Bermuda-based fund administrator Meridian Fund Services has launched a Corporate Governance Best Practices (CGBP) programme for hedge funds.

The company, which has offices in New York, the Cayman Islands and Nova Scotia, as well as Bermuda, indicated that there was a demand for improved governance.

Hedge funds have come under increasing scrutiny in recent months, particularly since the financial crisis and the Bernard Madoff fraud sparked calls for regulation and transparency.

Investors are also stepping up their due diligence of those to whom they entrust their capital.

Tom Davis, chairman of Meridian, said Meridian's new offering was timely because "in the post-Madoff era, investors are seeking assurances that fund managers are operating with the utmost operational integrity".

Meridian said its CGBP would allow managers to demonstrate the integrity of their governance systems.

Sharon Davis, a governance expert in Meridian's Bermuda office, said: "The consensus is that managers who implement high standards of governance are more likely to retain their existing investor base and attract new investors."

Randy Troy, who heads Meridian's New York office, said: "Investors are demanding best practices in areas where they previously had little concern, such as fund governance."

In creating the programme, Meridian drew on the fund experience of Joyce Heinzerling, with whom it has a strategic relationship.

Ms Heinzerling said: "In devising the programme for Meridian, my goal was to create a programme that would enable hedge fund managers to demonstrate that their funds have transparent and consistent corporate governance systems that go beyond mere window dressing and adherence to minimum local jurisdictional requirements."

She added that the programme was designed for funds organised in the US and added that the Securities and Exchange Commission recently stated that governance reviews are on the regulator's current agenda for hedge funds.

Meridian intends to assist US-based funds not organised in corporate form to establish advisory boards that will function in the same manner as a corporate board for an offshore fund. Meridian's programme will include the coordination of regularly scheduled board meetings and the preparation of board packages containing reports from the manager and key service providers to a fund.