Sub Advisor Agreement Template for the Philippines

A Sub Advisor Agreement is a specialized contract that allows you to formalize the delegation of investment management responsibilities from a primary advisor to a qualified sub-advisor in the Philippines. This document establishes clear legal boundaries, responsibilities, and expectations when you need to leverage external expertise for specific investment strategies or market segments.

When do you need this document?

You require a Sub Advisor Agreement when your investment advisory firm needs to access specialized market knowledge that you don't possess internally. This situation commonly arises when expanding into new asset classes, geographic markets, or investment strategies that require specific expertise. Investment management companies also use these agreements when facing capacity constraints or seeking to diversify their service offerings without hiring additional internal staff. The document becomes essential when you want to maintain client relationships while ensuring professional management of investments that fall outside your core competencies. Financial institutions often utilize sub-advisor arrangements to offer comprehensive investment solutions while focusing on their primary business strengths.

Key legal considerations

Your Sub Advisor Agreement must address several critical legal elements to ensure enforceability and regulatory compliance. The scope of services clause should precisely define which investment management functions you're delegating and which responsibilities remain with the primary advisor. Compensation structures must be clearly outlined, including fee arrangements, performance incentives, and payment terms. You need robust indemnification provisions that allocate liability between parties and protect against potential losses or regulatory violations. The agreement should include detailed reporting requirements, performance benchmarks, and termination procedures. Risk management provisions are crucial, covering investment guidelines, position limits, and approval processes for significant transactions. You must also address confidentiality obligations, particularly regarding client information and proprietary investment strategies.

Legal requirements in Philippines

Under Philippine law, your Sub Advisor Agreement must comply with the Securities Regulation Code (Republic Act No. 8799), which governs investment adviser registration and operational requirements. Both the primary advisor and sub-advisor must maintain appropriate SEC registrations and meet continuing compliance obligations. The agreement must incorporate Data Privacy Act requirements for handling client personal information and implementing appropriate security measures. Anti-Money Laundering Act compliance provisions are mandatory, including customer due diligence procedures and suspicious transaction reporting obligations. You need to address withholding tax requirements under the National Internal Revenue Code for professional fees and cross-border payments. BSP regulations may apply if the arrangement involves foreign currency transactions or offshore investments. The Civil Code of the Philippines governs contract formation requirements, ensuring your agreement includes essential elements like consent, object, and consideration. Regular regulatory reporting to the SEC regarding sub-advisor arrangements may be required depending on the nature and scale of services provided.