BFSB CEO and Executive Director Aliya Allen was in Hong Kong for the three day STEP Asia Conference 2012 which wrapped up on October 17, and will then be in Shanghai on October 24 and 25 for the China Offshore Summit 2012 , where she will be part of a panel discussing international financial centres.

“Every macro-economic view agrees that Asia-Pacific’s growth story is remarkable,” said Ms. Allen. “With the natural linkages and relationships created by the investment by China in The Bahamas, now is an opportune time to really push the advantages of The Bahamas for planning for Chinese families, inbound and outbound investments, international business and residency. In 2011 the Asia Pacific High Net Worth Individual population became the largest in the world and in our view The Bahamas is ideally placed to serve them.”

The STEP Asia Conference which brought together more than 40 speakers from around the world covered a wide range of issues and considerations in doing business in the People’s Republic of China with a strong focus on trust and fiduciary services.

While STEP attracts primarily lawyers specializing in trust and estate services the two-day China Offshore Summit gathers China’s leading financial intermediaries in an in-depth and exclusive discussion forum with bankers, lawyers, offshore professionals, representatives from trust companies and corporate service providers.

Speakers will discuss the many opportunities and key challenges surrounding China’s future growth, and the development of investment, trade and wealth management sectors. China’s fruitful business landscape also will be analyzed, and participants will have an opportunity to expand business relations as well as benefit from transparent conversation with relevant contacts regarding future market trends.

“China has a strong demand for global expertise to help manage its growing wealth,” said Ms. Allen. “The Bahamas has the talent, resources and financial structures to compete for and meet the wealth management needs of the Asian market. Participating in conferences and other business development initiatives targeting this market are crucially important to establish and reinforce The Bahamas’ capabilities and advantages.”

Photo Caption: BFSB CEO Aliya Allen is pictured with John Lawrence Deputy Chairman of STEP Worldwide and Managing Director of Windermere Corporate Services, Bahamas and William Ahern, Chair of the second day of STEP Asia.

On Monday, September 17, Rio de Janeiro was the location for the first event, which included nine representatives from BFSB member firms as well as The Honourable Ryan Pinder, Minister of Financial Services, along with other government representatives.

"The fact that BFSB is in Brazil for a second time this year with the support of the Minister of Financial Services, shows how committed The Bahamas is to maintaining its close ties with the Brazilian market," said Aliya Allen, BFSB's CEO & Executive Director as she addressed those attending the Bahamas Landfall event in Rio de Janeiro and Sao Paulo. "We are confident that we provide the kinds of structures and solutions that make sense for your environment, investment strategies and clients." She added, "As Brazilians look for more financial assets overseas and to compliant planning for the security of those assets, more and more firms are realizing that The Bahamas is unmatched in the diversity of product options and that it is consistently improving upon them."

Rodrigo Fiszman from Real Assets, a Brasil-based Multi Family Office which was BFSB's local partner for the Landfall events, reinforced this view in a presentation titled SMART Funds for Brasilian Asset Managers: The Real Assets Case Study. He told participants that his firm was very intentional in its choice of The Bahamas, because of the ease, flexibility and attractive cost of the Bahamas SMART Fund. Mr. Fiszman's presentation was part of several covering Asset Management opportunities in The Bahamas including:

• An Overview of Fund Structures in The Bahamas by Linda D'Aguilar, Partner, Graham Thompson & Co.;

• Introducing SMART Fund 007 by Brian Jones, UBS (Bahamas) Ltd.; and,

• The Bahamas for Asset Managers by Tiffany Norris-Pilcher, Partner, Ernst & Young.

Brian Jones, who conceived the concept of the SMART Fund 007 which was refined and vetted through BFSB's funds working group, spoke about the ease of using the new SMART Fund to access alternative investments, a trend in Brazil and in other Latin American countries. There was noticeable interest in the new SMART Fund product, with many participants indicating that they had attended the event just to hear about the new model.

