Luxembourg is leading professionalisation of governance in Europe. Challenges and outlook, with Eric Chinchon and Emmanuel Bégat, partners at mebs.

 

How much of a role does governance play in investor protection? 

                          

Eric Chinchon (EC): Effective governance enables the efficient implementation of investor wishes through diligent, informed, non-biased participants. It brings the organisation a strong sense of durability, stability and transparency. When carrying out a due diligence on Luxembourg funds, institutional investors consider three elements: 1. Their track record. 2. The risk management process in place. 3. Governance.

 

Emmanuel Bégat (EB): Governance ensures the implementation of a strategy in collaboration with the shareholders, while managing potential conflicts of interest. By providing complete and thorough information, governance facilitates the process of decision-making, protects all the stakeholders in an organisation, including the shareholders, and favours prudent management.

 

 

“Governance ensures the implementation of a strategy in collaboration with the shareholders, while managing potential conflicts of interest.”

 

What future do you foresee for Boards of Directors?

 

EB: The first change will be technological. The blockchain, AI and IoT must be at the core of the Boards' strategy. Boards will rely on tools that produce clear, concise, intelligible and efficient reporting, giving access to information anywhere and at all times.

 

EC: In Luxembourg, access to platforms such as Governance.io and Docunify, among others, will enable the endorsement of the procedures of the future. The diversity of cultural and technical skills will also play an important role, enabling the Board of Directors to cover the whole value chain. Finally, it is essential to go back to the basics of governance, i.e. defining the strategy, developing the business and determining remuneration of top management. Reallocating time from compliance and regulations to strategy issues brings significant added value to investors.

 

How is Luxembourg positioned as a place of governance par excellence?

 

EB: As a pioneer in independent professional governance for investment funds and management companies, Luxembourg has been striving for a long time to offer certification and continuous professional training to Directors. Today, a pan-European trend going in the same direction is developing. The Grand Duchy is at the forefront of this trend, playing an exemplary role, demonstrating the importance of independent governance in asset management and beyond.

 

EC: Certification is also part of the drive to make independent Directors more professional. Two out of three mebs partners are certified by the INSEAD. The creation of mebs France was a first step at international level, demonstrating that professional independent governance is a key growth driver. Luxembourg’s experience in cross-border activities and the creation of a French entity have enabled us to offer effective services immediately to French managers.