Tuesday, September 30, 2008

Board Duties Under the Temporary Guarantee Program for Money Market Funds

The U.S. Department of the Treasury has released form documents and instructions for its Temporary Guarantee Program for Money Market Funds. Money market funds that wish to participate in the Guarantee Program must deliver completed documents and pay the applicable Program Participation Payment by 11:59 p.m. Eastern time on October 8, 2008.

The details of the Department of the Guarantee Program requires action by independent directors.  In particular,the Guarantee Agreement form requires a certification that:
The Board, including a majority of its members who are not “interested persons” of the Fund as determined under the 1940 Act, has determined that the Fund’s continued participation in the Program and the Fund’s fulfillment of its obligations hereunder is in the best interests of the Fund and its shareholders; (emphasis added)
Given the participation deadline, funds wishing to participate in the Guarantee Program are advised to make prompt arrangements for their boards to take the required actions. 

The full set of documents related to the Guarantee Program can be found at: