By NEIL HARTNELL
Tribune Business Editor
Insolvency practitioners yesterday said the Attorney General’s ambition for The Bahamas to become “the near shore Delaware of corporate structuring” was both “achievable” and “appropriate” if the correct reforms are made.
Ed Rahming, Intelisys (Bahamas) founder and managing director, told Tribune Business that this nation would need to ensure it has both the right legislative framework and necessary human capital expertise - both Bahamian and expatriate - to fulfill the vision unveiled by Ryan Pinder during the Senate Budget debate.
“I’m a positive guy, so I’m going to say off the top that I think it’s achievable,” he said of the “Delaware” comparison. “I’m a patriot. I don’t want to make it on me, but I think anything’s possible once we put our minds to it and set out exactly how we want to achieve it.”
Mr Pinder did not set out such a specific road map yesterday, but said the “terms of reference” had been completed for “a project team” featuring both public and private sector representatives that will be appointed to come up with recommendations for the transformation of The Bahamas’ companies incorporation and insolvency/winding-up regimes. Among the laws targeted for reform is the Bankruptcy Act 1870, now 152 years-old.
“Due to the rapidly evolving domestic and international economic and financial services environments, there is a clear need to improve the current law pertaining to the registration of companies, insolvency and bankruptcy in The Bahamas,” Mr Pinder told the Senate yesterday.
“In this vein, the Government of the Commonwealth of The Bahamas, led by the Office of the Attorney General, has set a goal to revise the relevant law inclusive of the Companies Act 1992; the International Business Companies Act 2000 and related legislation; and the Companies (Winding Up) (Amendment) Act; the International Business Companies (Winding Up) (Amendment) Act; the Companies Liquidation Rules 2012, 2013 and the Bankruptcy Act 1870. Yes, I said 1870.”
The Attorney General continued: “Terms of Reference have been finalised and we are prepared to appoint a project team made up of public and private sector individuals formed to overhaul the Bahamas’ registered companies, insolvency and bankruptcy legislative regimes.
“The goal now is to ensure that these relevant new proposed laws remain current, modern, competitive and reflect international best practices generally. These reforms have the ability to materially change The Bahamas’ commercial offering internationally and provide another boost to our financial services and commercial structuring markets. We look to become the near-shore Delaware for corporate structuring and reorganisation.”
The term “near shore” refers to providing services to, and attracting companies from, jurisdictions that are in relative close proximity to the US. This suggests that Mr Pinder’s focus is on the Western Hemisphere, and specifically Latin and Central America and the Caribbean, especially given that the Bahamian financial services industry has established a strong presence with its existing wealth management services.
Craig A. ‘Tony’ Gomez, the Baker Tilly Gomez accountant and managing partner, told Tribune Business that setting out The Bahamas’ ambitions to match a financial services “flagship” was the correct move in signalling the standards this nation is aspiring to reach.
The US state has created a strong presence in the global financial services market, and he added: “It’s always good to compare and align yourself with somebody close to you who’s performing well. Delaware has become a flagship for those of us in the financial services industry. The comparison with Delaware as a near-shore jurisdiction whose standards we must equal and surpass is really appropriate.
“It’s a stand-out jurisdiction and we should be able to compare ourselves favourably in that regard. It’s simply a comparison of standards. The comparison should be made with international leaders; that we stand as equals to Delaware and other jurisdictions around the world.”
Mr Gomez said an overhaul of The Bahamas’ insolvency and winding-up regimes is warranted. “There’s always new trends in the interpretation and application of insolvency law on a regulars basis,” he added. “The challenge I find with a lot of what we do is that it’s so easy to incorporate a company, but it’s extremely difficult to wind-up and unwind a company.
“So the laws and regulations on winding-up a company certainly have to be modified. I’ll give you an example. The last time we amended the Companies Winding-Up (Amendment) Act was 2011. It’s now 11 years later. The insolvency practitioners’ rules were drawn up in 2012; that’s ten years ago. The Companies’ Liquidation Rules was 2012.
“The world has gone a lot faster than that over the past decade. There is a critical need to upgrade this business platform.”