Bahamas - IFLR1000_1_ by dandanhuanghuang


									58   Bahamas

     Chamber of commerce:                             Professional body:
     Bahamas Chamber of Commerce                      Bahamas Bar Association
     PO Box N-665                                     PO Box N-4632
     Nassau                                           Nassau
     Bahamas                                          Bahamas
     Tel:    +1 242 322 2145                          Tel:    +1 242 326 3276
     Fax:    +1 242 322 4649                          Fax:    +1 242 328 4615
     Web:                      Email:

     Overview of Bahamian financial                   amendments in 2005 and 2007 to further fine        Commission of The Bahamas’ policy it will be
     products                                        tune this tool.                                   eligible to be licensed within 72 hours.
                                                         Foundations may be used for commercial,
     Michelle Neville-Clarke                         private or charitable purposes and enabled the    Private trust companies
     Lennox Paton                                    Bahamas to better tailor make products not        The Private Trust Company (PTC) continues
     Nassau                                          only for its clients from common law jurisdic-    to be a favoured tool in wealth management
                                                     tions but those from continental European         with PTCs being formed for the express pur-
     The Bahamas has been an independent mem- and Latin America governed by civil law.                 pose of acting as a trustee of a specific trust, or
     ber of the British Commonwealth for more                                                          group of trusts for members of a family
     than 35 years, with a long history of political Investment funds                                  enabling the settlor and family members to
     stability. The basis of the Bahamian law and A new legislative regime for investment funds        retain control over the administration of the
     legal system is English common law tradition. was introduced in 2003. It was aimed at cre-        family trusts. PTCs also provide the possibili-
     There are resident justices appointed to the ating a more attractive risk-based regime. The       ty in greater privacy concerning a family’s
     bench of the Supreme Court, inclusive of the Investment Funds Act 2003 (the IFA),                 affairs and continuity in trustee.
     Chief Justice, and resident justices appointed encompassed a regulatory system for the pro-
     to the Court of Appeal, inclusive of the fessional fund, the standard fund, the specific           Segregated accounts companies
     President, however, the final court of appeal is mandate alternative regulatory test fund          The introduction of the Segregated Accounts
     the Privy Council which is seated in England. (Smart fund) and the recognised foreign fund.       Companies Act and resultant ability for busi-
         The Bahamian judicial system is well            Smart funds are by far the most novel fund    nesses to be registered as segregated accounts
     respected, and The Bahamas has a good pro- and are those that satisfy certain prescribed          companies continues to be beneficial in struc-
     fessional infra-structure dedicated to serving parameters and requirements of a category,         turing asset management vehicles in the
     the financial services industry. The Bahamas class or type of investment fund previously           Bahamas. The following companies are eligi-
     also continues to introduce new legislation to approved by the Securities Commission.             ble to be registered as a segregated accounts
     stimulate further growth and maintain its Smart funds will allow the investor varying             company:
     attractiveness as a well-established financial degrees of disclosure and regulatory oversight          i)     investment funds;
     services sector.                                and can save the investor time and money              ii)    issuing securities;
         The environment created between the pol- with the pre-approved registration that they             iii)   insurance; and
     icy makers, private industry and the regulators are accorded.                                         iv)    other business with the consent of
     in The Bahamas allows the country to remain         The Securities Commission has at present      the primary regulator.
     efficient and effective at coupling the need to approved five templates for new Smart funds             Companies registered as segregated
     adhere to internationally accepted regulatory and financial institutions or professional advi-     accounts companies are able to establish
     principles while being mindful of the needs sors may submit written proposals to the              accounts containing assets and liabilities that
     and growing demands of the financial services Securities Commission for the approval of            are legally segregated from the assets and lia-
     sector.                                         additional templates thus enabling the legisla-   bilities of the company’s ordinary account,
         The legislation of the Bahamas continues tion to encompass new structures in the ever-        thus allowing the assets of one account to be
     to evolve and currently provides an ideal evolving financial sector.                               protected from the liabilities of another
     toolkit from which one can make the perfect         Indeed the most recent Smart Fund, SMF        account.
     craft for their private wealth management 006 was introduced this year. The main char-                This ability to segregate accounts removes
     clients, some of which are the foundation, acteristic of the SFM006 is to provide a facil-        the need to use separate companies for each
     investment funds, private trust companies and ity (an account) for funds to separate illiquid     investment strategy whilst affording each seg-
     segregated accounts companies.                  or hard to value assets from other more liquid    regated account the same limited liability that
                                                     investments of the fund.                          would be obtained if separate companies were
     Foundations                                         As a SFM006 will be restricted only to        used. In addition, a company may be struc-
     The Bahamas was one of the first common existing shareholders in an identified                     tured whereby each investor has their own
     law countries to pass laws for the creation of Bahamian investment fund which is restricted       segregated account.
     foundations and since their introduction in to investors to whom a professional fund may              The Bahamas remains committed to con-
     2004 the Foundation Act has undergone be offered and under the current Securities                 tinuing to provide the perfect toolkit for prac-
                                                                                                       titioners and The Bahamas government aims                                                                                                                  2010 EDITION
                                                                                             Financial and corporate | Bahamas                              59

