The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas was yesterday aiming “to at least double” its registered investment funds business through an ‘ICON-ic’ product’s launch, plus steal market share from rival international financial centres (IFCs).

Ryan Pinder, minister of financial services, told Tribune Business that between “two-three dozen” potential Brazilian funds were ready to immediately domicile in the Bahamas as Investment Condominium (ICON) products, once the necessary legislation was passed.

Leading debate on the Investment Condominium Bill 2014 during its second reading in the House of Assembly, Mr Pinder said the legislation was designed to position the Bahamas as an innovator and market leader.

Its passage, he explained, would make the Bahamas the first common law jurisdiction with an investment fund product whose structure matched that found in the domestic Brazilian market.

With Brazilian investors, high net worth individuals and their families increasingly looking to diversify their portfolios outside their homeland, Mr Pinder said familiarity with the ICON’s structure should attract this business and encourage clients to redomicile to the Bahamas from other IFCs.

“We would hope to at least double our fund registration business,” Mr Pinder told Tribune Business of government and financial services industry hopes for the ICON.

“We already probably have two dozen funds in Brazil awaiting passage of the Bill in the Bahamas.”

With the ICON facilitating an increase in Bahamian-domiciled investment funds, Mr Pinder said this would translate into increased business for fund administrators and other sectors in the financial services industry.

The Minister said that based upon initial feedback, the Bahamas was likely to see “significantly increased business right away from Brazil”.

And efforts to promote the ICON, which was conceived based on feedback from Brazilian financial services professionals and their clients, are not being confined to the South American nation.

Mr Pinder confirmed to Tribune Business that the Bahamas will launch the ICON in Mexico next month, coinciding with this nation’s sponsorship of the Society of Trust and Estate Practitioners (STEP) Latin American conference, which is being held in that nation.

Peru and Chile are also ICON targets, as together with Mexico they are all civil law jurisdictions familiar with the structure used in the Bahamas’ latest financial services product. They also allow tax benefits when it comes to Controlled Foreign Corporations (CFCs).

Addressing the House of Assembly, Mr Pinder said the ICON would build on the success enjoyed by this nation’s SMART fund product - a consistent growth area that has been the Bahamas’ sole expanding investment fund niche.

SMART funds have seen 15-20 per cent growth in recent years, and Mr Pinder said 50-60 per cent of these had been formed to meet the needs of Brazilian financial services providers and their high net worth clients.

Suggesting that the ICON would build on the Bahamas’ reputation for innovation, started with the likes of the SMART fund, foundations and Executive Entity, Mr Pinder said: “Being nimble and innovative is the foundation to the re-defining of the Bahamas financial services industry.

“The ICON is another example of The Bahamas’ never-ending commitment to be first in class in the provision of market responsive, regulated and sophisticated products, but only the latest example of it.”

While SMART funds, especially the latest 007 template, had proven attractive to the Brazilian market, Mr Pinder said the ICON would provide a more familiar structure.

It will allow fund participants to pool assets for collective investments in an unincorporated entity, with an administrator acting on the ICON’s behalf and representing it in all matters.

Apart from attracting new funds business from Brazil and other civil law-based Latin American countries, Mr Pinder said the Bahamas felt the ICON would “attract significant business from other jurisdictions”.

To facilitate such re-domiciling by clients in other IFCs, the Government is also amending the Companies Act; International Business Companies (IBCs) Act; Exempted Limited Partnership Act; and Investment Funds Act.

Mr Pinder said an added bonus from these amendments was a boost to the ‘ease of doing business’ in the Bahamas.

The changes, he added, will allow the Registrar General’s Department to receive and process online company incorporations, deal with Certificates of Incorporation and other matters relating to companies and corporate law.

“These amendments, although seemingly small, are very significant to the ease of processing of company documents and enabling the incorporation and other activities as determined to be accomplished electronically,” Mr Pinder said.

“Those in the practice would recognise this is a significant step forward in the ease of doing business.”