UK - HMRC v Smallwood : Capital gains of settlor-interested trust with UK-resident settlor

Capital gains tax — Computation of gain — Double taxation relief — Taxpayers entering into sophisticated scheme to avoid capital gains tax — Whether trust or trustees “resident” in United Kingdom or Mauritius for purposes of governing double taxation agreement — Whether “tie-break” provision within such agreement applying to assist in determining competing residences — Taxation of Chargeable Gains Act 1992, s 277 — Double Taxation Relief (Taxes on Income) (Mauritius) Order 1981 (SI 1121/1981), Sch 1, arts 4(1)(3), 13(4)

Revenue and Customs v Smallwood & Anor [2010] EWCA Civ 778 (08 July 2010)

MAURITIUS Offshore hub, Africa

Mauritius has spent the last five years improving its financial infrastructure and fund regulation and is now reaping the rewards. “In the last 18 months there’s been a definite increase in South African hedge fund businesses coming to Mauritius,” says Simone Lowe, manager of Thames River’s Africa-focused FoHF. The locale will also benefit from India’s potential as a centre of hedge fund management.

Chances of joining the big league

Promising. Close to South Africa, tax-efficient and English-speaking, Mauritius has experienced some of the biggest growth in Africa in terms of financial services in recent years. “Their aim is to be the jurisdiction of choice,” Lowe says.

If of interest check out this article where HFMWeek examines the potential hedge fund hubs of tomorrow

Edcomm Banker’s Academy launches free AML overview for Mauritius

Edcomm Banker’s Academy has recently launched a free tutorial that provides Anti Money Laundering (AML) training for banks and financial institutions located in Mauritius. Focus on Anti Money Laundering for Mauritius offers an overview of the AML laws and regulations that are specific to financial institutions in this South African country.

OECD - Implementing the Tax Transparency Standards: A Handbook for Assessors and Jurisdictions

ISBN Number:

978-92-64-08800-9

Publication Date:

27 July 2010

Pages: 219

This handbook is intended to assist the assessment teams and the reviewed jurisdictions that are participating in the Global Forum on Transparency and Exchange of Information (the “Global Forum”) peer reviews and non-member reviews. It provides contextual background information on the Global Forum and the peer review process. It also contains relevant key documents and authoritative sources that will guide assessors and reviewed jurisdictions throughout the peer review process. Assessors should be familiar with the information and documents contained in this handbook as it will assist in conducting proper and fair assessments. This handbook is also a unique source of information for governments, academics and others interested in transparency and exchange of information for tax purposes.

Table of contents

INTRODUCTION

• About the Global Forum
• About this Handbook
• The Peer Review Process

PART I: KEY DOCUMENTS OF THE GLOBAL FORUM FOR PEER REVIEWS

• Terms of Reference
• Methodology
• Assessment Criteria

PART II: SOURCES OF THE STANDARDS

• Article 26 of the OECD Model Tax Convention on Income and on Capital and its Commentary
• The 2002 Model Agreement on Exchange of Information on Tax Matters and its Commentary
• Enabling Effective Exchange of Information - Availability and Reliability – The Joint Ad Hoc Group on Accounts (JAHGA) Report
• The 2006 OECD Manual on Information Exchange - Module on General and Legal Aspects of Exchange of Information
• The 2006 OECD Manual on Information Exchange - Module 1 on Exchange of Information on Request
• The OECD’s Project on Harmful Tax Practices - Consolidated Application Note

Mauritius : Launching of e-tribunal system at the Employment Relations Tribunal

The e-tribunal system for the Employment Relations Tribunal (ERT) was launched yesterday at the new venue of the Tribunal at Newton Tower in Port Louis, amidst senior representatives of the Bar and the Law Society.

With the e-tribunal electronic case management system, ERT will post online its awards and statements of case and of defence or other documents presented before the Tribunal. The e-system will also allow lawyers, disputants, witnesses and the tribunal to gain time between the lodging of a case and its final disposal.

The former Permanent Arbitration Tribunal, set up under the Industrial Relations Act of 1973, made way for the Employment Relations Tribunal established under the Employment Relations Act of 2008, which came into force in February 2009. The ERT which hears industrial disputes and delivers awards is thus a showcase of the principles governing the newly proclaimed Act. The Employment Relations Act of 2008 lays emphasis on the peaceful settlement of labour disputes and the exhaustion of all dispute resolution processes before industrial action is undertaken and makes provision for a new drive towards collective bargaining and the arbitration of industrial disputes.

