Update to The Investment Funds Act
An important update was made to our Investment Funds Act in February 2020. This act was a key element to securing confirmation from the European Union (“EU) that Bahamas structures meet the EU “Economic Substance” requirements.
While the law provided a 6 month window to implement all aspects of the law by August 31, the rollout process inclusive of the issuance of guidelines was significantly disrupted by the COVID pandemic. Arising from these constraints, a 3 month “no penalty” period has been provided, designed to enable full implementation by November 30.
As an overview, the most significant elements of the new regime are set out below:
- All Funds must appoint an Investment Manager. Moreover, all Investment Managers (“IMs”) must register with the Securities Commission of The Bahamas (“SCB”). While every investment fund have been required to be registered with the SCB, the IMs of these funds had no obligation to register or be accountable to the SCB. This registration of the IMs is intended to ensure that the IMs fulfill obligations under the IFA. These obligations are consistent with good governance, transparency and fair treatment to investors.
- A requirement to notify the regulator where delegation of investment management mandate is given to another company. This requirement is a key part of the implementation arising from the Economic Substance regime in The Bahamas.
- Independence between Directors, Investment Management, Fund Administrator and Custodian is a matter within scope of the regime.
- The Bahamas has introduced a fund type, the “EU AIFM”.
Arising from the law, we have had three key agenda items:
- Caystone Group has ensured that it is in compliance with the independence requirements.
- Update of the documentation for each fund to secure compliance with the requirements of the IFA.
- Register IMs.
As it relates to the registration of IMs, all IMs must be registered with the SCB, even if registered/regulated in another jurisdiction. In addition to this, the SCB also requires that the IM provides it latest financial statements.
The deadline for registration is 30th November, 2020. We have prefilled the attached form with some information however kindly review and complete as necessary and have the form signed and returned via email.
The fees applicable to each regulation are described below:
| Caystone support for IM Registration: | $500.00 (per Fund) |
| Out-of-pocket (Securities Commission fee): | $200.00 - $500.00 (IM Regulated – Non regulated) $200.00 - $500.00 (per Fund IM Regulated – Non Regulated) |
| Caystone as responsible for Economic Substance filing: | Waived (As part of Fund Administration fees) |
If there are further questions, please send an email to: contact@caystone.com.