumvented, the Company will seek to ensure that affected delegates (i.e. those entities to which investment activities have been delegated) are subject to regulatory requirements on remuneration that are "equally as effective" as those applicable under the Guidelines or that appropriate contractual agreements are in place to ensure that the delegation arrangements do not circumvent the remuneration requirements contained in the Guidelines.  The Company is satisfied that the Investment Manager, which is authorised as an AIFM by the FCA in the UK, is subject to AIFMD requirements including remuneration requirements and  that the Investment Manager’s remuneration policy is equally effective as that required under UCITS V.

The Company engages Bridge Consulting to provide the services of two of its consultants to act as Designated Persons and an additional consultant to act as MLRO for the Funds.  Bridge Consulting receives a fixed fee for the provision of these services and is wholly responsible for the remuneration of the Designated Persons and MLRO.

9. Monitoring

The Board will review the Policy and the implementation of procedures on an annual basis for the Company. The annual review of the Policy is intended to ensure the effectiveness of the Policy and the effectiveness of any policy and arrangements in place with any of the Company’s delegates.  The annual review will also consider the implementation of the Policy for compliance with requirements.  Additionally, the Board will request at least annual assurance from relevant delegates that the remuneration arrangements in place within their companies are equivalent and that the implementation of the remuneration arrangements is in compliance with requirements.  In order to avoid conflicts of interest monitoring should not be carried out by an individual subject to the same scheme.

10. Disclosure

The Company will comply with the disclosure requirements set out in ESMA’s Consultation Paper and Guidelines to include Annual Reports, KIIDs, Prospectus and Policy Statement.

Any Identified Staff shall be informed of the criteria associated with variable remuneration.

11. Effective Date

June 2019