It will be recalled that about 150 cases are referred to the ERT yearly and the Tribunal is expected to hear and determine an appeal within 90 days of the date of lodging. ERT has as main functions to settle industrial disputes in the civil service, the private sector and parastatal bodies and local government services in addition to hearing appeals related to decisions of the Conciliation and Mediation Commission. ERT also contributes to the promotion of harmonious industrial relations.

IFC Forum welcomes debate in British Parliament calling for an “informed, consistent and balanced” debate on the role of offshore centres

The IFC Forum welcomes today’s debate in the British Parliament calling for an “informed, consistent and balanced” debate on the role of offshore centres in the global economy.

The Forum also welcomes the UK Government’s commitment to seek an evidence-based approach to policymaking on this debate in the UK, as well as at the international level through the EU and the G-20.

The debate was sponsored by Mark Field, the Conservative MP for the Cities of London and Westminster, who argued that small international financial centres (IFCs) have endured unwarranted “political attacks and misguided criticism as major governments seek to understand the cause of the global financial crisis”. Mr Field said there is a risk that initiatives currently being driven by the OECD, the G-20, the Financial Action Task Force, the EU and national governments run the risk of inaccurately pinpointing small IFCs as a scapegoat for the recent shortcomings in financial markets, and in doing so obscuring the real causes of the financial crisis. Field said that

“Small IFCs were not the cause of the global financial crisis. While it is convenient to blame far off countries for causing the financial crisis, even those who work in the financial markets do not accept that small IFCs were a major cause of the crisis”

He cautioned against recent attacks on zero-ten tax regimes. He said that they reveal a worrying trend which not only undermines the sovereignty of independent states to set their own tax rates, but which also sees high tax countries seeking to export their high tax rates around the world. He welcomed the Government’s decision to cut corporation tax from 28% in recognising the need to keep the UK competitive rather than attempting to defend high tax rates by criticising any tax competition.

During the debate, Mr Field highlighted conclusions reached by the Foot Review on the UK’s relationship with its Crown Dependencies and Overseas Territories. In particular, Mr Field pointed out that there is limited impact on the UK’s tax base as a result of so-called ‘tax havens’. He highlighted that while the TUC has argued that the tax gap created in UK government tax receipts as a result of offshore centres is £25 billion, the Deloitte Report, commissioned by the UK Treasury at the time of the Foot Report, showed that only £2 billion is potentially lost in tax leakages per annum – though this figure could be lower.

Mr Field also noted that many small IFCs are able to offer stable, well-regulated and neutral jurisdictions through which to facilitate cross-border business for the benefit of the global economy pointing out that a number of academic studies have concluded that small IFCs create jobs within financial centres and in domestic economies; and can help poverty alleviation in developing countries. He argued that as a major net recipient of capital flows from small IFCs, the UK would suffer if its firms were it find it more difficult to access capital via the international markets.

It was also stressed that the Financial Action Taskforce gives many small IFCs a positive assessment in meeting its 49 recommendations – including measures to avoid concealing financial crime and terrorist financing. Mr Field also pointed out work being carried out by the Commonwealth Secretariat in illustrating the important role that small IFCs play in developing economic development and prosperity.

Mr Field argued that the OECD do not operate with the sort of transparency that they would expect of others and called for the Government to outline measures it can take to ensure that the G-20 process is more inclusive.

In response to the debate, Mark Hoban the Financial Secretary to the UK Treasury agreed that the UK is uniquely placed in this debate in having a constitutional relationship, through its Crown Dependencies and Overseas Territories, with half of the top 30 offshore financial centres. The UK is also, he explained, a major recipient of investment capital raised through small IFCs. He acknowledged the important contribution played by small IFCs to market liquidity in the UK, as well as the important link to the UK retail financial services market.

The minister also argued that it was crucial that the small IFCs were fully engaged in the process of raising global standards on regulation and transparency on issues such as prudential standards, anti-money laundering and the financing of terrorist activities. He recognised the efforts made by small IFCs to date and welcomed further efforts towards progress in this area. He also supported the call for a balanced debate in arguing that it was important that the UK government, the EU and the G-20 proceed on an evidence-based approach.

