Market responsiveness within a proper regulatory environment is the philosophy that is followed in The Bahamas, and will continue to be the driving force for development. This is especially evident in the country’s growing funds sector which also benefits from the Bahamas location off the coast of Florida, its competitive cost structure and a well developed infrastructure providing capacity for growth.
The Bahamas in fact has a long history of providing investment fund services and has taken measured steps over the past ten years to differentiate itself from other jurisdictions by creating mechanisms to establish different types of funds with more flexibility and appropriate levels of governance.
Speed to market for example was recognized several years ago by the Securities Commission of The Bahamas (SCB) when it published guidelines, providing direction for the fast tracking process of applications for investment funds that target accredited or high net worth investors. Under this process SCB guarantees approval of these categories of investment funds within 72 hours of receipt of a complete application and complement the fast tracking process that already existed for Unrestricted Fund Administrators (UFA) to license Professional and SMART©Funds.
The rationale for this course of action is that the investment funds in question are targeting investors who are deemed to be knowledgeable of the market and capable of conducting their own due diligence, thereby requiring a reduced level of scrutiny by the regulator.
The Bahamas Segregated Accounts Company (SAC) is also being used more and more to structure wealth management solutions for clients with highly diversified portfolios including investment funds and structured products.
A SAC may segregate each of its assets into separate accounts which are thereby shielded from exposure to losses or claims of creditors of the SAC itself, or on other accounts within the SAC. Also known as a Protected Cell Company, an SAC allows the compartmentalization of risks within a single corporate structure. As a result, the financial performance of an individual account does not affect any other accounts of the SAC itself.
In effect, the separate account of the SAC acts like a separate limited company — but all under common management — reducing senior management time, capital requirements, administration and costs.
The SAC complements the International Business Companies, Trusts and Partnerships which are available in The Bahamas. These structures can be used to establish all manner of hedge funds and private equity vehicles. A number of initiatives are underway to update the Investment Funds Act and also policies surrounding the establishment and ongoing administration of regulated investment structures.
The Bahamas is constantly reviewing its legislative and regulatory environment to ensure the jurisdiction meets the needs of the international market. In particular, the Securities Industry Act is receiving significant focus. Discussions are well underway concerning revisions that will appeal to securities investment advisors and independent asset managers but at the same maintain the Bahamas’ modern regulatory regime.