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A fund management policy exception register records time-limited departures, approval authority, conditions, monitoring and closure evidence.
A fund management policy exception register should record every approved departure from an internal policy, the reason, decision authority, conditions, monitoring owner, expiry date and closure evidence. It gives the manager one view of temporary control changes across investments, valuation, conflicts, liquidity and operations.
The register is not permission to override law, licence conditions or investor documents. It is a controlled record for a departure that the firm’s own policy allows an authorised person to consider.
Define an exception before recording one
Start with the exact policy clause and normal requirement. Describe what will be different, for which fund or account, and for how long. A vague entry such as commercial exception does not tell a reviewer what control changed.
The policy should state whether exceptions are possible and who may approve them. Some requirements should be absolute. Others may allow a documented departure within stated limits. If the policy contains no authority to vary the requirement, obtain legal or compliance advice before treating the issue as an exception.
Do not use the register to rewrite a policy after the event. If repeated departures show that the rule is obsolete, take the policy amendment through its proper approval process.
Keep legal and investor limits outside discretion
Map the proposed departure against the Securities and Futures Act 2001, applicable subsidiary rules, licence conditions, fund constitution, offering documents and side letters. An internal committee cannot approve conduct that those authorities prohibit.
Record the legal or compliance conclusion in the entry. Where interpretation is needed, retain the advice or analysis and identify any assumption. A policy exception should not be presented as a regulatory exemption.
Check whether investors must be notified or consent. Fair treatment matters when an exception changes allocation, valuation, liquidity, fees or access to information.
Cover the full operating model
Investment exceptions can involve concentration, geography, asset eligibility, due diligence or approval timing. Valuation exceptions may concern unavailable prices, delayed reports or use of an alternate method. Conflict exceptions may arise from employee interests, related parties or overlapping mandates.
Liquidity and dealing entries may concern settlement delays, borrowing, cash buffers or use of a tool allowed by fund documents. Operational entries can cover reconciliation, system access, service-provider performance or a temporary manual process.
Use a common register but apply subject-specific evidence. A missing due diligence document requires a different control from a failed price feed or a delayed bank reconciliation.
Require a complete approval request
The request should identify the fund, portfolio or process affected, policy clause, facts, business reason, risk assessment, proposed duration and compensating controls. It should name the person requesting the exception and disclose conflicts.
Attach evidence instead of relying on a summary. The approver may need an investment paper, valuation comparison, legal note, provider incident report, liquidity analysis or transaction record.
State the alternative if approval is refused. This shows whether the request is genuinely exceptional or simply the easiest route to a preferred commercial outcome.
Separate request, challenge and approval
The person who benefits from the departure should not be the sole approver. Route the request to the authority specified in policy, such as the investment committee, valuation committee, risk function, compliance officer or board.
Record questions and conditions, not only the final answer. The decision should state the approved scope, effective date, expiry, monitoring frequency and events that trigger an earlier return for review.
If several authorities are required, capture each decision. An investment approval does not automatically settle a conflict, valuation or legal issue.
Use a register that supports oversight
| Register field | Purpose | Example evidence |
|---|---|---|
| Policy clause and normal rule | Define the departure | Current approved policy |
| Affected mandate | Limit the scope | Fund or account identifier |
| Risk and conflicts | Support challenge | Assessment and declarations |
| Approval and conditions | Prove authority | Signed minutes or decision |
| Owner and review date | Maintain monitoring | Assigned action record |
| Expiry and closure | Prevent permanent drift | Restoration or policy change evidence |
Set conditions that can be tested
A compensating control should be specific. Examples include a lower exposure limit, independent price check, additional legal confirmation, daily liquidity report, dual approval or restricted system access. Record who performs it and how often.
A condition that says monitor closely is not testable. Replace it with the metric, threshold, frequency and recipient. Link every monitoring record back to the exception number.
If a condition is missed, define the escalation. The manager may need to suspend further activity, reduce exposure or return the matter to the approving authority.
Review patterns across the register
Management information should show open entries, overdue reviews, extensions, repeated policies, affected funds and common causes. Look for clusters around one team, provider, asset type or control.
The MAS information paper on fund-management risk practices provides current supervisory observations and examples of sound practice. Managers should use it with their own regulatory obligations and business model, not as a universal checklist.
Persistent exceptions may reveal insufficient staffing, unsuitable systems, unrealistic limits or weak policy design. Address the root cause instead of granting serial extensions.
Close or convert the exception
At expiry, prove that the normal control has been restored, the position has ended or an approved policy amendment now governs the matter. Record the closure date, reviewer and evidence.
An extension requires fresh facts and approval. Do not change the date silently. Preserve the original decision and each later review so that the history remains clear.
The Singapore VCC launch readiness guide is the pillar cornerstone. The due diligence exception guide covers transaction-specific missing evidence; this register is broader and manager-wide. The investment process risk review supports periodic oversight, while the Funds, VCCs and Cross-Border Structures hub links the full library.