Board Doc: What to Jettison or Maintain After the Crisis

The MFDF’s Board Doc is an occasional feature of the Daily News Feed that features questions from our readers. The answers and commentary provided in our responses do not constitute legal advice and should not be treated as such. Please consult with your independent counsel on questions of compliance with the securities laws and director fiduciary duties. If you would like the Board Doc to consider your questions, please e-mail

Q: As we adjust to the new normal brought on by the global health crisis, we are absorbing the lessons learned and hope to permanently maintain our sense of clarity and alertness in overseeing the funds and management. What have you heard from other fund boards on pandemic-related efficiencies that have improved board operations and that can be helpful going forward?

A: The Forum has held a number of virtual meetings with directors over the last six months. Some boards have completed the 15(c) contract approval process in the middle of the crisis and have given good reviews to virtual online platforms and telephonic meetings for achieving their statutory responsibilities, as permitted by SEC relief. Other boards strongly miss the interactive nature of their meetings and are already planning to meet in person at the earliest and safest convenience. Still, the suddenness of the crisis and the resulting virtual environment have introduced a number of adaptations that can benefit boards going forward. A recent NACD posting noted that boards should not necessarily fight to return to the pre-pandemic status quo and might be well served to maintain the agility and adaptations they have learned in the last six months. We can identify several things that boards have learned during this time that may be worth keeping going forward.

Quicker attention to matters: Travel limitations have resulted in boards being nimbler in their response times. Matters that may have been tabled until the next in-person board meeting have been dealt with immediately via virtual platforms and telephonic meetings. Directors have found, however, that the visual element of virtual meetings tend to engender fuller discussions than telephonic meetings. Practically, boards might retain meeting more often for shorter periods and create more social events via virtual platforms during times when travel is difficult.

Facility and familiarity with technology: Web platforms have increased directors’ familiarity and facility with technology. Directors have learned new ways to communicate, developed electronic meeting hygiene and protocols. Directors might consider maintaining use of video presentations for board meetings and educational sessions and might consider increasing their attendance at virtual industry education and networking events to build connections with other directors across the country.

Business continuity and risk oversight – Board members should now have a deeper working knowledge of advisers’ business continuity plans and how such plans impact operations and fund services. Boards can evolve the conversation with management on risk oversight to long-term resilience using what they have learned from the crisis. 

Overseeing Management and Service Providers – Boards have observed how the adviser has managed a mostly remote workforce. They have also had a limited view of fund service providers without the  benefit of on-site visits. The environment has provided important indications for the future of the workforce, including necessary levels of staffing, supervision, productivity and remote work upsides and downsides. Boards can also evaluate the performance and responsiveness of management and service providers to push for changes going forward. 

Adapting governance practices in a challenging environment – Some boards have interviewed, hired, and onboarded new directors and instituted new committee chairs over the last six months. Other boards have decided to wait to make such changes until after the pandemic. Overall, boards are learning to maintain internal operations and board culture during times of great uncertainty.  Practically, boards may change their procedures for hiring and interviewing directors based on their adapting to the current climate.