The Securities Authority publishes provisions regarding a hedge fund in a trust and the salary of a fund and trustee manager that will take effect in about 3 months. From now on, a fund manager and a trustee will present their fixed salary as a percentage of the net value of the fund’s assets, and in this way only.
In addition, a fund manager may stipulate in a fund prospectus that in addition to the management fee, his salary will also include a component of success fees derived from a positive return of the fund. The fund prospectus and its annual report will include a description of how to calculate the success fee and present a numerical example to illustrate.
According to the directive of the Authority, the success fee will be recorded in the fund books and their withdrawal from the fund account will be made according to their measurement frequency. In calculating the success fee, the frequency of measuring the success fee and the date of resetting the success fee calculation and whether a date has been set for resetting the success fee calculation, the fund manager may charge additional success fees only when the fund price is higher than the last price charged.
In addition, reference must be made to determining a rate for comparing the fund’s return – the fund manager may set a rate for comparing the fund’s return in calculating the success fee, which will constitute a “hurdle” rate above which the fund manager may charge the success fee.
The fund manager must clearly define the calculation of the success fee, for example – whether the success fee is calculated in relation to a fixed rate or in relation to a fixed interest rate or a securities index, is the calculation only for the relative rate above the set threshold, and is limited to a certain profit.
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