Mauritius : Investment Fund

A Collective Investment Scheme (“CIS”) is defined under the Securities Act 2005 (“SA 2005”) as a scheme approved by the Financial Services Commission (“FSC”) in Mauritius:

• whose sole purpose is the collective investment of funds in a portfolio of securities, or other financial assets, real property or non-financial assets as may be approved by the FSC;
  
• whose operation is based on the principle of diversification of risk;
  
• that has the obligation, on request of the holder of the securities, to redeem them at their net asset value, less commission or fees; and
  
• where the participants do not have day to day control over the management of the property, whether or not they have the right to be consulted or to give directions in respect of such management.

A "Global scheme" is defined under the Securities (Collective Investment Schemes and Closed-end Funds) Regulations 2008 (“Regulations”) as a company or any other legal entity approved by the FSC, holding a Category 1 Global Business Licence (GBL 1) and authorized to carry out activities falling within the definition of a Collective Investment Scheme.

Conditions applicable to Global schemes

The FSC may grant an authorisation for a Global scheme provided that:

1. information relating to the CIS Manager and the custodian as prescribed in the Regulations is submitted with the application for authorisation;
   
2. a CIS administrator [e.g. OCRA (Mauritius) Limited] with a place of business in Mauritius is appointed;
   
3. the accounting and reporting services are carried out by the CIS Manager, or the CIS Administrator of the scheme, having a place of business in Mauritius.
   
4. The prospectus or other offering document contains the following statements in a prominent position -
   
   "Investors in [name of the Global scheme] are not protected by any statutory compensation arrangements in Mauritius in the event of the fund's failure."
   
   "The Mauritius Financial Services Commission does not vouch for the financial soundness of the fund or for the correctness of any statements made or opinions expressed with regard to it."
   
   
5. a certified copy of the prospectus or other offering document filed in a jurisdiction where the collective investment scheme is regulated or exempted from regulation is filed with the FSC;
   
6. information is provided on the CIS Manager and the custodian, including name and registered addresses and where regulated, if applicable;
   
7. information is given on whether the collective investment scheme is regulated, or shall be subject to regulation, in any jurisdiction and if so, a copy of the authorisation or similar consent of the regulator and if not, indication on what basis it is exempted from securities regulation in other jurisdictions;
   
8. adequate measures are taken to prevent money laundering and financing of terrorism and provided that the FSC is satisfied that these measures meet legislative requirements.

An authorisation under section 97(5) SA 2005 may be granted subject to such terms and conditions the FSC considers necessary or desirable for the protection of participants.

Subject to FSC approval, a Global scheme may appoint and retain a CIS Manager and/or a custodian established in a foreign jurisdiction.

Mauritius : Attorney General opens COMESA Court of Justice Retreat

The Government aims at making of Mauritius a legal hub and the holding of the current COMESA Court of Justice Retreat on the island is more than welcome, stated the Attorney General, Mr. Yatin Varma, yesterday at the opening of the Retreat held at the Intercontinental Hotel in Balaclava.

The Retreat which is held from 12 to 16 July 2010 will review the current Strategic Plan of the COMESA Court of Justice and prepare a new Strategic Plan for the period 2010-2015. It will focus on issues like: Fair and Timely Case Resolution; Access to Justice; A Strong Judiciary and Workforce; A Sound Infrastructure; Security and Disaster Preparedness; and Public Trust, Confidence and Awareness.

The Attorney General pointed out that through its duty of ensuring the observance of the rule of law in its interpretation and application of the COMESA Treaty, the Court has an important role to play in the integration agenda of COMESA.

As COMESA proceeds further with the integration process such as the launching of the COMESA Customs Union in June 2009 and the start of the process for a single Free Trade Area for the three Regional Economic Communities, namely the COMESA, EAC and SADC (Common Market for East and Southern Africa, East African Community and the Southern Africa Development Community) the COMESA Court of Justice will be called upon to play an increasingly prominent role in harmonising the legal instruments in the region, added Mr. Yatin Varma as he laid emphasis on the strategic importance of the COMESA Court.