In her opening remarks, Ms. Allen also addressed The Bahamas Advantage by noting "More than 80 years of thought, effort and co-operation have produced ideal conditions and a wealth of Advantages for (Ultra) High Net Worth individuals, families, businesses and asset managers in The Bahamas."

Minister Pinder closed the Landfall event by telling participants "The Ministry of Financial Services is determined to strengthen The Bahamas’ standing and image as a jurisdiction "open for business", one that is widely recognized as the preeminent international financial and business centre."

A presentation on “Wealth Management: Advantage Bahamas” by Ivan Hooper, Chief Executive Officer, The Winterbotham Trust Company Limited and Paul Winder, Managing Director, ATC Trustees (Bahamas) Limited, concluded Landfall presentations. They said, "Creating added value to our wealth management services is a continuous process in The Bahamas. It has led to market leading legislation for dynastic planning, succession and family governance and established The Bahamas as the wealth and asset management gateway of the Americas since the 1930. Foundations, private trust companies, the Bahamas Executive Entity, purpose trusts and SMART Funds are just some of the reasons why The Bahamas offers real wealth management advantages."

In addition to Landfall presenters, other Bahamas' participants included Viana Gardiner, Ministry of Financial Services; Shawn Forbes, Pictet; Chet Neymour, Ministry of Foreign Affairs; Fabien Jenny, UBS; James Malcolm, Schooner Bay; and Wendy Warren, Caystone Solutions.

Bahamas Landfall: Destination Brasil sponsors were ATC Trustees; Butterfield Bank (Bahamas) Ltd.; Ernst & Young; Graham, Thompson & Co; Grand Bahama Port Authority; Schooner Bay; Scotiatrust; and Winterbotham Trust Company.

Joining BFSB as cosponsors of the Seminar were the Association of International Banks & Trust Companies (AIBT), the Society of Trust & Estate Practitioners (STEP), and the Bahamas Institute of Chartered Accountants (BICA).

Click here for details on the very comprehensive day of presentations and to download the various presentations delivered by industry experts.

The event, held at the British Colonial Hilton Hotel in downtown Nassau, was divided into two sessions: Leading Innovation in Private Wealth Management and A Modern Insolvency Framework.

Bahamas Landfall: Rediscovering The Bahamas will update participants on developments in the international financial services industry in The Bahamas; Grand Bahama and the maritime sector; and residency and second home ownership. An update on the Tax Information Exchange Agreement (TIEA) between The Bahamas and Canada also will be provided.

"We are very pleased with the interest in the seminar by the financial and business community in Toronto," said Wendy Warren, BFSB's CEO and Executive Director. "The Canadian economy weathered the recent recession much better than most countries and continues to do well. I think it's clear through the expected turnout that The Bahamas is being viewed with great interest as a location for investment and financial service opportunities."

A similar workshop was held in Calgary at The Petroleum Club on Monday, March 28 for financial and business professionals.

BFSB's Bahamas Landfall workshops were organized to coincide with a trade and investment mission to Canada led by the Rt. Hon. Prime Minister Hubert Ingraham, who also attended the Annual Meetings of the Inter-American Development Bank (IDB) which took place in Calgary.

Toronto's Bahamas Landfall event, and the one in Calgary, is receiving sponsorship support form Ansbacher Bahamas, ATC Trustees (Bahamas) Limited, Butterfield Bank (Bahamas) Limited, IP Solutions International, KPMG, Premier Fund Services, PricewaterhouseCoopers, RBC Private Wealth Management and Scotiabank.

The speaker lineup is impressive. From the lead presenter, Min. Zhivargo Laing who will speak to Grand Bahama as a Light Industry, Transshipment & Maritime Hub through to the concluding presenter, Attorney General John Delaney, seminar participants are expected to benefit from a content-rich seminar.

