What is the Bahamas like as an investment market?
The Bahamas is known for its political stability, strong economy based on offshore financial services, and tax advantages for investment businesses. This is the main condition for a favorable climate for investment.
Foreign businesses can easily adapt to the regulatory framework of the Bahamas, as the country's legal system is based on English common law, which is understandable and predictable. The government strictly enforces a zero tolerance policy towards corruption and removes any bureaucratic obstacles to registering companies in the Bahamas.
How does Bahamian law define an investment fund?
A comprehensive understanding of what an investment fund is and how it operates in the islands is provided by the Bahamas Securities Commission.
An investment fund in the Bahamas is generally defined as a collective investment scheme in which investors pool their funds for the purpose of investing in different types of assets, such as securities, real estate or other financial instruments.
An investment fund in the Bahamas is managed by a professional investment manager or fund manager who makes investment decisions on behalf of investors.
An important task of an investment fund is to diversify assets by distributing risks between several investments. Investors typically have the right to redeem their shares or units in the fund, providing liquidity.
Who regulates the activities of investment funds in the Bahamas and how?
Investment fund regulation in the Bahamas is primarily overseen by the Securities Commission of the Bahamas (SCB). The Commission enforces securities laws and regulations, including those related to investment funds, through various tools.
The SEC has enforcement powers to take action against investment funds and fund managers that violate securities laws or regulations. This may include sanctions, fines, or revocation of licenses.
What are the licensing requirements for investment funds in the Bahamas?
Licensing requirements for investment funds in the Bahamas may vary depending on the specific type of fund, its structure and target investors. Below, we will provide a general overview of the typical licensing requirements that investment funds in the Bahamas must adhere to.
In some cases, it is necessary to obtain a license from the SMART Foundation in the Bahamas. It is intended for special purpose funds to test alternative regulation.
Persons engaged in the marketing or distribution of investment fund products will be required to register as representatives of a licensed broker-dealer or investment adviser in the Bahamas.
What legal form should a business choose to register an investment fund in the Bahamas?
Deciding the appropriate legal form for registering an investment fund in the Bahamas depends on various factors. But there are common legal forms that you can refer to when registering an investment fund in the Bahamas.
Setting up a professional fund in the Bahamas
You can also set up a professional foundation in the Bahamas. The fact is that the Bahamas offers a special regulatory regime for professional funds that are organized and managed by experienced investors. These funds are subject to lower regulatory requirements than retail funds. The legal form of a professional foundation can vary, but often includes an SAC or an IBC.
How to obtain a standard investment fund license in the Bahamas
Obtaining a standard investment fund license in the Bahamas is a structured process, with each step coordinated by the Bahamas Securities Commission. We will only list the general steps to obtain a standard investment fund license in the Bahamas.
- Determine the structure of your investment fund, including whether it will be open-ended or closed-end, and outline the investment strategy and objectives of the fund.
- Appoint a registered agent authorized to conduct business in the Bahamas. The Registered Agent will assist with the application process and liaise with regulatory authorities.
- Appoint two directors and hire several key service providers (custodian, administrator, broker and investment manager).
- Prepare the necessary fund documents, including the memorandum or prospectus, the fund's articles of incorporation, and other required disclosures. These documents must comply with Bahamian regulations and contain complete and accurate information about the fund.
- Maintain a physical presence in the Bahamas to obtain an investment fund management license (IFA must have its head office in the islands).
- Prepare and submit a standard investment fund license application to the Bahamas Securities Commission. The statement typically includes detailed information about the fund's structure, investment strategy, directors, and officers.
- SCB will conduct due diligence on the fund's founders, directors, and officers. Ensure that all individuals participating in the fund meet the eligibility and due process criteria in accordance with the rules of the Bahamas.
- Pay the required registration fees to the Bahamas Securities Commission. The fee structure may vary depending on the type and size of the fund.
If the SCB approves the application and is satisfied that the fund's requirements have been met, it will issue a standard investment fund license.