1. The Securities Industry (Amendment) Act, 2019 (the “Securities Amendment Act”) came into force on 30 April 2019. The Securities Amendment Act made certain amendments to the Securities Industry Act, 2011 (the “SIA”) to, among other things, (i) clarify the Securities Commission of The Bahamas’ (the “SCB”) powers regarding the authorization, regulation and supervision of any persons regulated by the SCB; (ii) clarify the circumstances where judicial review is possible; (iii) bring the SIA in line with evolving international AML and International Organization of Securities Commissions (“IOSCO”) principles on securities regulation; and (iv) eliminate overlapping provisions between the SIA and the proposed new Investment Funds Act, 2019 (the “IFA 2019”).
  2. The amendments contained in the Securities Amendment Act include the following:
  3. The registration of a registered firm (authorized to engage in the business of dealing, arranging deals, and managing or advising on securities) will cease to be effective if the registrant fails within the prescribed timeframe to (i) pay all prescribed annual fees and applicable penalties or (ii) file all applicable notices, documents, reports or other prescribed documents and materials.
  4. The powers of the SCB have been expanded to expressly include the supervision of activities, conducting investigations and hearings and imposing sanctions on regulated persons and market participants, with respect to compliance with the Financial Transactions Reporting Act, 2019 (the “FTRA”). In this context, a “regulated person” includes a registered firm, a registered market place, an investment fund manager and an Alternative Investment Fund Manager (an “AIFM”) as defined in the proposed IFA 2019*.
  5. The SCB’s authority to access records and request information from regulated persons has been expanded to enable the SCB to do so for the purpose of satisfying itself that the provisions of the SIA and the FTRA are being complied with or for assisting with the administration of the securities legislation in another jurisdiction. The type of information that the SCB may request or access during an investigation has also been amplified to expressly include, audit information, telephone records and records maintained by internet service providers or other electronic communication providers located in The Bahamas.
  6. The SCB is now empowered to waive any automatic administrative penalty, in whole or in part, where it considers that it would not be contrary to the public interest to do so.
  7. A person directly affected by a decision of the SCB at a hearing, other than a non-appealable decision, may appeal to the Supreme Court within thirty days of the later of (i) the making of the decision or (ii) the issuing of reasons for the decision. In the case of any other decisions of the SCB (other than those from a hearing), which are not stated to be final or not subject to appeal, a person directly affected by such decision may apply to the Supreme Court for judicial review within 30 days after the later of (i) the making of the decision or (ii) the issuing of reasons for the decision. However, an approved settlement agreement in any matter involving disciplinary proceedings before a panel established by the SCB is not subject to an appeal or judicial review.
  8. The same person may no longer serve as CEO and Chairman of the Board of Directors of a public issuer.
  9. The exemptions from registration under the SIA for investment management firms engaged solely in the business of providing investment management or advisory services to investment funds licensed or registered by the SCB as professional, standard or SMART funds, have been eliminated. Based on the latest draft of the IFA 2019 circulated by the SCB earlier this year, it is anticipated that these firms be subject to licensing or registration, under that Act.
  10. *Based on the latest draft of the IFA 2019 circulated by the SCB earlier this year, an AIFM is defined as a company incorporated under the Companies Act, 1992 or the International Business Companies Act, 2000 which (a) markets an investment fund or European Union Alternative Investment Fund (“EU AIF”) in the European Union; or (b) manages an EU AIF whether or not it is marketed in the European Union, and is licensed under the IFA 2019.
  11. Directors and officers are now prohibited from voting on any director or shareholders’ resolutions to approve (i) any material contract in which such director or officer has an interest or (ii) any contract whatsoever, if the contract relates in any way to personal loans or advances to such director by the company or the director or officer’s personal remuneration or benefits.
  12. A new section has been inserted into the Principal Act which allows any shareholder of a company, either in person or by their attorney, and in furtherance of a proper purpose, to request in writing, specifying the purposes, to inspect the share register, books, records, details of transactions with related parties, directors’ disclosures of material interests, minutes and consents kept by the company, during normal business hours and to make copies. In this context, a “proper purpose” is a purpose reasonably related to a shareholder’s interest as a shareholder. If a company refuses a request, a shareholder may within 90 days of his receiving notice of the refusal apply to the court for an order to allow the inspection.
  13. The Registrar of Companies is mandated to remove a company from the register of companies (i) after being notified by the Competent Authority that the company is not compliant under the Commercial Entities (Substance Requirements) Act, 2018 or (ii) the company’s registered office failed to meet its obligation to identify and verify its beneficial owners in accordance with the provisions of the Register of Beneficial Ownership Act, 2018. Before removing a company from the register of companies, the Registrar will send a notice to the company (i) advising of its findings of non-compliance and (ii) stating that the company will be removed from the register, unless (a) the default is remedied within 21 days of receipt of the notice or (b) the beneficial owners are identified and verified within 21 days after receipt of the notice.
  14. Where a company is removed from the register of companies all property of the company (including money and negotiable instruments), except property which is being held on trust for another person, will be held on trust by the Treasurer for the shareholders of the company for 20 years. After the expiration of the 20 year period, the property is deemed to belong to the Treasurer for the benefit of The Bahamas. Any property vested in the Treasurer may not be disposed of without the prior approval of both Houses of Parliament.