The Investment Funds Act, 2003 positioned The Bahamas at the cutting edge of modern investment fund administration.
The Act recognises four classes of Funds:
- The Standard Fund, which anticipates an offering to the general public, is a highly regulated, modern investment vehicle designed to operate as a traditional collective investment scheme.
- The Professional Fund is a separate class designed for sophisticated investors, and may be licensed by an authorised administrator (in addition to the Securities Commission) thereby enabling faster time to launch.
- The SMART Fund is a specific mandate alternative regulatory test fund suitable for innovative structuring of investment funds.
- The Recognised Foreign Fund is an investment fund incorporated or established – and in good standing – in a prescribed jurisdiction.
These four classes of Funds, coupled with a progressive approach to regulation and a reputation for quality administration, place The Bahamas at the forefront of the modern Investment Funds industry.
As a blue chip, well-regulated and cooperative financial centre, The Bahamas always has been mindful of the needs of the marketplace. The Act retained the ability of local fund administrators with an unrestricted licence (“authorised administrator”) to license professional and SMART investment funds independently of the regulator. This ability to launch new funds based on the due diligence review of the authorised administrator has proven to be a major advantage for The Bahamas.
The new Bahamas Investment Condominium (ICON) is a structuring vehicle that can be licensed as a SMART Fund, Professional Fund or Standard Fund in The Bahamas. It is not a company, not a partnership, and not a trust. It is a pooling mechanism and operating instrument for investment funds. The structure is then licensed and fully regulated as an investment fund – as is done today using existing vehicles such as the International Business Company, the Exempted Limited Partnership, and the Unit Trust.
The Bahamas has achieved a finely tuned regulatory regime that provides confidence in the quality of supervision while ensuring that the demands of the investment community can be met. The Investment Funds Guide provides details on the regulatory and business regime for the funds sector.