**Licensing Exempt Funds**
With the Investment Funds Act 2003 and Regulations now in effect, one of the most significant and immediate implications for financial service professionals locally is the requirement to license existing Exempt funds, as these funds are no longer recognised under the new legislation.
Existing Exempt Funds have three months to appoint a Fund Administrator licensed by the Securities Commission of the Bahamas (a list of whom may be found on the Securities Commission’s website) and a total of nine months to reorganise the Fund under the 2003 Act. The options are to:
· Apply for a license as a *SMART* Fund as defined within the Regulations.
Currently, the Securities Commission recognises four classes of *SMART* Fund, which are defined by means of *SMART* Fund Rules published by the Commission. One of these Rules (*SMART* Fund No 3) has been designed to provide a simple conversion mechanism for existing Exempt Funds. The Securities Commission and an Unrestricted Fund Administrator have the authority to license each of these classes of Fund. *(See below for link to Rules)*
· Apply for a license as a Professional Fund as defined within the Regulations.
In this case the Administrator and / or a local Attorney should sign off on the necessary documentation. The Securities Commission and an Unrestricted Fund Administrator have the authority to license this Fund.
· Apply for a license as a Standard Fund as defined within the Regulations.
In this case the Administrator together with a local Attorney should sign off on the necessary documentation and submit such to the Securities Commission for licensing. Standard Funds can be licensed only by the Securities Commission.
· Cease operations in The Bahamas within the defined time period.
Practitioners with portfolios of Exempt Funds should review the relevant legislation and approach a licensed Fund Administrator, legal counsel or the Securities Commission to instigate the process of licensing these funds.