The COMESA Court has jurisdiction to adjudicate upon all matters which may be referred to it pursuant to the COMESA Treaty. Specifically, it ensures the proper interpretation and application of the provisions of the Treaty and adjudicates any disputes that may arise among Member States regarding the interpretation and application of the provisions of the Treaty.

The decisions of the Court are binding and final. Decisions of the Court on the interpretation of the provisions of the COMESA Treaty have precedence over decisions of National Courts. To ensure the independence of the Court, Article 9 (2) (c) of the COMESA Treaty provides that the Council shall give directions to all other subordinate organs of COMESA other than the Court in the exercise of its jurisdiction.

The COMESA Court of Justice was established under Article 7(1) of the COMESA Treaty signed on 5 November 1993 in Kampala, Uganda and ratified a year later in Malawi on 8 December 1994. The Court is currently composed of twelve judges, constituting the Appellate and First Instance Divisions.

Sensys receives order worth SEK 1 million from Mauritius

SENSYS Traffic AB (publ) has received an order for traffic safety systems worth SEK 1 million for delivery to the Mauritius Police Force.

The order, which has been obtained in tough international competition and after careful evaluation, implies an extension of the traffic safety systems in Mauritius. The order concerns both mobile and stationary systems.

"This order strengthens our position in Mauritius, where road deaths have been successfully reduced by 30 percent since Sensys' systems started to be used for traffic monitoring," says Johan Frilund, CEO of Sensys Traffic AB.

Sensys Traffic develops and markets various systems for traffic informatics and traffic safety. The products are primarily used for speed and red-light surveillance and enforcement. The Sensys share is listed on NASDAQ OMX Stockholm.

Jersey : Tax Information Exchange Agreement with Portugal

Today at the Portuguese Embassy in London, the Chief Minister, Senator Terry Le Sueur, signed a Tax Information Exchange Agreement (TIEA) with the Portuguese Secretary of State for Tax Affairs, Sergio Vasques.

Senator Le Sueur said “This is the latest in an ongoing programme of signing TIEAs or Double Tax Agreements (DTAs) with all OECD and G20 member countries. We are committed to complying with international standards and as one of the four Vice-Chairs of the Peer Review Group of the Global Forum on Transparency and Information Exchange for Tax Matters, we intend to continue to lead by example”.

“We have a long-standing, close relationship with Portugal because of the significant number of Portuguese nationals who have come here to work and settled in Jersey. When the TIEA comes into force, the Portuguese authorities have agreed to start negotiations on an agreement to avoid double taxation for certain income of individuals, like employment income and pensions.”

The TIEA will come into force once Jersey and the Portuguese governments have completed their domestic procedures. In Jersey this means the ratification of the agreement by the States of Jersey and the adoption of the necessary Regulations.

The TIEA is the same as those previously signed by Jersey with other countries, and provides for the exchange of information on request, which request has to be formulated in writing in accordance with the terms of the Agreement.

Jersey FSC signs MoU with South African Reserve Bank (SARB)

The Jersey Financial Services Commission (the “Commission”) and the Bank Supervision Department of the South African Reserve Bank (the “SARB”) have signed a Memorandum of Understanding (“MoU”) that will help facilitate co-operation between the two regulatory bodies.

The MoU provides a framework for the JFSC and the SARB to exchange confidential information and co-operate with each other regarding the supervision and regulation of banking entities under their authority.

John Harris, Director General of the Commission, said, “I am delighted to sign this Memorandum of Understanding with the South African Reserve Bank. A number of South African banks already have a presence in Jersey and this Memorandum will assist the Commission and the South African Reserve Bank to maintain close co-operation and dialogue with each other. Such collaboration should help to protect depositors and promote the integrity of financial services markets in Jersey and South Africa.”

World Bank : Countries Have Opportunities to Boost Global Investment Competitiveness

Overly restrictive and obsolete laws are an impediment to foreign direct investment and their poor implementation creates additional costs to investment, finds Investing Across Borders 2010, a new report by the World Bank Group.

This is the first World Bank Group report to offer objective data on laws and regulations affecting foreign direct investment that can be compared across 87 countries. Clear and effective laws and regulations are vital for ensuring best results for host economies, their citizens, and investors.

