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”).
The amendments contained in the Securities Amendment Act include the following:
- 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.
- 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*.
- 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.
- 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.
- 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.
- The same person may no longer serve as CEO and Chairman of the Board of Directors of a public issuer.
- 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.
*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.
For more information, please contact, a member of our firm’s Securities Practice Group.
The information contained in this article is provided for the general interest of our readers, but is not intended to constitute legal advice. Clients and the general public are encouraged to seek specific advice on matters of concern. This article can in no way serve as a substitute in such cases.
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