Technical presentations will address the Securities Industry, Investment Funds Services, Estate Planning, Infrastructure and Business Environment, and the benefits to be derived from the Bahamas-Canada Tax Information Exchange Agreement. These presentations, along with corporate testimonials, will be given by Aliya Allen, Graham Thompson & Co.; Barry Malcolm, Scotiabank (Bahamas) Ltd.; Carlton Mortier, Ansbacher Bahamas; Edison Sumner, IP Solutions International Ltd.; Julien Martel, Butterfield Bank (Bahamas) Ltd.; Kevin Seymour, PricewaterhouseCoopers; Paul Winder, ATC Trustees (Bahamas) Ltd.; Simon Townsend, KPMG Bahamas; and Terah Rahming, Premier Fund Services.

Twenty two individuals representing various Bahamian financial and business firms will be in Toronto for the BFSB seminar.

More than 400 global investors are expected at BIS which takes place in Sao Paolo April 26 to 29 and which has become the region’s leading investment conference. Key BIS themes include: Brazilian Economic Success; Crisis Impact: Portfolios; Transparency in Regulation; Brazil’s Infrastructure; Quantitative Trading; Funds of the Future; Pension Asset Allocation; and Alternatives.

“Brasil is an important and growing market for The Bahamas,” said BFSB CEO & Executive Director, Wendy Warren. “This is the third year in a row that we have participated in, and made a presentation, at the conference. Each year attendance by BFSB member firms grows stronger as does Bahamas’ recognition at the Summit.”

BFSB is a gold sponsor of the Summit, and has also secured a Panel discussion titled “Asset Managers Interview” which includes the exclusive involvement of Bahamian financial professionals.

Panel members who will be interviewed by Ms. Warren include: Anthony Ferguson, BFSB’s Deputy Chairman and President, CFAL; Jane Siebels, Chairman & CEO, Green Cay Asset Management; and Renaud Vielfaure, Head of Private Banking & Investment Management, SG Private Banking (Bahamas).

The panel will discuss:

• Investing in the wake of the global financial crisis.
• Key investment themes for the next twelve months.
• Reacting to changes in taxation and regulation.
• How have investor demands for increased transparency impacted back office operations.

Other BFSB members who have already confirmed their attendance at the Summit include Antoine Bastian, Genesis Fund Services; Brian Jones, Winterbotham Fund Services; Daniel Nicolier, Credit Agricole Suisse (Bahamas) Limited and Linda D’Aguilar and Aliya Allen, Graham, Thompson & Co.

BFSB members interested in attending the Summit can receive registration passes at a reduced rate. Contact the office for further details.

Top of mind for any trust or financial services professional these days, Ms. Houlder will turn the topic on its head, and panelists will be asked for their honest assessments of what it will take for IFCs to face and thrive in the future. Under fire once again from the OECD, IFCs can also add a continuing economic downturn to the list of “must deal with”.

Always a key conference for trust professionals, the STEP Caribbean Conference finds itself in Barbados this year in what promises to be a watershed year for the conference. Delegates from around the globe will join Caribbean trust professionals from May 24 – 26 at the Hilton in Bridgetown, Barbados.

Vanessa Houlder has been part of the Financial Time’s economics team, specializing in tax issues, since 2003. She has worked as a journalist on the Financial Times since 1988 covering, in turn, British companies, the commercial property industry, technology, management and the environment. Before joining the FT, she worked for the Investors Chronicle for two years. She has a degree from Cambridge University and has won journalism awards for writing about property, science and technology. She was also LexisNexis Tax Writer of the year in 2007.

The Step Caribbean Conference, now in its 12th year, promises to reposition trust professionals to recover in 2010. Along with lessons from the brilliant minds scheduled to speak at this year’s conference, attendees will benefit from networking with other professionals in their field; they will gain knowledge for new business development; and indulge in continuing education with noted Canadian bestselling author of The Wealthy Barber, David Chilton.

Before breaking to home school his children, David Chilton was one of the most sought-after speakers in North America. He is known for his unique combination of expert knowledge and humour, which helps to take the intimidation and dryness out of financial planning. Chilton’s new speeches aren’t about just money; they’re about believing in yourself and overcoming mistakes (many of his are truly hilarious). Above all, his talks are about perspective – the missing ingredient in many people’s lives and financial plans.

