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Minister Elsworth Johnson B. G., Opalesque Geneva: The Bahamas has been busy updating its legislation these last few years to make it easier for businesses to settle and people to work. Indeed, the government has been facilitating the ease of doing business, ensuring compliance with international best practices, digitalizing the public sector, offering one-year permits, setting up an international arbitration centre, refining its SMART funds' mandate, providing a legal framework for digital assets, and creating a digital representation of its fiat currency.
One of the recent innovations is the Commercial Enterprises Act, which became legislation in December 2017. The Act aims to retain the Bahamas' competitive edge in the world's financial services industry, ranking as the fourth largest offshore financial centre in the world, after the Cayman Islands, Hong Kong, and Singapore, according to Lawyerlex.
It "is directly linked to the decision of the government to foster certain industries in the Bahamas - including captive insurance, reinsurance, mutual fund administration and wealth management - and to facilitate the ease of doing business," says Kevin Moree, a partner at McKinney Bancroft & Hughes, one of the largest and oldest law firms in the Bahamas, during Opalesque's recent Bahamas Roundtable. "Entities which qualify under that Act are provided certain expedited services, particularly in connection with immigration, helping them to set up and get running as quickly as possible."
Another significant piece of legislation, Moree added, is the Commercial Entities (Substance Requirements) Act (CESRA), which was passed to ensure compliance with international best practices related to the prevention of tax evasion/avoidance through profit shifting.
There is also the total digitization of the public sector services, said Elsworth Johnson, the Minister of Financial Services, Trade & Industry and Immigration, who participated in the roundtable. "Now you can get your passport electronically, renew your driver's license and make immigration applications all online," he says.
And then there is BEATS - should you wish to take your portable office for a year to the Bahamas. "We have The Bahamas Extended Assess Travel Stay Programme (BEATS) which is similar to the annual permit to reside and makes it easier and faster for non-residents to get approval. Under the program, non-residents will be able to apply for a permit online and receive permission to live in The Bahamas for remote work or study purposes for up to one year," Johnson says.
The department of immigration created a portal for applicants in March. By the end of June, short-term work permits and residence spouse permits applications will be automated. By September, all immigration applications will be done online.
Another change that is currently being processed is arbitration. The Bahamas wants to become an international arbitration centre. "The Ministry recently established an ADR (alternative dispute resolution) Unit and engaged an arbitration consultant with responsibility for the roll-out of international arbitration and other alternative dispute resolution processes in The Bahamas," Johnson explains. "Since August 2020, our Ministry has met with the Office of the Judiciary and other industry stakeholders with a strong focus on ADR legislative reform. We have finalized our amendments to the International Commercial Arbitration Bill 2018 and will circulate the same for a short consultation period in Summer 2021." He hopes the bill, which will incorporate the UNCITRAL Model Law into domestic law, will be enacted in the next few months.
Furthermore, the Bahamas continues to refine existing products such as SMART funds. The Specific Mandate Alternative Regulatory Test Fund (SMART Fund) was introduced under the Investment Funds Act, 2003 as an additional style of a collective investment vehicle. The primary facility offered by the SMART Fund concept is an open architecture which allows practitioners to design innovative structures, akin at times to special purpose vehicles, without reference to inflexible regulatory criteria predefined in legislation.
"Over the last two years, we have also introduced new legislation in accordance with international best practices regulating investment managers providing services to Bahamian investment funds," says Christel Sands-Feaste a partner at Higgs & Johnson, a corporate and commercial law firm. "Clients who choose to utilize the Bahamas for investment fund structures have the assurance that the investment manager must meet, firstly, international standards of fitness and properness, and secondly, will be regulated by the Securities Commission of the Bahamas in a very transparent manner through a registration process that is tailored to take account of the level of risk associated with the services provided by investment managers."
Furthermore, there is the Digital Assets and Registered Exchanges Act 2020 (the DARE Act), which provides the legal framework to regulate the issuance and sale of digital assets, or crypto-assets, including digital tokens. "We have certainly seen a huge increase in interest in clients wishing to establish digital asset businesses in The Bahamas within the regulatory framework of the DARE Act," she says.
Last but not least, in comes the Bahamas Sand Dollar. "It is simply the digital representation of our fiat currency. This means that people can now own and use our Bahamian dollar also in digital form which has a lot of advantages," explains Andrew Rolle, founder of Mundo Advisors, a boutique legal and corporate services firm. "Let me also make clear that the Bahamas Sand Dollar is not a cryptocurrency but our currency in digital form and so it ties in perfectly into our existing financial and economic infrastructure and complements our traditional wealth management products."
You can read the full Bahamas roundtable report here:
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