The Bahamas is an attractive jurisdiction for investment funds because it allows for fund administrators to licence investment funds without prior application to the regulator and does not require the investment manager or advisor to be licensed or regulated. Sovereign can provide comprehensive fund formation and licensing services – as well as ongoing administration, including accounting, registrar, transfer agency and compliance services.*
Bahamas SMART (“Specific Mandate Alternative Regulatory Test”) Funds are licensed funds subject to a lighter regulatory touch than other licensed funds and are intended for a limited number of investors and/or incubator-type situations where a fund is in the course of raising capital and attracting investors. SMART Funds require no Offering Memorandum and allow the annual audit to be waived. For situations which do not meet the criteria for a SMART Fund, there are “Professional” Funds and “Standard” Funds, the former being funds available to a limited number of high net worth investors or financial institutions and the latter being suitable for “retail-type” funds with a relatively high number of smaller investors.
All licensed funds in the Bahamas require a minimum of two directors (who need not be Bahamas residents) and, with the exception of certain types of SMART Fund, a Bahamas-licensed Administrator.
In September 2014, the Bahamas became the first common law jurisdiction to create an investment fund vehicle that aligns with the traditional structuring of Brazilian funds. The Bahamas has termed this fund the Investment Condominium or “ICON”. Similar to the Brazilian condominium, the ICON possesses no distinct legal personality, which is addressed through the appointment of an administrator that is empowered to transact in its name, and represent and bind the ICON. The ICON’s purpose is defined as the contractual relationship subsisting between participants agreeing to the pooling of assets for the purpose of investing those assets collectively. The ICON can be structured and licensed as a SMART Fund, Professional Fund or Standard Fund in The Bahamas. Other types of entities – companies, exempted limited partnerships or unit trusts – may convert to an ICON.
* Sovereign’s fund services in the Bahamas are provided through our regulated associate firm Sterling (Bahamas) Limited.