Michael Foot from Promontory Financial Group (UK) Ltd., is among the headline speakers for The Nassau Conference 2009 which takes place Wednesday November 18 at the British Colonial Hilton.

Now in its fifth year under the Founding Partner and lead sponsorship of the Association of International Banks and Trust Companies in The Bahamas (AIBT), the Conference will see Mr. Foot and other speakers address key issues facing The Bahamas such as the OECD standard for information exchange and jurisdiction development needs.

Under the theme “Private Wealth Management: The Changing Dynamics“ the 2009 Conference programme will include presentations covering:

• The Rapidly Changing World of “Off-Shore Centers” with speaker Michael Foot, Promontory Financial Group (UK) Ltd.

• A panel discussion on The Bahamas Status and Strategy Towards Tax Information Agreements, with John Delaney, Higgs & Johnson and Arthur Strommer, Credit Suisse Nassau Branch and a third panelist.

• A panel discussion on Tax Amnesties covering the United States, Brazil and Italy and featuring Robert F. Hudson, Jr. Baker & McKenzie LLP; Humberto de Haro Sanches, Ulhôa Canto, Rezende e Guerra Advogados; and Franco Pollini, BSI Bank Ltd.

• The Benefits of Economic Permanent Residency with Graham Harvey from The Scorpio Partnership.

• A panel discussion titled Private Wealth Management: What does The Bahamas need to do to get better and smarter? It features consultant Bruce Weatherill who has previously been involved in strategy development for the jurisdiction.

• A panel discussion on The Next Generation of Bahamian Entrepreneurs in Financial Services featuring Wendy Craigg, Governor of Central Bank of the Bahamas and Hilary Deveaux, Executive Director, Securities Commission of The Bahamas.

The registration fee for the Conference is $500. You can register online or by calling AIBT at 356-3898.

“We are very excited about the topics and speaker line up for the Conference,” said Conference Chairman Andrew Law. “The conference comes at a particularly challenging time for the industry and we have concentrated on developing sessions that will deal with the pressing issues we are facing.” Students from the College of The Bahamas will also be attending the Conference as they have in previous years, courtesy of the corporate sponsors for the event.

“AIBT recognizes that our future and growth and development are very much dependent on attracting more and younger Bahamians to consider careers in the sector,” said Christian Coqouz, AIBT’s Chairman. “As a result we structured our sponsorship packages to allow our corporate sponsors to cover the cost of one of or more students to attend the event.”

The Conference Steering Committee includes Conference Chairman Andrew Law from International Protector Group; Arthur Strommer, Credit Suisse Nassau Branch; Bruno Roberts, The Private Trust Corporation; Clifford Johnson, PricewaterhouseCoopers; Dominique Lefevre, SG Hambros; Jan Mezulanik, Pictet Bank & Trust; Wendy Warren, Bahamas Financial Services Board; and Anastacia Johnson, AIBT.

The AIBT was established in 1976 to represent the International Banks and Trust Companies operating from The Bahamas. The Association is funded by its members and works with them to promote professional standards in the industry and continued success and understanding of the banking sector.

A Foundation is a relatively new estate planning vehicle to The Bahamas that combines all the advantages of an IBC with those of a trust and adds an enhanced level of flexibility. Michael Anderson, President of Royal Fidelity, said Foundations were a welcome addition to the market as they allow a much wider cross section of the Bahamian public to more effectively plan for their succession. “Because a Foundation can be started with as little as $10,000 in either cash or property, far more people will now be able to use this confidential, flexible and cost effective solution for a secure succession plan for their family assets."

Photo shows L to R: Ingrid Saunders Manager, Royal Fidelity Trusts Dept; Michael Anderson, President Royal Fidelity Merchant Bank & Trust; attorney Lucia Broughton, Partner Broughton Cartwright, who addressed attendees at a recent Royal Fidelity Foundation Seminar.