“Foreign direct investment is critical for countries’ development, especially in times of economic crisis. It brings new and more committed capital, introduces new technologies and management styles, helps create jobs, and stimulates competition to bring down local prices and improve people’s access to goods and services,” said Janamitra Devan, Vice President of Financial and Private Sector Development, World Bank Group.

In Angola and Haiti excessive red tape means it can take half a year to establish a subsidiary of a foreign company. In Canada, Georgia, and Rwanda, this can be done in less than a week. Leasing industrial land in Nicaragua and Sierra Leone typically requires half a year as opposed to less than two weeks in Armenia, Republic of Korea, and Sudan. In Pakistan, Philippines, and Sri Lanka it can take up to two years to enforce an arbitration award.

The report finds that countries that do well on the Investing Across Borders indicators also tend to attract more foreign direct investment relative to the size of their economies and population. Conversely, countries that score poorly tend to have higher incidence of corruption, higher levels of political risk, and weaker governance structures.

Investing Across Borders 2010 aims to help countries develop more competitive business environments by identifying good practices in investment policy design and implementation. It provides indicators examining sector-specific restrictions on foreign equity ownership, the process of starting a foreign business, access to industrial land, and commercial arbitration regimes in 87 countries. Investing Across Borders does not measure all aspects of the business environment that matter to investors. For example, it does not measure security, macroeconomic stability, market size and potential, corruption, skill level, or the quality of infrastructure. However, the indicators provide a starting point for governments wanting to improve their global investment competitiveness.

Download Full Report

Mauritius : Limited Partnership Act 2011

The Securities Act 2005 allows a collective investment scheme to be structured as a limited partnership. The Limited Partnership Act 2011 will provide a statutory framework for a modern investment vehicle for specialised collective investment schemes structured in the form of a limited partnership.

The limited partnership is a fund of pooled interests managed by a General Partner who raises capital (i.e. committed capital or commitments) from outside investors (Limited Partners).

The partnership is independent in that the management of the investment pool is performed by a management firm that has no outside affiliation or ownership. Most funds of this type require a nominal investment by the General Partner. In addition, the General Partner usually takes a profit split (known as carried interest). Another unique feature of these types of vehicles is that any proceeds from investments must be distributed to investors – they cannot be reinvested except under a few exceptional conditions.

Guide to Setting up Alternative Investment Funds 2010

Download Hedgeweek Special Report hedgeweek guide to Setting up Alternative Investment Funds 2010

OECD Global Forum on Transparency & Exchange of Information for Tax Purposes (GFTEI) - Peer Review Group Meeting to be Held in The Bahamas

From 20th to 22nd July 2010, the 3rd Meeting of the Peer Review Group of the Global Forum on Transparency and Exchange of Information for Tax Purposes, of the Organisation for Economic Cooperation and Development (OECD), will be held in Nassau. This will be the first time that The Bahamas hosts a meeting of an OECD-related initiative.

The Peer Review Group (PRG) was established by the Global Forum in September 2009, as a technical working group consisting of representatives of 30 countries, including The Bahamas. The PRG is operating under a mandate to develop and implement a system for the assessment, monitoring and review of actions taken by member countries toward the implementation of the established standards for transparency and information exchange with regard to tax matters.

The newly developed Peer Review Process was launched in March 2010, and is now in its first stage of implementation, beginning with the assessment of the first group of 18 jurisdictions, including: Australia, Barbados, Bermuda, Botswana, Canada, Cayman Islands, Denmark, Germany, India, Ireland, Jamaica, Jersey, Mauritius, Monaco, Norway, Panama, Qatar, and Trinidad & Tobago.

Approximately one hundred jurisdictions, including The Bahamas, will be assessed over the next three years, in a 2-phase process (similar to that employed by the Financial Action Task Force) that examines legal and regulatory frameworks for transparency and information exchange as well as practical implementation. The Phase 1 review for The Bahamas has begun as of 1 July, and should take 6 months, with the Phase 2 review being scheduled for July 2012. Based on the PRG’s Assessment Criteria, there will be a need to continually address, from now on, the issue of transparency and exchange of information for tax matters, including through the negotiation of new TIEAs.

