The government is expected to bring a bill to parliament before the end of the month to correct the fundamental flaws of the present Mutual Funds Act 1995, Minister of Financial Services and Investments Allyson Maynard-Gibson announced yesterday.
Minister Gibson said The Investments Funds Bill 2003 will be innovative, progressive and flexible.
Addressing scores of Bahamas Financial Services Board members at the British Colonial Hilton, she said the Securities Commission has already signed off on the long awaited bill.
“The aim of the legislation is to present a workable regulatory structure that does not fetter the growth of the (financial) industry, but instead improves its business framework by removing impracticalities and enhancing the attractiveness of the Bahamas as the jurisdiction of choice,” Minister Gibson said.
Mrs. Gibson told BFSB members that the legislation would create a new licensing structure for funds. This means that all Bahamas-based funds – those incorporated, administered or whose investment advisor or manager is located in the Bahamas – must be licensed with the Commission.
Depending on its relationship to the Bahamas, non-based funds, however, must either appoint a representative registered with the Commission or notify the Commission of the relationship.
“The exempt fund structure, which presently exists, will be no more,” Minister Gibson said. “Instead all funds operating in the jurisdiction will be regulated or submitted to the Commission in one way or another.”
In an effort to catch up with competing jurisdictions, the bill would also provide the Commission with “administrative sanctioning, ” allowing it to deal with breaches of the Act by both, regulated and unregulated funds.
“Although existing in the present legislation, these powers are unclear and limited,” Mrs. Gibson said. “They are cumbersome, and in many instances, the only real recourse available to the Commission is through an already clogged criminal system.”
Such sanctioning powers will also assist the Commission in achieving its mandate of ensuring orderly, fair and equitable dealings in the mutual fund, securities and capital markets, she said.
Minister Gibson added that the new and improved bill would also provide the industry with an innovative new tool to attract new business, re-organize existing businesses to better suit clients’ need.
At the same time, it would also design a regulatory structure to specifically address the fund structure with which the industry is working.
In addition to the Specific Mandate Alternative Regulatory Test (SMART) Fund, the legislation establishes three other categories of funds – the Professional Fund, the Standard Fund and the Recognized Foreign Fund and provides a new fee structure for both Investment Fund Administrators and Investment Funds that are more realistic, yet remaining competitive.
Chairman of the Financial Services Consultative Forum Brian Moree indicated that the new law is another step in the country’s attempt to compress the cycle between coming up with an idea, deciding to do it and then executing it.
“Whether it be a product or some other aspect of the industry, we have been taking much too long,” Mr. Moree said. “And it is for this reason that we have not been able to stay as competitive as we should have been. We must get out of the pipeline.”
By Macushla Pinder, The Bahama Journal
