Regulatory Documents

Policy for the prevention and management of conflicts of interest

In application of the general principles laid down by Directives No. 2004/39/EC of 21 April 2004 ‘MiFID’ and No. 2014/65/EU of 15 May 2014 ‘MiFID II’, Quantonation has formalized a policy for managing conflicts of interest and has implemented specific provisions in terms of organization and control to prevent, identify and manage conflicts of interest situations that may affect the interests of its clients in connection with the implementation by Quantion of investment services.

Definition

A conflict of interest is defined as “an adverse conflict between the interests of the company and those of its clients or between the interests of several clients of the company”. Thus, a conflict of interest may arise when Quantonation or one of the portfolios it manages, or one of its employees or persons related to it:

  • is likely to realize a financial gain or avoid a financial loss at the expense of one of the managed portfolios or one of the partner companies;
  • has an interest in the result of a service provided to the client or a transaction carried out on behalf of one of the managed portfolios different from the interest of the managed portfolio or the partner company in the result;
  • is encouraged for financial or other reasons to prioritize the interests of one of the managed portfolios over the interests of one or more other managed portfolios;
  • carries out the same professional activity as a partner company;
  • receives from a person other than the managed portfolio, an advantage in relation to the service provided to the managed portfolio, in any form whatsoever, other than the commission or fees normally charged for this service.

Prevention

Placing the utmost importance on the interests of its clients, and in order to prevent potential conflict of interest situations, Quantonation has put in place a policy and a mechanism allowing it to operate independently while respecting the primacy of client interests and the confidentiality of information.

The prevention of conflicts of interest is based on rules of good conduct set out in the internal regulations and code of ethics of Quantonation. These provisions, which the employees attest to having taken note of during their integration into the company, aim to ensure compliance with the principles relating to the primacy of clients’ interests and the prevention of conflicts of interest: each employee has the obligation to behave with loyalty and to act in a fair manner in the interest of the clients by respecting the integrity, transparency, independence and security of the market.

This awareness of all employees to the rules and internal codes of good conduct is complemented by various measures implemented by Quantonation in order to prevent potential conflicts of interest. More specifically, these are strict rules and procedures relating to:

  • to the protection of confidential information, privileged information, and professional secrecy;
  • to personal transactions carried out on their own behalf;
  • to the social mandates and external functions exercised;
  • to benefits and gifts received from clients or intermediaries.

Detection

Quantonation has set up an organization to identify situations of conflicts of interest that could affect the interests of clients, by establishing a mapping of potential conflicts of interest identifying the types of situations and activities or operations that may generate conflicts, the associated risks, and the procedures established for their control.

Management

Conflicts of interest are managed in accordance with the principle of the primacy of the client’s interests, that is to say, in an equitable manner and by providing him with complete and appropriate information. Thus, Quantonation authorizes itself in accordance with situations to:

  • carry out the activity or operation insofar as the organization allows for appropriate management of the potential conflict of interest situation;
  • inform the client in the event that certain conflicts of interest may persist and provide him with the necessary information on their nature and origin;
  • if applicable, not to carry out the activity or operation leading to a conflict of interest.

Corrective actions intended to avoid as much as possible situations of conflict equivalent to those that have just occurred are then proposed.

Verified conflicts of interest are listed in a register identifying the conflicts of interest encountered and the appropriate measures that have been taken to resolve them.

Controls

The control of the system for preventing and managing conflicts of interest set up within the SGP is the responsibility of the RCCI through compliance with applicable legal, regulatory and ethical provisions.

The RCCI also carries out an annual review of all activities carried out in order to detect situations that are likely to lead to conflicts of interest, and implements appropriate procedures to manage potential conflict situations fairly.

Furthermore, in order to avoid self-control, the system for preventing and managing conflicts of interest is integrated into the outsourced control programme; it is present in all other control missions, whatever their themes, and will then be the subject of a specific mention in the control notes returned by the delegated RCCI.

A Compliance and Internal Control Committee, held semi-annually, deals with all the topics covered during the period and ensures the implementation of an action plan related to the recommendations made. All anomalies and areas for improvement related to this system that have been identified will be reported immediately to the RCCI for corrective measures.

Customer information

In the event that Quantonation finds that the measures deployed are insufficient to ensure, with reasonable certainty, that the risk of harming clients’ interests can be avoided, it will inform the concerned clients in writing, in a complete and objective manner, by refraining from using biased arguments while pointing out the constraints and risks associated with certain products or operations, the nature of the conflict so that they can make their decision in full knowledge of the facts.