The story, produced by BFSB, speaks to the long-standing commitment of The Bahamas to be a responsible member of the international community, and highlights key developments in the financial services sector around AML, regulatory agencies and international cooperation and recognition.

Historically, and when we as practitioners think of estate planning, asset protection and ease of management of assets, the first “tool” that comes to mind nine times out of ten times is the tried and tested Trust. Regardless of which International Financial Centre (“IFC”) is chosen, the Trust has been the staple diet of a majority of practitioners for years, and will remain so for many years to come. However, as we all know, the Trust is not a “one size fits all solution,” and some clients just don’t warm to the overall concept. We’ve all been there, and once a client says a Trust isn’t for them, it’s difficult to find another solution fitting the bill.

For those practitioners among us that have faced this situation, I’d like to say, “And now for something slightly different.” Allow me to re-introduce The Bahamas Foundation (“the Foundation”) as a viable alternative planning tool.

Since its birth in 2004, it’s fair to say the Foundation has been under utilised by both local and international practitioners. Is there a reason for this? For starters, the Trust is, and will continue to be the main tool used by practitioners in this area. Nonetheless, there are certainly opportunities for the Foundation to form an integral part of this planning, or indeed be considered as an alternative to “old faithful.” The aim of this article is to re-visit the Foundation, highlighting its benefits and uses from a practitioner’s perspective.

The Basics Revisited.

The Bahamas Foundation was introduced with the enactment of The Foundations Act, 2004. As with all legislation, it has undergone some amendments, principally in 2005 and 2007, and has become a key tool in the practitioner’s “Bahamas Tool-Kit.” The Foundation has many applications (which will be explored later in this article), and is able to be used for private, commercial and charitable purposes.

As with a Trust and a Company, the Foundation has a slate of key positions that can, or indeed must, be filled. The main players are:

• Founder (like the Settlor of a Trust)

• Secretary

• Foundation Agent (created via the 2007 Amendment Act)

• Foundation Council (similar to a Board of Directors or Trustee)

• Protector or Protector Committee

• Beneficiaries

There is great flexibility under the Foundations Act, 2004 as to who can act is these capacities. As an example, the Foundation Council does not have to be comprised of Bahamas resident members, nor does the office of Protector have to be provided by a Bahamian. Rather, the only caveat is a Bahamas based service provider must act in the capacity of Secretary or Foundation Agent. This service provider, by virtue of acting in this position, also provides the Registered Office of the Foundation.

The Foundation’s governing document is the Foundation Charter. As with a Trust Deed or Articles of Association of a Company, the Foundation Charter sets out the parameters within which the Foundation must be managed and governed. As an example, and importantly, the Charter deals with Founder retained powers; appointment and removal of the foundation’s officer(s), foundation council members, protector(s), beneficiaries; investment powers; dispositive provisions and provisions regarding the amendment and revocation of the charter.

The Foundation Charter can also be supplemented by the addition of Foundation Articles. The Foundation Articles can be used to provide further information around the identity of the beneficiaries, how and when they can benefit and the regulation of any governing body of the Foundation.

Once the documentation has been prepared, registration is a straight-forward process. In essence, the Secretary or Foundation Agent provides a synopsis of the Foundation Charter (the Founder’s name is not disclosed) to the Registrar General’s Department, along with a statement that the Foundation will maintain a minimum asset value of US$10,000, and the Foundation complies with all the provisions of the Foundation Act, 2004. The Registrar General will then issue a Certificate of Registration.

Is it really “Eco-Friendly?”

