Acting Executive Director
Securities Commission of the Bahamas**
The Securities Commission of the Bahamas (SCB) has issued a notice to its registrants and licensees concerning transitional provisions for investment funds and investment fund administrators existing prior to the promulgation of the new Investment Funds Act. Specifically covered in the notice were matters relating to “Exempt Funds”, as previously existed under the former Mutual Funds Act, 1995.
Preexisting registrants and licensees are required to comply with transitional provisions under the Act within nine months, but the Commission has indicated that a decision will be made within the week as to the necessity of extending the deadline for a further period.
**Bahamas Based Funds**
On the matter of funds exempt under Section 3 (6) of The Mutual Funds Act, and the requirement for registration pursuant to Section 3 (2) of the new Investment Funds Act, industry participants have been advised that Section 64 of the new Act provides that they may apply for a waiver from any requirement of the Act.
Consequently, a fund affected by Section 3 (2) as noted may apply for a waiver from the requirement to be licensed or registered with the Commission.
Hillary Deveaux notes that this approach would be an interim measure to deal with the issue until the legislation can be amended to take into account concerns of the industry relative to the potential for overregulation.
The Investment Funds Act stipulates that all “Bahamas based” investment funds are required to be licensed or registered by the Commission. The definition of Bahamas based funds provides, inter alia, that a fund is considered Bahamas based solely on the basis of the fund having appointed an investment advisor or investment manager in The Bahamas.
Industry had communicated its concern to the Commission over the level of regulation that funds which are Bahamas based solely on this basis may encounter. For example, such funds could potentially be regulated on multiple levels, in that they are regulated in the jurisdiction of choice and would also be required to submit to further regulation in The Bahamas when the direct operation of the fund is not connected to The Bahamas. The potential for overregulation is even more emphasised in cases where the investment manager or advisor is itself registered with the Commission.
Responding to these concerns, the Commission has determined that the long term solution to the concerns of industry would require legislative amendment; hence, the interim solution while the matter is reviewed in full.
The Commission remains committed to collaborating with industry to avoid any interruptions to the sector or implications that may negatively impact the continued growth and development of the funds industry in The Bahamas.