Bahamas Investment Funds
An investment fund is a recognised legal structure in the Bahamas that issues or has equity interests, the purpose or effect of which is the pooling of investor funds with the aim of spreading investment risks and achieving profits or gains from the acquisition, holding, management or disposal of investments.
The Investment Funds Act 2003, which coupled with a progressive approach to regulation and a reputation for quality administration positioned the Bahamas at the cutting edge of modern investment fund administration, recognises four classes of Funds:
- The Standard Fund, which anticipates an offering to the general public, is a highly regulated, modern investment vehicle designed to operate as a traditional collective investment scheme.
- The Professional Fund is a separate class designed for sophisticated investors and may be licensed by an authorised administrator (in addition to the SCB) thereby enabling faster time to launch.
- The SMART Fund is a ‘specific mandate alternative regulatory test’ fund suitable for innovative structuring of investment funds. The primary facility offered by the SMART Fund concept is an open architecture that allows practitioners to design innovative structures, like special purpose vehicles, without reference to inflexible regulatory criteria predefined in legislation.
- The Recognised Foreign Fund is an investment fund incorporated or established – and in good standing – in a prescribed jurisdiction.
The Act retained the ability of local fund administrators with an unrestricted licence (‘authorised administrator’) to license professional and SMART investment funds independently of the regulator. This ability to launch new funds based on the due diligence review of the authorised administrator is a significant advantage for the Bahamas.
The Bahamas Investment Condominium (ICON) is a structuring vehicle that can be licensed as a SMART Fund, Professional Fund or Standard Fund in the Bahamas. It is not a company, or a partnership or a trust. It is a pooling mechanism and operating instrument for investment funds. The structure is then licensed and fully regulated as an investment fund – using existing vehicles such as the IBC, Exempted Limited Partnership or Unit Trust.
* Sovereign’s fund services in the Bahamas are provided through our regulated associate firm Sterling (Bahamas) Limited.