The Tribune

By FAY SIMMONS

Tribune Business Reporter

jsimmons@tribunemedia.net

Reforms to two key corporate products will boost the Bahamian financial services industry’s competitiveness by enabling it to provide more flexible structures to clients, the Attorney General has charged.

Ryan Pinder KC, speaking on the reforms to the Exempted Limited Partnership (ELP)Act and the International Business Companies (IBC) Act in the Senate, said the changes will impact commercial corporate structures as well as the investment funds industry.

He said: “These pieces of legislation are important for our second industry in our country, our financial services industry. Yes, they’re technical. And yes, they do technical things, but they are fundamental, even in an increment, to the advancement of our industry.

“The amendments before us are important. They’re important in our investment funds industry. They’re important in our commercial structuring industry. And they are important to provide the flexibility required by our financial services industry to be able to stay competitive.”

Mr Pinder explained that the IBC Act changes will allow ELPs incorporated in The Bahamas to be convert into an IBC. He said: “This Bill looks to insert a new section 84(c) into the principle Act and it’s a straightforward amendment. It allows and empowers, for Exempted Limited Partnerships incorporated in The Bahamas, to be able to convert and continue [as] an international business company.”

He added that reforms to the ELP Act will allow this product to continue as a limited partnership in another jurisdiction and also be converted, if the client desires, into an investment condominium (ICON). “What this bill does is add a number of sections that deal with the continuation of entities. In particular, this allows for the continuation of an Exempted Limited Partnership as a limited partnership in another jurisdiction,” Mr Pinder said.

“So a Bahamian partnership can now be continued out of the jurisdiction into another partnership in another jurisdiction. This also allows for the conversion of an Exempted Limited Partnership into an investment condominium.” Mr Pinder said the later reform is particularly important to the financial services industry’s Brazilian customers.

He added: “An investment condominium is a particular entity, a particular structure actually created when I was minister of financial services, to allow for a framework for investment funds for our civil law country clientele. Primarily Brazilian clients, where they have a different view of entities in their laws. And many of their investment funds are structured as condominiums. And so what this allows is for an Exempted Limited Partnership under Bahamian law to continue.”

The Attorney General said the reforms to both Acts will allow assets, liabilities and taxes to be carried over from one product to the next, thereby strengthening the commercial structuring regime.

“These are technical Bills, but they’re important Bills in the world of financial services and commercial structuring. Being able to convert your entity into a different type of entity is fundamental for a number of reasons,” he said.

“In law, when you dissolve an entity, you have adverse tax effects. You have certain minority interest rights that come into play. You have a number of different legal obligations and rights that come with dissolving an entity. As you can see in these Bills, when you continue an entity, the corporate fundamentals of that entity continue - the assets, the liabilities, the tax implications, the ownership of this continues into the new entity. This is important from a structuring point of view.”

Mr Pinder said the reforms will incentivise nigh net worth clients and their advisers to continue doing business within The Bahamas. He added that the financial services industry must continually evolve and not “sit on our laurels”.

“It’s also important, from a client’s point of view, to have confidence in the country,” he added. “To allow that client to have the flexibility to continue a fund, for example, that may be a partnership into an investment condominium is vital to keep that client in this jurisdiction.

“And Lord knows we need to continue to innovate and evolve to keep our clients in this jurisdiction. I support continued innovation in the industry. It’s vital when you see banks closed down. We’ve always had a policy that you see asset managers come into existence, evolve the industry into new types of offerings and activities. That is the game that we are in. Gone are the days we could sit on our laurels and have the same approach year after year.”