Any additional information on this policy for the prevention and management of conflicts of interest can be obtained by customers by sending a written request to Quantonation or by contacting your usual contact person.

Shareholder engagement policy

With a view to promoting long-term shareholder engagement, Directive (EU) 2017/828 of the European Parliament and of the Council of 17 May 2017 known as the “shareholders’ rights” imposes on portfolio management companies (i) to develop and publish a shareholder engagement policy describing how they integrate their shareholder role into their investment strategy, and (ii) to publish an annual report on the implementation of this policy.

As part of its portfolio management activity, Quantonation has adopted this shareholder engagement policy, applicable to all portfolios managed and invested in equity securities.

In this regard, it is specified that Quantonation is a signatory to the principles for responsible investment (PRI) established by the United Nations. Its approach aims to integrate environmental, social and governance (ESG) criteria into its asset management, to engage in dialogue with the companies in which it is a shareholder, and to systematically exercise its voting rights attached to the shares held.

Introduction

The shareholder engagement policy describes how the following elements are ensured:

  • Monitoring of strategy, financial and non-financial performance, risks, capital structure, social and environmental impact and corporate governance;
  • The dialogue with companies held;
  • The exercise of voting rights and other rights attached to shares;
  • Cooperation with other shareholders;
  • Communication with relevant stakeholders;

The prevention and management of real or potential conflicts of interest in relation to their commitment.

Quantonation follows as much as possible the different shareholder engagement criteria described below. Where they are not applied, or are incomplete, the reasons for their non-application are set out in this policy.

The shareholder engagement policy is reviewed from time to time, and as necessary, by Quantonation.

Monitoring of strategy, financial and non-financial performance, risks, capital structure, social and environmental impact and corporate governance

Quantonation is committed to fully exercising its shareholder responsibility in the interest of its investors, by conducting a rigorous analysis of its holdings.

Prior to the study of potential investments, the Quantonation investment team verifies that the target company does not operate in an excluded sector (as set up by Audacia: tobacco industry, coal industry, pornography, arms production, gambling) because not meeting Audacia’s ethical and environmental principles.

The investment team then carries out an analysis of the economic and financial performance of the holdings in which it decides to invest, while paying particular attention to their good governance as well as their social and environmental footprint, by means of internal tools (reporting, ESG questionnaire,…) and exchanges with the leaders.

For Quantonation, the financial and executive independence of shareholdings is an issue of good governance, as well as a factor of growth. Therefore, before each investment, Quantonation concludes with the concerned participation an investment protocol / shareholders’ agreement providing in particular:

  • a reinforced right of information by which the latter undertakes to provide Quantonation with a certain number of elements about its activity (minimum half-yearly reporting containing the main financial aggregates, etc.);
  • an ESG action plan, determined in collaboration with the participation, which can be manifested by:
  • the introduction of ESG objectives,
  • the insertion of quantified deadlines,
  • the implementation of annual reporting in order to measure the progress made,
  • the obligation to raise ESG issues during the governance body meeting at least once a year,
  • regular exchanges on best practices.

Cette démarche garantit la prise en compte des éléments extra-financiers parallèlement aux éléments financiers lors de la décision d’investissement.

Dialogue with companies held

The key element of Quantonation’s shareholder engagement results from the permanent dialogue it maintains with the portfolio companies.

Indeed, they are regularly questioned in a formal or informal manner (physical meeting, videoconference, telephone exchange or email) about their strategy, opportunities and risks, as well as their financial and non-financial performance.financial, beyond the annual general meetings.

Where applicable, the investment team formally monitors the financial and extra-financial developments of its holdings during committees (monitoring, follow-up,…) which are held at least once a year.

Support on both financial and extra-financial topics completes this scheme.

Exercise of voting rights and other rights attaching to shares

Quantonation is systematically convened to the general meetings of portfolio companies in which its principals or the AIFs it manages have invested.

Since Quantonation has the will and the duty to defend the best interests of its investors, it pays particular attention to voting on resolutions proposed at general meetings, whether ordinary or extraordinary.

The decision on the meaning of the vote is made by the member of the investment team in charge of monitoring the participation concerned. Indeed, each member of the investment team is responsible for investigating and analyzing the resolutions presented for each of the participations they monitor. It reviews each resolution in light of the present policy established by Quantonation, and its thorough knowledge of participation and its activities. The decision to participate in general meetings is subject to a formalized follow-up for each participation.

In order to be effective in this approach, Quantonation has set quantitative criteria to determine if it participates in the votes in question (threshold for holding Quantonation in particular). These criteria are theoretical and Audacia will be able to participate in an assembly and take part in the votes without applying these criteria.

