The organisation of Danish investment funds

The legal entity of a Danish investment funds is an association, in which all investors are members and where the membership entails right to vote at the General Assembly, which is the highest authority. The General Assembly chooses the Board of Directors, appoints a Manager and the Depositary. The manager is usually a limited company.

The management company must only service investment funds. This limitation, which is based on the UCITS-directive, has been introduced to ensure that the professional fund managers use their best effort to the benefit of the usually less professional fund and thus avoids conflict of interest. The Depositary must be a Danish bank, and it is often the promoter of the investment fund, as reflected in the investment fund name.

It is however important to stress the independence of the investment fund and its managing company of the promoting bank. It is a clear-cut business relation, and the promoter-banks usually also sell other funds than the one they promote. There have been several examples of investment funds changing promoter as well as depositary bank.

The investment funds and their management companies are under continous surveillance by the Danish Financial Supervisory Authority.

Each fund has separate accounting, ensuring that costs connected with the specific investment policy are borne by the fund itself.