Rolle said: “The commission accepts that this change is a necessary way of ensuring that the jurisdiction opens itself in order to gain ground globally in this sector.”

Finally, the Bill proposes some slight changes in the existing Act’s licensing requirements to ensure that the directors, officers and senior managers of an administrator have to be scrutinised for fitness and propriety. A compliance officer will have to be appointed for the administrator. Express “physical presence requirements” are to be introduced to ensure that there are two senior officers residing in the Bahamas in the case of the administrator.

By way of an update on these issues, and in reference to International Business Companies, Rolle said that “the commission has reconsidered and backed the proposed restriction that IBCs not be qualified to be licensed as an administrator.”

"The and the need to address ring-fencing in respect to IBCs, the differences between IBCs and companies are companies may soon disappear.”

Oversight of administrators will largely remain the same in that every person who engages in fund administration in or from the Bahamas will be required to hold a licence. There are no substantive changes to the licensing process. The new regulations do propose to establish new requirements – some are brand new and others emanate from certain policies that the Securities Commission favours. In the case of regulation 73, the commission's policy of requiring two directors to be appointed to an administrator is now embedded in the legislation. A new requirement is in the pipeline for the administrator to appoint a chief executive officer as well as a compliance officer. The people who do these jobs are to be ‘fit and proper’ and have specific duties that the regulations prescribe. The duties of the CEO include strategic leadership, fiscal responsibility, risk management, internal controls, business conduct and acting as the chief liaison officer between the firm and the commission.

The commission knows that it cannot interfere in the business considerations of its licensees but nevertheless wants them to meet their regulatory obligations. The duties assigned to the compliance officer by statute all relate to his obligation to ensure compliance with laws, standards and reporting obligations.

The administrator's job

The final and, probably, most significant matter raised in the regulations is the nature of the obligations to be assigned to the administrator. The draft legislation seeks to set fines and outline the nature of the duties and obligations assigned to the various parties whose activities are related to an investment fund. In this regard, according to Rolle, the commission wants a number of duties provided for in regulation 74(1)(a-c and e) to be reassigned to either the operators of the fund or to the investment manager, which she described as “more appropriate parties.”

She went on: “Related to the change in the requirement for the fund to appoint a licensed administrator as its principal office, there is another key change in the legislation the imbalance of the administrator's role versus the investment manager's responsibilities proved too onerous for the administrators of large institutional funds and, as a result, industry has not seen development in this area. By addressing this issue, we believe that the industry can once again vie for position in the institutional space.”

The concluding part of this account will be published shortly. It will look at the Bahamas' plans for reforming the regulation of fund managers and custodians.