EVCA has launched new corporate governance and best practice guidelines for the management of privately held companies. The guidelines have been devised to address aspects of corporate governance specific to the industry and its business model.
The guidelines further complete a range of professional standards that have been developed by EVCA for the professional conduct of private equity and venture capital fund managers, both in respect of the management of their activities and in their relationships with investors and portfolio companies.
The guidelines were developed by the EVCA Corporate Governance Working Group which involved industry practitioners, advisors and other shareholders with both European and broader international perspectives. A shareholder and public consultation period was held from autumn 2004 to spring 2005 to enable comments from a wide range of shareholders to be taken into consideration.
The corporate governance guidelines include recommendations for:
– Principles of conduct for private equity and venture capital investment, including the need for confidentiality and the requirement to respect the needs of all stakeholders in a business;
– Principles of conduct for private equity and venture capital managers as shareholders in portfolio companies, including consideration of potential conflicts of interest and the need to ensure that portfolio companies have the right tools in place for appropriate decision making.;
– Principles of conduct as a board member of the portfolio company, including the importance of all board members identifying and assessing areas of risk for the business;
– Principles of conduct for the management of portfolio companies, including ensuring that relevant information is produced accurately and on time and that appropriate measures for monitoring governance are in place.
The guidelines have been drawn up to apply to a range of situations and investment stages (from seed and development capital to buyouts). They are designed to be multi-jurisdictional, while recognising that specific activities will vary in different circumstances.
The guidelines can be downloaded from: http://www.evca.com/html/publications/publications.asp