In March 2010, The Bahamas achieved the minimum standard of 12 signed TIEAs that was required in order to be removed from the OECD/G20 greylist. As of Thursday 17 June 2010, twenty-two TIEAs have been signed by The Bahamas, including agreements with the United States, Monaco, San Marino, the United Kingdom, New Zealand, the People’s Republic of China, Argentina, the Netherlands, Belgium, France, Mexico, the Nordic Countries (Norway, Sweden, Denmark, Finland, Iceland, The Faroes and Greenland), Spain, Australia, Germany and Canada.

The Bahamas is committed to being a responsible member of the international community, and to satisfying and complying with international standards applicable to it as a financial services centre.

New Structured Product from Standard Bank

Standard Bank Offshore Group is launching the latest in its series of award winning structured products which are designed to return initial capital deposited along with fixed interest returns and participation in potential stock market growth.

Quantum PLUS 3 is open for subscription until 17 August 2010, subject to availability, and is divided into a 1 year and 5 year fixed term Standard Bank deposit, available in Sterling, US dollar or Euro. Minimum deposit amounts are £10,000, $20,000 or €15,000.

The product divides a client’s money equally between two deposits: Quantum and PLUS, and both deposits are designed to return original capital deposited, along with the potential gains at their respective maturity dates.

The Quantum portion pays an attractive rate of 4% (AER) and is redeemed in full after the first year. The PLUS portion is linked to potential stock market growth over the full five year term with a participation rate of 70%.

Herman Wessels, Managing Director, Treasury & Product commented: “Our structured products are designed for depositors who seek capital security and growth potential linked to the performance of a stock market index. Quantum PLUS 3 has been introduced following the success of Quantum PLUS II which was launched earlier this year. It offers returns linked to the performance of equity investments, but without the usual risk of volatile market movements and as with Quantum PLUS II we expect to see high demand for this competitive offering.”

He added: “Given the current economic and political uncertainty, now is an ideal time to commit to a product which provides peace of mind along with the opportunity to take advantage of continued stock market recovery. For clients who wish to access a product which has been designed to return at least the capital deposited in full at maturity, Quantum PLUS 3 offers a combination of potential market-related returns and a high yield on the Quantum portion.”

The Fund Management Industry in Hong Kong and Asia-Pacific

Hong Kong has the largest number of fund managers, one of the largest fund management industries in Asia-Pacific, and the largest exchange-traded funds (ETFs) market by trading value in East Asia. Nevertheless this sector in common with some others examined in this study, reveals the huge impact the Chinese mainland has had on Hong Kong in terms of activity created and concurrently a relatively modest development of its international position. Some of the main themes to be developed in what follows turn on the following summary observations:

Unlike the two other major regions of the world economy, there is no cooperation infrastructure nor even comparable statistics for the fund management industry in Asia-Pacific. Unlike the United States and Europe that have a national or regional industry association to advocate regulation and policy recommendations to the industry, there is no such kind of regional cooperation in Asia. In turn, is a dire lack of comparable statistics in this area across economies in the region not only impedes research but more importantly hinders the development of initiatives, strategies and policies for the region.

Internationalism and diversifications. Hong Kong’s and Singapore’s industry survey reports show that the combined fund management industry is larger in Hong Kong, but (as of 2008) it appears to be more internationalized and diversified in Singapore. However, things have gradually changed. Since 2009 large banks and fund houses have started to expand their teams in Hong Kong and/or relocate senior executives to the city. While this relative but notable reconfiguration in the last year or two appears to result from the impact of the China factor, given the sector’s relative preference for greater concentration of expertise the result is also an improved the level of regional importance and internationalism for the Hong Kong fund management industry.

The China factor. The enormous and underdeveloped Chinese market is without doubt one of the biggest opportunities for the Hong Kong fund management industry. China’s capital market is still subject to exchange and capital controls and its fund management industry is short of seasoned fund managers. Hong Kong, an open economy with good financial infrastructure and many experienced fund managers, is in pole position to capture the opportunity to service the Chinese market, particularly its new middle-class and expanding wealthy population. Further, it will be beneficial for Hong Kong to deepen its private investors market. In addition to be the gateway for Chinese funds to invest abroad, Hong Kong should also be the gateway for foreign companies that are interested in the Chinese market. 