If Quantonation must participate in a general meeting of a company listed on a regulated or organized market (limited application within Quantonation), this one:

  • ensure that the depositary transmits to him/her the documents necessary for the exercise of the right to vote within the allotted deadlines;
  • will generally follow the recommendations of the AFG when it issues them for voting in the general assembly;
  • will ensure above all that the interest of minority shareholders, comparable to its investors, is respected;
  • may focus his attention on other points, such as the approval of accounts and their release, the approval of regulated agreements, the election of corporate officers, capital operations or statutory amendments.

When Quantonation has to participate in a general meeting of an unlisted company (the majority within Quantonation) which does not present particular difficulties, it prefers voting by mail.

On the other hand, a member of the investment team systematically physically goes to general meetings identified as sensitive, regardless of the financial situation of the company. Meetings with an agenda that has a significant strategic impact in the life of the company (sale of assets, etc.) are considered sensitive. The same applies to general meetings of companies with temporary or structural difficulties.

Generally speaking, Quantonation strives to take part in all votes in order to preserve interests and represent investors as best as possible, without seeking to obstruct the proposed resolutions, but on the contrary contributing to strengthening the general interest of the company, by bringing his skills and experience while offering innovative solutions.

The line of conduct followed by Quantonation is clear and revolves around two major objectives:

  • preserve and defend the interests of its investors: Quantonation takes part in the votes on the proposed resolutions with a long-term vision, that is to say by ensuring the financial health of the participation allowing (i) the actual payment of any dividends when they are due to be paid, and (ii) the liquidity of the securities held at the agreed maturity and price. Thus, Quantonation carefully analyzes the resolutions that may have an impact on the financial situation or strategic orientation of the company, in order to prevent any future difficulties that may arise and make it difficult for the liquidity of the securities it holds;
  • not to hinder the proper functioning of the companies in the portfolio: as a shareholder (direct or indirect), Quantonation has the permanent concern not to adopt an attitude contrary to the general interest of the company.

Cooperation with other shareholders

Generally speaking, Quantonation rarely cooperates with other shareholders or in a form of collective commitment in the holdings in which it is invested.

It could nevertheless in the future, on a case-by-case and timely basis, participate in shareholder coalitions on initiatives aimed at improving ESG practices of a shareholding.

Communication with relevant stakeholders

Quantonation interacts with different stakeholders (investors, companies, regulators, professional organizations,…) with the aim of raising the investment team’s awareness of long-term issues and to better understand all the financial and non-financial risks that companies may face.

In particular, Quantonation regularly takes part in discussions and participates in certain working groups to take into account the expectations of different stakeholders regarding sustainable investment.

As an illustration, Quantonation hosts each year an ESG seminar open to all its participations, in order to open them up to the strategic opportunities offered by sustainable development and share with them the best ESG practices.

Prevention and management of real or potential conflicts of interest in relation to their commitment

Conformément aux dispositions réglementaires et déontologiques applicables, Quantonation s’est dotée In accordance with the applicable regulatory and ethical provisions, Quantonation has adopted a policy for preventing and managing conflicts of interest and has implemented specific provisions in terms of organization and control in order to prevent, identify and manage conflicts of interest situations that may affect the interests of its clients in connection with the provision of investment services.

Quantonation shall conduct an annual review of all activities carried out in order to detect situations that are likely to lead to conflicts of interest. It has also implemented appropriate measures to fairly manage potential conflict situations. More specifically, these are strict rules and procedures relating to:

  • to the protection of confidential information, privileged information, and professional secrecy;
  • to personal transactions carried out on their own behalf;
  • to the social mandates and external functions exercised;
  • to benefits and gifts received from clients or intermediaries.

The control of the system for preventing and managing conflicts of interest set up within Quantonation is the responsibility of RCCI through compliance with applicable legal, regulatory and ethical provisions.

The policy for preventing and managing conflicts of interest is available on this Quantonation website.

Report on the implementation of the shareholder engagement policy

Quantonation publishes each year on its website, within six months of the end of its fiscal year, a report reporting on the implementation of the shareholder engagement policy. This annual report includes in particular:

  • A general description of how voting rights were exercised;
  • An explanation of the choices made on the most important votes;
  • Information on the possible use of services provided by proxy advisors;
  • The orientation of votes cast during general meetings, this information being able to exclude insignificant votes due to their purpose or the size of participation in the company;

ESG Policy

Information relating to Quantonation’s ESG (Environmental, Social and Governance) policy is available in the “ESG” section of this website.