Hon. Allyson Maynard-Gibson, M.P.
Minister of Financial Services and Investments

Earlier this week, Minister Maynard-Gibson contributed to discussions in the House of Assembly during the Second Reading of the Investment Funds Bill. The Minister was responsible for tabling the bill for *”An Act to Provide for the Regulations of Investment Funds in The Bahamas and for Matters Connected Thereto”* during the previous session of the House.

Describing Offshore Funds as delivery vehicles for international investment capital, the Minister said they provide an efficient, innovative means of facilitating cross-border connections among investors, investment managers and investment opportunities. These funds are organised using a variety of legal structures in different jurisdictions and, as the investment fund industry develops globally, new investment products are developed by fund sponsors and advisors seeking to attract different types of investors. *”At the same time,”* said the Minister, * “the rules and regulations in many jurisdictions continue to evolve.”*

Over the past decade, The Bahamas has developed into a major international centre for mutual funds, prompting the Government to pass the Mutual Funds Act in 1995, which protects investors by regulating the fund industry through a Securities Commission and Administrators that license mutual funds. Since that time, The Bahamas has gained considerable credibility and recognition as a properly regulated environment for the establishment and operation of funds. Presently, there are more than 60 licensed Mutual Fund Administrators in The Bahamas, managing in excess of 700 funds with reported assets under management of approximately $90 billion.

The tabled Bill strikes a reasonable balance between regulatory and market interests and is positioned to provide a strong, attractive and fertile platform for the further development and expansion of investment fund business within the financial services sector of The Bahamas.

Pointing to the three traditional “Bahamas advantages”, Minister Maynard-Gibson said The Government has (a) reaffirmed the tax neutrality of the jurisdiction; (b) reaffirmed its commitment to a strong anti-money laundering and strong anti-terrorist financing regime, while providing for lawful personal privacy; and (c) strengthened the regulatory environment in line with global trends to regulate the activities of offshore funds.

*”In order to secure our investment funds industry, we must develop a risk based system of regulation, i.e. a framework that identifies the risk of the business area and seeks to regulate it without adding undue bureaucracy.”* In achieving this balance, the Minister said, while it is proposed that all funds will now be subject to the regulatory oversight of by the Securities Commission, the legislation establishes a series of classes of funds each subject to varying degrees of regulatory oversight, based on its defined risks. In short, the proposed new legislation enhances the present regulatory framework, and provides for greater market efficiency, transparency and investor protection.

Of particular note is the proposed creation of a new style of Fund, a SMART (Specific Mandate Alternative Regulatory Test) Fund, to which The Bahamas ‘Brand’ may be affixed. This new product allows for flexibility within the industry while preserving the regulatory integrity of the jurisdiction. *”This innovation, only available in The Bahamas, puts The Bahamas on the cutting edge of the funds industry.”* said the Minister.

The Investment Funds Bill is part of a series of legislative reform measures being proposed by the government in an effort to modernise the financial services sector and to ensure that The Bahamas remains competitive. Minister Maynard-Gibson affirmed that it represents the results of extensive consultations with industry and Regulators.

The Bill will be submitted for a third reading and passage after proceeding through the committal stage. If passed in the House of Assembly, it will then be presented to the Senate for that Chamber’s consent, and ultimately to the Governor-General for assent and final publication in the Gazette as an Act of The Bahamas.