EVCA Governing Principles

273.6.2. Timing of distributionsQuestion:When should distributions be made?Explanation:Normally investors expect distributions to be made as soon as possible after a realisation. Prompt distributionsimprove the IRR. However, if excessive distributions are made the fund might be unable to meet its liabilitiesin future.Recommendation:Distributions should be made in accordance with the relevant provisions in the fund's constitutional documents.Before making a distribution, the manager should consider the fund's current and foreseeable liabilities andassets (including liabilities for tax, escrow and clawback provisions and contingent liabilities such as thoseunder warranties and indemnities). Distributions should not be made which risk the fund being able to meetits liabilities in the future.Before making a distribution in specie, any restrictions on transfer of the relevant investments should be considered.3.7. Investor relationsOngoing relations with investors are a vital issue for the manager to address to ensure transparency. Implementingappropriate processes will also allow the manager to operate more efficiently, by reducing the number of 'ad hoc'enquiries that the manager receives from investors. In many jurisdictions there will be obligations imposed on themanager to report to investors, although on commercial grounds many managers exceed these obligations.3.7.1. Reporting obligationsQuestion:What reports should the manager make to investors?Explanation:Reporting obligations are important for investors wishing to monitor the status of their investment. The natureof funds means that valuing an investment on an ongoing basis is difficult and, without information fromthe manager, investors cannot effectively monitor the performance of the fund.Governing Principles - EVCA Professional Standards - May 2003 (reprint January 2009)