EVCA Governing Principles

183. ExamplesRecommendation:The manager should consider requiring the investee business to obtain consent for the following:• significant developments in the business (e.g., capital expenditure, new issues of capital, changes tothe investee business's constitution);• changes in debt structure;• changes of control, acquisition or disposal of shares by other shareholders;• adoption of a new business plan;• changes to the investee business's key management or their remuneration; and• developments in the business which will materially change the nature of the business in which the fundhas invested.Investor consents, whilst needing to be comprehensive in scope, must not be so wide-ranging as to restrictthe management team's ability to run the investee business or take up excessive amounts of the manager's time.3.3.7. Co-operation with co-investors and syndicate partnersQuestion:What relationship should the manager have with co-investors and other members of syndicates in whichit participates?Explanation:Where an investment has been syndicated or there are co-investors, a manager may not be able to control aninvestment and may have to co-operate with other shareholders in order to achieve defined goals and build aconsensus as to appropriate actions.Recommendation:The manager should act in the interests of the fund and any other clients investing in the relevant investmentit has (where appropriate, managing any conflicts of interest that may arise between them). Wherever possible,the manager should not accept any obligations in favour of other investors, unless it would be in the fund'sinterests to have some agreement or understanding with those investors.3.3.8. Co-investment and parallel investment by the manager and its executivesQuestion:What issues should the manager consider regarding co-investment and parallel investment by itself,its associates or its executives?Explanation:Where the fund documentation permits the manager, its associates or its executives to co-invest or makeparallel investments, there is potential for the fund's interests to be prejudiced.Governing Principles - EVCA Professional Standards - May 2003 (reprint January 2009)