to ensure that The Bahamas fully complies           Organization, in which the Bahamas current-           lar increase in its funds practice with regards
with the enhanced norms now being demand-           ly has only observer status.                          to South American fund managers.
ed in the financial services sector while main-          In lieu of this source of income the govern-
taining its commitment to the wealth man-           ment will be challenged to create new revenue         Leading lawyers
agement industry.                                   streams, and may consider changing its tax            Linda Beidler-D’Aguilar
                                                    neutral status to the low tax structure adopted       Sean McWeeney
                                                    by Barbados in 1997. These taxes could come           Dana Wells
Financial and corporate                             in several forms- a sales tax, value-added tax or
                                                    a tax on registering an incorporation, which in
Recommended firms                                    essence already exists in the form of a business      Higgs & Johnson
Tier 1                                              licensing fee. Financial lawyers expect some          The addition of two partners to Higgs &
Graham Thompson & Co                                important decisions regarding the nation’s tax        Johnson’s financial practice last year brings
Higgs & Johnson                                     status to be made this year.                          new leadership to the commercial practice.
Lennox Paton                                            While a low tax structure would mark a            Partner Michael Allen, a former McKinney
McKinney Bancroft & Hughes                          substantial shift for the Bahamas, lawyers            partner and chairman of the Financial
                                                    foresee this model will have the benefit of            Services Board, has long been a presence in
Tier 2                                              removing the stigma created by the current            the private wealth market. The firm contin-
Callenders & Co                                     tax neutral status. Even if businesses will have      ues to be a high-profile player in trusts, with
Klonaris & Co                                       additional costs associated with doing busi-          Earl Cash leading the practice team.
                                                    ness there, the sophisticated nature of the              Though the firm has a strict policy of
Tier 3                                              financial services industry in the Bahamas will        keeping the details of its transactions confi-
Alexiou Knowles & Co                                continue to be attractive to investors.               dential, the firm has been involved in sever-
Glinton Sweeting O’Brien                                                                                  al multi-million dollar refinancing projects
Harry B Sands Lobosky & Co                                                                                involving utility and power providers. The
                                                    Graham Thompson & Co                                  firm has also drawn on its connections to
The developed world has always had a fickle          Although quite proud of its members that              US and European firms as part of the
relationship with the offshore jurisdictions,       have entered public service – three partners          TerraLex professional network.
and with the advent of the global financial cri-     have gone on to become attorney general –                With respect to their funds practice,
sis the leaders of the G20 nations looked to        the partners of Graham Thompson admit it              Higgs & Johnson has kept active recently
these markets with torches lit and pitchforks       creates challenges. Most recently, partner            with the restructuring of funds in light of
held high. Though the infamous blacklist            Michael Barnett ascended to the post of attor-        the world economic crisis. The purpose of
failed to materialise, a so-called grey list of     ney general in July 2008, following former            the restructurings is to simplify the fund
non-co-operative countries includes the             attorney general and fellow Graham                    structures for the purpose of better valuating
Bahamas in its ranks.                               Thompson alum Claire Hepburn’s appoint-               assets, and to appeal to the increasingly con-
    The increased pressure has sparked strong       ment to the country’s Supreme Court. In the           servative nature of investors.
discussions as to the future of the offshore        analysis of one competitor the departure
industry, and businesses operating in these         “speaks well of those individuals but has left a      Leading lawyers
jurisdictions may have to resign themselves to      bit of gap.” Graham Thompson recently                 Earl Cash
greater scrutiny in the increasingly-intercon-      brought in former judge Hugh Small to                 John Delaney
nected world of international finance. As one        replace the loss of senior talent in its litigation   Heather Thompson
lawyer says: “In the end, you have to accept        team.
the world for what it is and you have to                As with all Bahamian law firms, confiden-
change.”                                            tiality is key to the attorneys of Graham             Lennox Paton
    In response to calls for greater transparen-    Thompson, though the firm did take part in             Though competitors say their peripheral
cy the Bahamas government announced last            several high-profile transactions recently.           practice areas are still developing, all agree
March it intends to comply with transparency        Through the latter half of 2008 the firm               that Lennox Paton has a solid tier one pres-
standards set forth by Organisation for             advised Butterfield Bank’s fund administra-            ence in financial services. The firm has been
Economic Co-operation and Development.              tion arm in the sale of a share to fund manag-        steadily growing its lawyer base and recently
This process will include signing more Tax          er Fulcrum Group, a subsidiary of private             hired partner Arthur Seligman to lead the
Information Exchange Agreements like the            equity firm 3i. The merger gives 3i a majority         trust practice team, as well as former court
one the Bahamas has shared with the US since        stake in the resulting company, called                of appeal judge Lorris Ganpatsingh as spe-
2002.                                               Butterfield Fulcrum Group, which will over-            cial counsel for arbitration matters.
    In October 2008, the Bahamian govern-           see nearly $100 billion in assets.                        Credit for the firm’s significant invest-
ment signed an Economic Partnership                     The firm was also on hand as local coun-           ment funds practice is given to partner
Agreement with Europe, opening the way              sellors for the Royal Bank of Scotland in the         Michael Paton, who one competitor notes
toward free trade with the European nations.        establishment of a $400 million revolving             has “achieved a good reputation in this
The agreement, which forces the Bahamas to          credit facility to oil and gas producer Dana          area.” The firm’s recent funds activities
phase out its duty tariffs over the coming          Petroleum, financing last April’s acquisition of       involve some complex matters, including
months, marks a substantial sea change in the       fellow oil company Bow Valley Energy.                 the representation of a $3 billion fund
Bahamian economy, which relies heavily on               Graham Thompson is a perennial adviser            impacted by Bernard Madoff ’s ponzi
tariffs and import duties to fund its opera-        to investment funds, with clientele ranging           scheme and a $450 million fund involved in
tions. The elimination of tariffs is also crucial   from international players to smaller niche           a dispute with the Brazilian government.
for the nation’s entrance into the World Trade      markets. Recently, the firm has seen a particu-

