Group # 5

UNIVERSITY OF CENTRAL PUNJAB
ASSIGNMENT
Corporate Governance
Program:
MCOM
Submitted to:
Prof. Samiullah
Section:
MCOM (B)
Names and Registration No:
Muhammad Awais Munir L1F18MCOM7118

Moeen Qadir L1F18MCOM7101
Azhar Maqsood L1F18MCOM7092
Zain – ul - Abideen L1F18MCOM7097
Introduction:
A hedge fund isn't a specific type of investment. Rather, it is a pooled
investment structure set up by a money manager or registered investment
advisor and designed to make a return.1 This pooled investment structure is
often organized as either a limited partnership or a limited liability company.
To invest in a hedge fund, generally you'll need to meet certain income and
net worth requirements.
A hedge fund is an investment structure for managing a private, loosely

regulated investment pool that can invest in both cash (physical securities)
and derivative markets on a leveraged basis. Legally, it may take the form of
a limited partnership, corporation, trust or mutual fund depending on where
the fund is domiciled and the type of investors it seeks to attract. The
domicile or legal location of the hedge fund determines the structure i.e
domestic or offshore fund. As with more traditional styles of management,
investor funds are allocated either in a separate account or, more typically,
in a commingled fund. The hedge fund structure gives investors access to
hedge fund managers with specialized investment skills. Unlike traditional
asset managers, many hedge fund managers try to create value primarily
through positions uncorrelated with systematic exposure to capital markets.
Instead, they seek to generate portfolio performance regardless of the
direction of the capital markets.
Definition:
Hedge fund is a private investment partnership and funds pool that uses
varied and complex proprietary strategies and invests or trades in complex
products, including listed and unlisted derivatives.
Why is it called a Hedge Fund?

The original hedge funds were structured to hold stocks both long and short.
Therefore, the positions were "hedged" to reduce risk, so the investors made
money regardless of whether the market increased or decreased. The name
stuck and the term expanded to include all sorts of pooled capital
arrangements.
What do these funds do?

Within a hedge fund, the hedge fund manager raises money from outside
investors and then invests it according to whatever strategy he has promised
to use. For example, there a hedge funds that:
 Specialize in "long-only" equities, meaning they only buy common

stock and never sell short
 Engage in private equity, which is the buying of entire privately held
businesses, often taking them over, improving operations, and later
sponsoring an initial public offering
 Trade junk bonds
 Specialize in real estate
 Put money to work in specialized asset classes such as patents and
music rights
Those are just a few examples. Hedge funds can specialize in just about
anything. There are even hedge funds that are made up of other hedge
funds.
Fees and costs of Hedge Funds:

The managers of a hedge fund are compensated based on the terms or
arrangements found in the operating agreement.
Some hedge fund managers receive the standard "2 and 20," which means
2% of net assets per year plus 20% of profits above a predetermined
hurdle. Other hedge fund managers are paid on a pure profit arrangement.
Operations of Hedge Funds in Pakistan:

The Securities and Exchange Commission of Pakistan hereby notifies the following Private Fund
Regulations, 2015 for the regulation of Private Equity and Venture Capital Fund Management
Services and the registration and regulation of the Private Funds and for matters connected
therewith and incidental thereto.
In these Regulations, following are the requirements:
1. Alternative Fund
2. Constitutive Documents
3. Eligible Investor
4. Form
5. Investment Policy Statement"
6. Private Funding
7. NAV of a Unit
8. Net Assets
9. Ordinance
10. Private Fund (Arrangement which has the purpose of pooling funds from one or more
Eligible Investors for investment)
11. Placement Memorandum
12. Private Equity & Venture Capital Fund Management Services
13. Private Equity and Venture Capital Fund
14. Private Placement
15. Register
16. Regulations
17. Rules
18. Schedule
19. Trust Deed
20. Trustee
21. Units
22. Unit Holder
How Hedge funds influence public companies:

Hedge funds play a crucial role within the financial services industry and
company governance. Hedge funds and personal equity firms have
developed similar investment strategies that are designed to influence the
company governance and organizational structure of publicly listed
companies. an outsized number of hedge funds, have adopted an investment
strategy to accumulate large positions in publicly listed companies, using
their ownership positions to have interaction in monitoring of management.
Activist hedge funds often make direct interventions within the corporate
governance of target firms, confronting management teams by demanding
specific actions, like changes in management, company capital structure,
dividend policy and company strategy, so as to extend shareholder value.
The investment strategy of Hedge funds is to focus on publicly listed
companies which they'll take private for a period of restructuring and
governance changes. Eventually, the firm will either be returned as a publicly
listed company or be sold to a strategic buyer or another investor.
Activist hedge funds are definitely the large thing in corporate governance
today. They intervene in corporate governance with goal to create change
and to influence the corporate decision for personals benefit hedge funds
are speculated to unlock existing value and confront the management of
public company. This entry focuses on hedge fund activism as a disciplinary
mechanism within the governance of public companies. Moreover, hedge
funds are active in concentrated ownership structure too. Activist hedge
funds have succeeded in extracting concession also within the presence of
dominant shareholder’s activist hedge funds screen the marketplace
for underperforming companies and buy a significance stake in them so
as engage their management. The goal of activist to create profit and to
influenced company decision and take a look at to require part in
management. However, hedge fund benefit from a brief term change within
the stock price of the takeover target they will also liable for shout termism
in corporate governance. Feeling the pressure of hedge funds managers may
pursue short terms returns at the expense of future value creation. In
Pakistan mostly companies are supported family ownership model, by
investing in hedge funds the activist tries to influence the choice of
company and that they want to be within the management and need power
and by using proxy shares and their own share they influence the
corporate decision. They check the company governance system of the
corporate and take a look at to seek out weakness and so exploits it. At
company try and save themselves

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UNIVERSITY OF CENTRAL PUNJAB

Muhammad Awais Munir L1F18MCOM7118

A hedge fund is an investment structure for managing a private, loosely

Why is it called a Hedge Fund?

What do these funds do?

 Specialize in "long-only" equities, meaning they only buy common

Fees and costs of Hedge Funds:

Operations of Hedge Funds in Pakistan:

How Hedge funds influence public companies:

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