By Judith Gross, Contributing Author. The views expressed are her own. NEW YORK, Oct. 7 (Thomson Reuters Accelus) - The role of directors on offshore hedge funds has often been, at best, a limited oversight one, with perfunctory meetings and a limited interchange with the fund itself during the year. That has been changing – slowly – as compliance moves to the top of the list of concerns for investors and managers alike. In addition, directors themselves are realizing that the status quo is no longer tenable. Hedge funds advised by U.S.-based investment advisers tended to only have a board of directors if they were domiciled outside of the United States, since it is a legal requirement in most offshore jurisdictions, but not in the United States. In other words, it has been atypical to see a board of directors on a U.S. fund. But an offshore fund in a place such as the Cayman Islands, the biggest domicile of hedge funds in the world, would certainly have a board of directors. There are several reasons why this scenario has changed. Recent litigation has ensnared directors, pushing them into playing a more active role. For example, in a recent Cayman Islands Grand Court decision of a fund fraud case, Weavering Macro Fixed Income Fund Limited v. Sefan Peterson and Hans Ekstrom (August 2011), two “independent” directors were ordered to pay $111 million for willful neglect and failing to carry out their duties. Even though these two directors may not have been “independent” in the technical sense, the judgment was based on the fact that they “did nothing and carried on doing nothing for about six years,” as the justice in the case noted. What should compliance professionals, investment managers and investors alike look for in a well-functioning board of directors? Here are some areas to focus on in making this determination: Is the board receiving relevant information on a timely basis? That is, do they have the information that they will need to perform their oversight role? Are the board meetings substantive, with a full agenda and detailed minutes? This indicates a board that is engaged, as opposed to playing a perfunctory one. Is the board viewed as an integral part of a fund’s operations? Is the board used as a resource, and do the directors have the necessary experience and knowledge to be a resource? When a problem arises, the board can play an important role in providing guidance and decision-making. Are the board fees significantly lower than industry standards? While it is important to keep operating expense down, excessively low board fees may indicate a lack of engagement by the board members. While no two boards will have completely similar procedures and levels of involvement, as the role of hedge fund boards move closer to the standard set by independent fund boards in the United States, hedge fund advisers will need to add this area to their list of compliance and management concerns. Having the board act as a rubber stamp is no longer an option. (Attorney Judith Gross is the principal and founder of  JG Advisory Services LLC, with a background in government affairs, securities law and the hedge-fund industry).