2010 EDITION                                                                                                              
60   Bahamas | Financial and corporate

        Lennox Paton has also been active with
     the local resort development industry,
     though the partners admit there has been a
     definite slowdown in projects. The firm is
     advising the joint venture between resort
     developers Starwood Vacation Ownership
     and Kerzner International for their develop-
     ment of the Harborside Resort at Atlantis
     on Paradise Island. The firm was also
     involved in the financing of the Albany golf
     resort in New Providence as counsel to

     Leading lawyers
     Michelle Neville-Clarke
     Michael Paton

     McKinney Bancroft & Hughes
     The partners of McKinney have developed a
     reputation as strong litigators but also main-
     tain a significant presence in corporate mat-
     ters. In recent months these areas have
     blurred, as corporate clients are increasingly
     becoming litigation clients. Recently, the liti-
     gation department has been involved in sever-
     al large insolvency matters, representing liq-
     uidators with claims in excess of $300 million.
         In the predominately nationalised telecom
     market McKinney has the fortune to repre-
     sent IngiGO, a local arm of telecom company
     Systems Resource Group, as it attempts to
     crack the Bahamas Telecommunications
     Company’s monopoly on the industry. With
     the Bahamas government expected to at least
     partially privatise the sector in the second half
     of 2009, lawyers expect to see a great deal of
     activity in this area in the ensuing months.
         Last March, a McKinney team closed a
     deal for a syndicate of lenders led by Citibank
     in a loan facility to the Nassau Airport
     Development Company, a partnership
     between the Bahamian government and
     Canada’s Vancouver Airport Services. The
     $265 million loan will be used to finance a
     development and renewal project at the
     Lynden Pindling International Airport, the
     largest airport in the Bahamas. The firm is
     also representing resort developer Rav
     Bahamas through its casino license applica-
     tion for a Bimini Bay resort.

     Leading lawyers
     Brian Moree
     John Wilson                                     2010 EDITION

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