It doesn’t have a catalytic converter, and I wouldn’t recommend using it to get to work in the mornings, but the Foundation can certainly be called the “hybrid vehicle” of the estate planning world. Don’t worry, I’m not going to launch into a series of car metaphors, but rather show that the Foundation is a unique mix between a Trust and a Company. Here are a few examples for consideration, and once reviewed, some clear advantages of using the Bahamas Foundation will begin to emerge:

Like a company, but unlike a trust, a Foundation:

• may enjoy unlimited duration and is not subject to the law against perpetuities;

• is a legal entity in its own right, has a registered office and is registered with the Registrar General of The Bahamas;

• enjoys limited liability, enabling riskier types of assets to be managed within the structure;

• as a legal entity, can own assets in its own name;

• does not require a change in the legal ownership of its assets as a result of a change in its governing body.

Like a trust, but unlike a company, a Foundation:

• may have discretionary or vested beneficiaries;

• benefits from The Bahamas’ asset protection legislation - the Fraudulent Dispositions Act;

• can be established by will;

• may be used to avoid forced heirship in other jurisdictions;

• does not form a part of a person’s estate and is therefore not subject to probate;

• may have a protector.

This of course is all fine, and I’m sure looks good. However, taking these views and applying them in practical terms is key.

Benefits and Practical Uses

As practitioners, we’re often faced with a client wanting to achieve a variety of objectives. As with all client wishes, some are achievable, some are not, and some can be achieved with a compromise.

With the above in mind, and in general, we can all relate to the client that wants to achieve the following:

• maintain confidentiality;

• have an effective estate plan;

• maintain an element of management / control of the assets without damaging the integrity of the overall structure;

• protect their assets from 3rd parties and perhaps family-adverse influences;

• use a registered “legal” entity to hold and / or administer assets.

As noted earlier, our initial thoughts will likely lean toward the Trust as the preferred solution. However, in speaking with the client, it may emerge that the client:

• is from a civil law country where the trust concept if not well known;

• does not feel comfortable using a 3rd party trustee;

• wishes to maintain an element of control over the assets.

If this is the case, the Foundation could be a good fit. Taking each of the requirements in turn:

Even though the Foundation is a registered entity, confidentiality is maintained by virtue of the Founder’s name not being public information. Additionally, a nominee Founder can be used to further protect the identity of the actual Founder. This also has further application where the Foundation is used as a holding vehicle. In this case, the Foundation as a registered and legal entity is seen as the shareholder, rather than an individual person.

An effective Estate Plan can be put in place by virtue of the trust-like nature of the Foundation. As with a Trust, the Founder passes legal title of his / her assets, to the Foundation. This then allows the assets to be managed and maintained on behalf of the beneficiaries, with distributions being made in accordance with the Founder’s wishes. Additionally, the Foundation benefits from The Bahamas robust asset protection legislation, thus protecting legitimately “settled” assets from any creditor claims.

As a part of the family’s Estate Plan, the Founder may also wish to stay intimately involved in how the assets are invested and distributed. Of course, discussing how a client can maintain an element of control is always a tricky discussion. However, and in the case of a Foundation, the Founder can reserve a number of powers without jeopardising the overall integrity of the structure, and certainly more than are available when establishing a Trust. Taking this one step further, the Founder can also be a member of the Foundation Council, helping direct and manage the Foundation’s assets.

Putting these requirements into a practical and real life context, the Foundation has application:

• as a holding vehicle for shareholding of a Private Trust Company and shareholding of a Family Business (promoting longevity of family ownership and asset protection);

• as a part of an effective estate plan where a Trust is not the preferred vehicle;

• where the client wishes to maintain a number of powers and some control over the assets;

• for Chartable Purposes.

Of course, these are but a few examples of where the Foundation can be used, but certainly helps highlight the Foundation’s versatility.

Conclusion

It’s clear that the Bahamas Foundation truly is a hybrid vehicle, and is a viable alternative to a Trust in the right circumstances. It has applications as a stand-alone vehicle or as a part of an overall structure, and when used appropriately, can be an extremely useful tool.

By Timothy J. Colclough, LLB (Hons), MSI, TEP Assistant Vice President, Head of Business Development & Custody Butterfield Bank (Bahamas) Limited

Article originally published in the STEP Journal (Vol 17 Issue 4)