1. THE FINANCIAL SERVICES SECTOR Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT): By: Samantha Knowles-Pratt

2. 2 The Nassau Conference 2014 The Bahamas’ Investment Condominium (“ICON”) Samantha Knowles-Pratt Partner, Delaney Partners © Copyright Delaney Partners October 2014

3. 3  Name must be reserved with the Registrar General (“Registrar”).  Initial Participants agree and sign the Governing Regulations – this establishes the condominium.  Initial Participants appoint the governing administrator and the general administrator.  Certificate of Establishment is issued by the Administrator and submitted to Registrar along with fee within 7 days of date of establishment for stamping by the Registrar.  A Registrar stamped certificate is evidence of compliance with registration requirements. Governing Regulations may but need not be filed.  ICON must be licensed as an investment fund within 90 days of date of establishment. ESTABLISHMENT & REGISTRATION © Copyright Delaney Partners October 2014

4. 4 Must contain the following: The NAME OF THE ICON (must include “ICON,” “IC” or “Investment Condominium”); STATEMENT that it shall be LICENCED as an INVESTMENT FUND; The ADDRESS IN THE BAHAMAS FOR SERVICE OF PROCESS; The NAME AND ADDRESS OF THE ADMINISTRATOR; The DATE OF ESTABLISHMENT. Note well: publicly filed with RGD CERTIFICATE OF ESTABLISHMENT © Copyright Delaney Partners October 2014

5. 5  Name;  Statement that it is formed exclusively to operate as an investment fund (statement of purposes);  Name and address of Administrator (governing and general);  Address in The Bahamas for service of process;  Provisions relating to audit (note SFM waiver exceptions preserved);  Duration of the ICON;  Provisions for the dissolution of the ICON;  Number and currency of participation interests to be issued;  Rights, powers (voting/non-voting) of the participation interests;  The manner in which material agreements and Governing Regulations are to be amended;  Liability of participants ;  Valuation procedures;  Duties of the governing administrator and general administrator;  Such other items as are required by the Investment Funds Act and Regulations, 2003; CONTENT OF GOVERNING REGULATIONS © Copyright Delaney Partners October 2014

6. 6 RIGHTS OF PARTICIPANTS  Entitled to participation interests and to redemption.  Participation interests can be issued as voting or non-voting.  Voting participation interests may remove and replace the Administrator.  Disclosure and other rights as investors as required by the Investment Funds Act, 2003 (“IFA”). © Copyright Delaney Partners October 2014

7. 7 GOVERNANCE & MEETINGS Administrator is required to call at least 1 meeting a year of participants – this annual meeting may be held in The Bahamas or anywhere in the world as the Administrator determines.  Participants may require that other meetings be held on their requisition to the Administrator.  Provisions as to meetings are as per the Governing Regulations but if silent, default provisions as per Investment Condominium Act, 2014 (“Act”).  Quorum as per the Regulations or if silent: For meetings at which an extraordinary resolution is to be considered: participants holding twenty-five percent of the issued and outstanding voting participation interests. For meetings at which an ordinary resolution is to be considered: participants holding ten percent of the issued and outstanding voting participation interests. © Copyright Delaney Partners October 2014

8. 8 ADMINISTRATION The initial Participants appoint an Administrator. Voting Participants have power to remove or replace Administrator. Single institution performing governance and general administrative roles possible. Separate institutions splitting those roles – the governing administrator and general administrator. 1.General Administrator must be a financial institution licensed by the Securities Commission of The Bahamas (“SCB”) as a restricted or unrestricted fund administrator. 2.Governing Administrator must be: Restricted or unrestricted investment fund administrator A financial and corporate service provider Licenced dealer in securities Bank or trust company licensed by the Central Bank of The Bahamas (“CBB”) Entity in foreign jurisdiction licensed by a regulator having authority equivalent to the CBB or SCB Governing administrator is the “operator” of the fund. General administrator acts in the same way as administrator of other funds with the same roles and responsibilities. Delegation permitted. © Copyright Delaney Partners October 2014

9. 9 POWERS AND DUTIES OF ADMINISTRATOR Administrator or governing administrator may engage service providers in the name of the ICON. Administrator or governing administrator has power to bind the ICON and generally transact in the name of the ICON. Administrator or governing administrator has duties of an “operator” under the IFA, with duty to act honestly, in good faith and exercising the care, diligence and skill of a reasonably prudent person. Duties of an administrator under the IFA (see reg. 17 of the IFA Regulations). If separate administrator appointed, it is the governing administrator who has the authority to bind the fund and to engage service providers. May be indemnified up to willful default. Indemnity first priority lien on assets of ICON with priority over secured and unsecured claims. Debt/obligations assumed by administrator on behalf of ICON is debt/obligation of the ICON. © Copyright Delaney Partners October 2014

10. 10 OBJECTIVE OF CONVERSION & APPLICATION To accommodate re-domiciliation of investment funds to The Bahamas. To allow for conversion of different structures already in The Bahamas. To allow for unbroken continuity of the fund, while changing the character of the underlying legal structure that comprises it. Applies to Bahamian IBC, exempted limited partnerships or unit trust. Similar entities (companies and unit trusts) in other jurisdictions would have to take advantage of existing continuation procedures in the IBC Act or utilize any power to change governing law contained in the trust instrument. © Copyright Delaney Partners October 2014

