Discretionary Management Agreement Template for the Netherlands

A Discretionary Management Agreement is a fundamental legal document that grants an investment manager the authority to make investment decisions on your behalf without requiring your prior consent for each transaction. Under Dutch law, this agreement establishes a formal mandate relationship governed by the Civil Code while ensuring compliance with stringent financial supervision requirements.

When do you need this document?

You need this agreement when engaging a professional investment manager to handle your investment portfolio with full discretionary authority. This is essential for high-net-worth individuals seeking professional portfolio management, pension funds delegating investment decisions to external managers, insurance companies outsourcing asset management, and family offices establishing formal investment management relationships. The document is also required when institutional investors appoint specialized managers for specific asset classes or when retail clients opt for discretionary wealth management services from licensed Dutch investment firms.

Key legal considerations

The agreement must clearly define the scope of discretionary authority, including permitted asset classes, investment restrictions, and risk parameters. Essential clauses include detailed fee structures, performance measurement criteria, and termination procedures. You must ensure proper client categorization under MiFID II, as this determines the level of protection and disclosure requirements. The agreement should address conflicts of interest management, best execution obligations, and custody arrangements. Risk disclosure requirements are particularly important, especially for retail clients who must receive comprehensive information about potential losses. The document must also establish clear reporting obligations, including regular portfolio statements and transaction confirmations.

Legal requirements in Netherlands

Under the Dutch Financial Supervision Act (Wft), investment managers must hold proper licensing from the Netherlands Authority for the Financial Markets (AFM) before providing discretionary management services. The agreement must comply with MiFID II implementation requirements, including detailed client suitability assessments and ongoing suitability monitoring. Dutch law requires specific consumer protection measures for retail clients, including cooling-off periods and enhanced disclosure requirements. The document must address Anti-Money Laundering obligations under the Dutch Wwft, including client identification and ongoing monitoring procedures. Investment managers must also ensure compliance with Dutch tax reporting requirements and provide necessary documentation for clients' tax obligations. The agreement should incorporate Dutch governing law clauses and specify jurisdiction for dispute resolution, typically Dutch courts or arbitration under Dutch arbitration rules.