An onshore fund management industry. Following the global financial crisis, there is greater appetite in the region and globally for the use of onshore regulated vehicles, which provide greater investor protection and ability to assess and manage risk. In this connection recent changes in European Union directives on investment funds may have a big impact on the Asian fund management industry, which relies heavily on the European market; indeed the offer of funds originating and sold in Asia but registered and marketed from Europe has expanded notably in the recent past. These developments, alongside the concurrent strengthening of Hong Kong’s fund management industry in the same period noted above, strongly suggest a good opportunity for Hong Kong to develop an onshore fund management industry and to seek to become the centre of Asia domiciled funds. However, there is limited information how local authorities want to pursue these goals.

Download

Volaw judged Best Islamic Administrator / Trustee

Volaw Trust & Corporate Services Limited have been awarded the Best Islamic Administrator / Trustee Award in the Islamic Finance Awards at the recent Sukuk Summit held in London on 9-10 June 2010.

Now in its fourth year, the Summit is generally regarded as the leading Islamic Capital Markets forum in Europe and was attended by over 200 delegates, with attendees from the Middle East and the Far East as well as Europe.

The Sukuk Summit Awards panel of judges is made up of respected industry experts from across the GCC, Europe and the South East Asia who are responsible for nominating those institutions and individuals that they deem to have attained outstanding achievements, success and excellence over the past 12 months. The Award was presented by Abdul Aziz Al Hinai, Vice President of the Islamic Development Bank, and Dr Catherine Cowley, Senior Lecturer in Ethics and Finance at University of London, at the Summit’s Gala Dinner. It was accepted on behalf of Volaw by Trevor Norman, Volaw’s Director of Islamic Finance and Funds Group

Commenting on the award Mr Norman said: “It is a great honour to receive this award which has previously been presented to multi-national companies such as Deutsche Bank and CIMB Islamic Bank, Malaysia. The award recognises the work my team has done in structuring and administering Islamic capital markets products for more than 15 years.”

During the course of the Summit, Mr Norman participated as a panellist in the key debate between Shari’a Scholars and Islamic finance practitioners, this being the third year in succession that he had been invited onto this panel.

STEP Members Forecast Future of UK Trust and Estate Practice

The Society of Trust and Estate Practitioners (STEP) have today released a report revealing their members’ thoughts about the future of trust and estate practice in the UK.

The report: Trusted Advisor, The Future, draws conclusions by bringing together qualitative opinions from of a seminar of senior practitioners held in January 2010 and the quantitative results of a subsequent survey of the wider STEP membership across the UK.

The results in the report are grouped into three specific areas of change: Regulation, clients’ needs and, business models and strategy.

STEP members point to increasing regulation, the rise in people requiring specialist advice due to increasingly complex family relationships, the growing role of the internet, the tendency towards multi-disciplinary structures and the commoditisation of services as examples of where the market will change, among many others.

STEP Chief Executive David Harvey said: “What emerges most clearly across these predictions is that STEP members in the UK expect huge changes in coming years. We hope that this document helps our members and others in casting light on how the future might impact their business. For STEP, these findings will help the Society develop the most effective support for members that it can to ensure that change means not threat, but opportunity.”

Mauritius : Global Scheme

A "Global scheme" is defined under the Securities (Collective Investment Schemes and Closed-end Funds) Regulations 2008 (“Regulations”) as a company or any other legal entity approved by the Financial Services Commission (FSC), holding a Category 1 Global Business Licence (GBL 1) and authorized to carry out activities falling within the definition of a Collective Investment Scheme.

Conditions applicable to Global schemes

The FSC may grant an authorisation for a Global scheme provided that:

1. information relating to the CIS Manager and the custodian as prescribed in the Regulations is submitted with the application for authorisation;
   


2. a CIS administrator [e.g. OCRA (Mauritius) Limited] with a place of business in Mauritius is appointed;
   


3. the accounting and reporting services are carried out by the CIS Manager, or the CIS Administrator of the scheme, having a place of business in Mauritius.
   


4. The prospectus or other offering document contains the following statements in a prominent position:
   
   "Investors in [name of the Global scheme] are not protected by any statutory compensation arrangements in Mauritius in the event of the fund's failure."
   
   "The Mauritius Financial Services Commission does not vouch for the financial soundness of the fund or for the correctness of any statements made or opinions expressed with regard to it."
   


