Amendments to Investment Funds Act passed

Amendments to Investment Funds Act passed
Elsworth Johnson, Minister of Financial Services, Trade & Industry and Immigration (file photo)

NASSAU, BAHAMAS-  Minister of Financial Services, Trade Industry and Immigration Elsworth Johnson said yesterday that amendments to the Investment Funds Act will address concerns by the European Union (EU) on how determination of a professional investor is made.

Johnson told Parliament yesterday during his contribution to the debate on a Bill for an Act to amend the Investment Funds Act 2019 noted, “Since the Act came into force on September 1 2019, the Securities Commission of The Bahamas which regulates investment funds in The Bahamas  as well as various participants, stakeholders and international observers have had the opportunity to see how the Act lives up to its stated objective.

“There are 24 provisions of the principal act that these provisions seek to amend. The proposed amendments strengthen the act by clarifying the scope of approval, appointment and activity of investment funds manager, the investment funds administrator, the custodian and the auditor.

“The amendments also expand the provisions for sharing information with other regulators and adjusts the transitional period for the investment funds act 2019 to facilitate adjustments being proposed in the amendment bill itself.”

Johnson added: “Importantly the bill also addresses concerns which may be hampering the European union’s full endorsement of the Bahamas Investment Funds regulatory regime, particularly in regard to how the determination of a professional investor is made.

“With respect to the investment funds manager a critical deficiency leading to the Bahamas’s implementation of the Investment Fund Act 2019 was that there regime had not been structured to provide for full assessment of the governance, operation and organizational conduct of the operators, managers or custodians of investment funds which the Act we believe largely accomplished.

“Regarding investment fund managers, the amendment bill proposes to clarify several aspects of the registration process. The amendment bill requires all persons intending to act as an investment fund manager to Bahamas based investment funds to apply for registration to the commission including those who would provide services to a professional fund.”

According to Johnson, a professional investor must be able to show the expertise, experience and knowledge necessary to make their own investment decisions.

”Under this amendment bill for a natural person to be deemed a professional investor, he or she must be able to show the expertise, experience and knowledge necessary to make their own investment decisions,” he added.

“This amendment improves investor protection provisions for this group of investors as they are no longer considered professional investors simply by having a high net worth.”