NASSAU, BAHAMAS — Amendments to the Securities legislation will address outstanding deficiencies in the protection of minority investors’ regime and other technical gaps in the legislation, according to Prime Minister Dr Hubert Minnis.
Minnis, who led debate in the House of Assembly on the Securities Industry (Amendment) Bill, 2021, noted that his administration remains resolute in strengthening the protection of minority investors through the implementation of legislative amendments.
“The objectives of the Securities Industry (Amendment) Bill, 2021, are twofold and address deficiencies in the protection of minority investors’ regime, identified in the World Bank’s Doing Business report, and to address technical gaps in the current Securities Industry Act,” he said.
He noted that as of December 31, 2019, there were 164 participants in the securities industry registered with the Securities Commission. This number was up from 157 registrants in 2018, and 2020 numbers, currently under audit, indicate a slight increase in spite of COVID-10, according to Minnis.
The prime minister noted that the amendments were prompted by the need to address outstanding deficiencies in the protection of minority investors’ regimes identified in the World Bank’s report.
”The proposed amendments will enable the commission to address technical gaps in the act,” said Minnis.
”The proposed amendments will provide for the automatic revocation of a registration, where a registrant fails to renew its registration, submit its annual filings, or to pay its annual fees as required. The amendments proposed by the Securities Industry Bill, 2021, to sections 99, 101 and 166 of the current act, are intended to address the remaining outstanding deficiencies related to the protection of minority investors.
”The outstanding deficiencies relate to the requirements for disclosure by the issuer of its financial statements and any material contracts. The amendments also make the provision of a register of public issuers mandatory as opposed to discretionary.”
According to Minnis, the commission has taken note of certain technical gaps in relation to its ability to enforce against those who fail to renew their registration in a timely and appropriate manner.
The commission, he noted, is currently conducting a full review of the Securities Industry Act to assess the need to modernize the act.
The amendments provide that where the registered person fails to renew registration before the annual renewal date, registration will be automatically revoked. Further, the registrant will be liable to pay an automatic penalty of 10 percent of the prescribed license fee to the commission.
Where a registrant fails to submit annual filings or insurance information, registration will automatically be revoked immediately.
Where the registrant fails to pay the annual fee within 30 days of it being due, registration will automatically be revoked.
Addressing the Insurance (Amendment) Bill, 2021, Minnis noted that Section 30 of the Insurance Act requires companies to obtain prior approval from the commission whenever there is a change in the beneficial ownership of the company.
“There is no specific requirement for companies to obtain prior approval whenever there is a change in senior management. The Caribbean Financial Action Task Force (CFATF) considered this a deficiency in the insurance legislation” said Minnis.
“It was deemed to affect the commission’s ability to prevent criminals from doing business in the insurance sector after the initial company registration. FATF recommendation 26 requires that financial supervisors take the necessary legal or regulatory measures to prevent criminals or their associates from holding or being the beneficial owner holding a management function in a company.
“It was determined that insurance companies should obtain prior approval from the Insurance Commission for any change in senior management in the company, to mitigate against this risk.
“In carrying out its power to supervise insurance companies under the Insurance Act, the commission determined that it was necessary to require insurance companies to obtain prior approval of the commission whenever there is a change in senior management in the company.”
He added: “This requirement is important to the commission in the exercise of its mandate to properly supervise its licensees for both prudential and AML/CFT purposes. The proposed amendment to sections 28 and 30 of the Insurance Act would achieve this end.”