11. 11 CONVERTING A COMPANY TO AN ICON A majority of voting shareholders and all directors agree and adopt the articles of conversion. Certificate of conversion is signed by the Administrator under seal and filed with the Registrar within 7 days of date of certificate along with prescribed fee. Registrar stamps certificate of conversion - stamped certificate of conversion is prima facie evidence of compliance with all requirements in respect of conversion. ICON applies to be licenced as a fund. Administrator issues confirmation to each participant (former shareholders) stating: 1.Number of shares converted and the number of participation interests held by such participant; and 2.Conversion has not affected value of capital contribution. Note: Conversion that takes place while company is not in good standing is void and of no effect. © Copyright Delaney Partners October 2014

12. 12 CONVERTING AN EXEMPTED LIMITED PARTNERSHP TO AN ICON A majority of limited partners having the right to vote and all general partners agree and adopt the articles of conversion. Certificate of conversion is signed by the Administrator under seal and filed with the Registrar within 7 days of date of certificate along with prescribed fee. Registrar stamps certificate of conversion – stamped certificate of conversion is prima facie evidence of compliance with all requirements in respect of conversion. ICON applies to be licenced as a fund. Administrator issues confirmation to each participant (former general and limited partners) stating: 1.Number of participation interests converted and the number of participation interests held by each participant; and 2.Conversion has not affected value of capital contribution. Note: Conversion that occurs while exempted limited partnership is not in good standing is void and of no effect. © Copyright Delaney Partners October 2014

13. 13 CONVERTING A UNIT TRUST TO AN ICON Articles of conversion approved by the trustee or such other person as required by the terms of the trust instrument and by the majority of the unit holders having voting rights. Certificate of conversion is signed by the Administrator under seal and filed with the Registrar within 7 days of date of certificate along with prescribed fee. Registrar stamps certificate of conversion - stamped certificate of conversion is prima facie evidence of compliance with all requirements in respect of conversion. ICON applies to be licenced as a fund. Administrator issues confirmation to each participant (former unit holders) stating: 1.Number of trust units converted and the number of participation interests held by each participant; and 2.Conversion has not affected value of capital contribution. Note: Any conversion of a unit trust that occurs on a date when such unit trust is in the process of being wound up or dissolved is void and of no effect. © Copyright Delaney Partners October 2014

14. 14 CONTENT OF ARTICLES OF CONVERSION © Copyright Delaney Partners October 2014 Name; Provisions detailing the basis upon which shares of a company, limited partnership interests of an exempted limited partnership or units of a unit trust, as applicable, shall be converted to participation interest in the condominium along with details of any rights; Provisions for valuation and accounting treatment of the assets and liabilities of the company, exempted limited partnership or unit trust, as applicable and in all cases, any retained earnings upon conversion; In the case of a company, the date on which the company was incorporated or continued and the date on which it intends to covert to an ICON; In the case of an exempted limited partnership, the date on which the partnership was registered and the date it intends to convert to an ICON; In the case of a unit trust, the date on which the unit trust was established and the date on which it intends to convert to an ICON;

15. 15 CONTENT OF ARTICLES OF CONVERSION cont. In all cases, annex to the articles of conversion, the Governing Regulations of the ICON containing the information prescribed by the First Schedule of the Act; In case of a company, the Governing Regulations are to be approved by the shareholders of the company; In the case of an exempted limited partnership, the Governing Regulations are to be approved by the general partner and the limited partners; In the case of a unit trust, the Governing Regulations are to be adopted by the trustee and such other persons as required by the trust instrument; In all cases, the name and address of the Administrator; © Copyright Delaney Partners October 2014

16. 16 GENERAL PROVISIONS The standard 20 year exemptions apply. Dissolution – may be compulsorily wound up by the Court or voluntarily. Standard provision relating to keeping reliable accounting records. Transfer of participation interests permitted. Removal from Registry and restoration. Minister has power to make ICON Regulations – no regulations to date. © Copyright Delaney Partners October 2014

17. 17 UNIQUE FEATURES ICON is not a legal entity but a contractual relationship. Cannot declare dividends or make distributions. Separate administrators or same entity can perform both functions. Can only be used as a Fund. Not required to file Governing Regulations (except in case of conversion). Closed-end ICON must be licensed. 1 annual general meeting of participants with voting rights required at any location. Participant Interests enforceable as a chose in action (similar to a share). Conversion. Method of liability of Participants. © Copyright Delaney Partners October 2014

18. 18 FEES (1) Registration fees of an investment condominium will be billed in a reduced sliding scale: a)First quarter of a calendar year -$350.00 b)Second quarter of a calendar year-$250.00 c)Third quarter of a calendar year-$150.00 d)Fourth quarter of a calendar year-$100.00 (2) Filing of certificate of conversion: -$150.00 (3) Certificate of Good Standing: -$50.00 (4) Annual fees: -$350.00 (penalties for late payment applicable) (5) Filing Notice of Dissolution: -$150.00 (6) Restoration fees: -$750.00 © Copyright Delaney Partners October 2014

19. THE END 19© Copyright Delaney Partners October 2014