2010 highlights legislative developments
The legislative agenda for the Bahamas Financial Services Board(BFSB)during the course of the year covered several pieces of industry legislation.
The Trustee Act Review Committee continued its efforts, having agreed the amendments it would wish to see introduced and having also agreed that securing the services of David Brownbill, Q.C. to preserve a well-crafted Trustee Act was fundamental to our value proposition. BFSB is grateful for the contributions received from the Central Bank of The Bahamas and the Association of International Banks&Trust Companies towards costs of this project.
There are several substantive amendments and a few minor amendments. The legislative drafting process is continuous and the final drafts will be shared with industry as soon as they are available. BFSB hopes that legislative action in early 2011 is possible.
The amendment to the 1998 Trustee Act&Perpetuities Act now joins the Bahamas Executive Entity Bill(BEE)which was resubmitted to the OAG in February of this year. The OAG recently completed its review of the bill. BEEwill complement the well-recognized environment for trust services in The Bahamas. Based on market feedback, there are several top level estate planners awaiting the enactment of this legislation.
BFSB welcomes the tabling of the bill for the new Securities Industry Act in the closing hours of 2010. This bill will transform the manner in which the securities industry functions and will greatly enhance the marketing position of The Bahamas. BFSB extends sincere thanks to the SIA Review Committee for its tireless efforts over the past 3 years.
The BFSB Arbitration Committee worked closely with the Office of the Attorney General and the Bahamas Maritime Authority to develop a comprehensive and modern Arbitration Act 2009 and Arbitration(Foreign Arbitration Awards)Act 2009. Both became law in 2010. The services of Watson Farley&Williams were secured and proved invaluable during the consultation process.
Initial proposals for amendments to the Segregated Accounts Company require additional work, with ongoing consultation with the Registrar General’s Department and OAG.
Also, proposals were submitted to the Central Bank for tweaking of the Private Trust Company regime; we await the tabling of this amendment.
The latest market oriented development was the Central Bank’s issuance of its”Guidance Notice on the Waiver of the Minimum Number of Shareholders Requirement for Applicants for a Restricted Bank and/or Trust Company Licence”. BFSB is grateful to the Central Bank for its early review and adjustment of the regime, based on a risk based analysis of this specific class of licensee.
This purpose and benefits of this amendment along with all of the earlier legislative advances will be the subject of BFSB Horizons in 2011.
Transparency and information exchange New ITC Act
With the dramatic change in the environment, greater emphasis was placed on research and communication. Directors and those who were willing to follow the ongoing chain of information gathered in 2009, would see that BFSB made a significant investment in remaining abreast of the rapid evolution in our industry. The board also secured technical assessments of the tax policy of Canada and China and the potential response by centers such as The Bahamas.
On March 20, 2010, The Bahamas achieved the G20 standard on Transparency and Cooperation in Tax Matters. This standard was first promulgated by the OECD in the 1990s. In 1998, the OECD sought to have 40 plus countries, including The Bahamas, adopt this standard. The Bahamas, in a 1999 presentation to the OECD, insisted on a level playing field. This principle was accepted formally by the OECD in 2002, as noted in a Communiqué issued by The Bahamas in 2002.
For more than 10 years, The Government of The Bahamas held firm to this principle and kept faith with the industry; likewise in 2009, The Bahamas, as an integrated member of the international community, moved to implement the standard immediately following global consensus and the achievement of its key pre-condition.
Over a 12 month period concluding in March 2010, The Bahamas successfully concluded 19 agreements to achieve the standard. As of July 1, the enforcement date of the TIEA enabling International Tax Cooperation Act, The Bahamas had inked 22 Tax Information Exchange Agreements(“TIEAs”). These reflect the G20/OECD standard that agreements should be negotiated with major trading partners and with countries that have an interest in pursuing such a bi-lateral arrangement.
During the past year, many have posed questions regarding the G20 standard The Bahamas sought to achieve. With the enactment of the enabling legislation BFSB developed an overview of The Bahamas’policy and legislative response in the form of a TIEA Q&A(available on BFSB’s website).