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Regulations & Structure of Mutual Funds

Regulation & Structure

Mutual funds in the Caribbean are governed by country-specific legisla-tion and regulations that reflect the objectives and concerns of the host country. They are required to fulfill all of the obligations related to licens-ing, reporting, audit, and operation that are prescribed in the legislation, and are generally regulated by a some regulatory body established to over-see the securities industry within the country.

Most funds in the Bahamas are structured as investment companies, complete with a Board of Directors, an Investment Manager, a Custodian, an Administrator, and an Auditor, all of whom perform important and spe-cific roles for the fund. The company itself is governed by the parameters established in its Memorandum and Articles of Association.

Oversight of the ongoing operations of a mutual fund is accomplished through the appointment of a Board of Directors. The board usually con-sists of reputable individuals who are either associated with the sponsoring company or who provide sufficient expertise in a particular area to assist with the ongoing evaluation and supervision of a fund’s operations.

As with other non-mutual-fund companies, the Board of Directors meets on a regular basis to review the fund’s operations and financials, and to address any related issues.

The Board is ultimately responsible for all the activities of the fund.

Mutual Funds History

Mutual funds are “pooled investments,” strictly meaning that they combine contributions from many different people under an investment compa-ny and then purchase a portf...

Types of Mutual Funds

Three types of structures operate as investment companies: open-end funds, closed-end funds, and unit investment trusts. Although only open- and closed-end funds are offered in the Bahamian Dollar market, several other types of funds are commonplace elsewhere.

Important Documents

There are several important documents that mutual fund subscribers should understand. Offering Memorandum. A mutual fund that offers its shares to the public is required to produce an official Offering Memorandum (OM) and to typically file it with t...

Funds Work

Many individuals are familiar with bank term deposits and how they work. A fixed time period and a fixed interest rate make your eventual re-turn easy to calculate up front: $100,000 @ 4% interest for one year will earn $4,000 of interest and result in a balance of $104,000 at the end of that ...

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