5. a certified copy of the prospectus or other offering document filed in a jurisdiction where the collective investment scheme is regulated or exempted from regulation is filed with the FSC;
   


6. information is provided on the CIS Manager and the custodian, including name and registered addresses and where regulated, if applicable;
   


7. information is given on whether the collective investment scheme is regulated, or shall be subject to regulation, in any jurisdiction and if so, a copy of the authorisation or similar consent of the regulator and if not, indication on what basis it is exempted from securities regulation in other jurisdictions;
   


8. adequate measures are taken to prevent money laundering and financing of terrorism and provided that the FSC is satisfied that these measures meet legislative requirements.

An authorisation under section 97(5) SA 2005 may be granted subject to such terms and conditions the FSC considers necessary or desirable for the protection of participants.

Subject to FSC approval, a Global scheme may appoint and retain a CIS Manager and/or a custodian established in a foreign jurisdiction.

Mauritius : Expert Fund

An “Expert Fund” is defined as a fund which is only available to expert investors. A Collective Investment Scheme (“CIS”) may apply to the Financial Services Commission (“FSC”) under the Securities (Collective Investment Schemes and Closed-end Funds) Regulations 2008 (“Regulations”) for authorisation as an expert fund.

Such application must include the following documents / information:

• constitutive document of the scheme;
  
• measures taken to prevent money laundering and financing of terrorism;
  
• latest audited financial statements;
  
• a copy of the offering document given to potential investors; and
  
• if applicable, information on the CIS manager as requested in regulation 6.

Conditions applicable to an Expert Fund

1. An expert fund shall only be available to expert investors.
   
2. An expert fund may appoint a manager who, where appointed, shall be the holder of:
   
   (a) a CIS manager licence; or
   
   (b) a licence issued by a regulatory body in a jurisdiction having comparable regulation as Mauritius for investor protection (e.g. FSA in UK or SEC in US)
   
   
3. The CIS manager of an expert fund need not be resident in Mauritius.
   
4. The Board of the fund or the CIS manager where appointed must satisfy itself that the fund is and continues to be managed in accordance with the fund’s constitutive documents.
   
5. The Board of the fund, or the CIS manager where appointed, shall be responsible for ensuring that the provisions of these Regulations applicable to expert funds are complied with.
   
6. The expert fund shall accept as investors in the fund, only such persons as the Board or CIS manager where appointed is satisfied are expert investors.
   
7. The offering document or any other similar document of an expert fund shall:
   
   (a) contain a statement to the effect that the expert fund shall be available only to expert investors,
   
   (b) contain in a prominent position, the definition of an expert investor; and
   
   (c) shall have the following statements in a prominent position -
   
   "Investors in [name of the expert fund] are not protected by any statutory compensation arrangements in Mauritius in the event of the fund's failure."
   
   "The Mauritius Financial Services Commission does not vouch for the financial soundness of the fund or for the correctness of any statements made or opinions expressed with regard to it."
   
   
8. In accordance with section 30 of the Financial Services Act 2007 the audited accounts of the expert fund shall be filed by the scheme, the CIS manager or the CIS Administrator as appropriate.

Expert Investor

An “expert investor” means-

(i) an investor who makes an initial investment, for his own account, of no less than US$ 100 000; or

(ii) a sophisticated investor as defined in the Securities Act 2005 or any similarly defined investor in any other securities legislation (e.g. an accredited investor under US federal securities laws)

Exemptions for an Expert Fund

An expert fund, subject to authorisation from the FSC, shall be exempt from the provisions of the Regulations except for regulations 78 to 81 and Part I and XII.

Mauritius : Offshore Fund / GBC 1 Collective Investment Scheme (Global scheme)

A Collective Investment Scheme (“CIS”) is defined under the Securities Act 2005 (“SA 2005”) as a scheme approved by the Financial Services Commission (“FSC”) in Mauritius:

• whose sole purpose is the collective investment of funds in a portfolio of securities, or other financial assets, real property or non-financial assets as may be approved by the FSC;
  
• whose operation is based on the principle of diversification of risk;
  
• that has the obligation, on request of the holder of the securities, to redeem them at their net asset value, less commission or fees; and
  
• where the participants do not have day to day control over the management of the property, whether or not they have the right to be consulted or to give directions in respect of such management.

A "Global scheme" is defined under the Securities (Collective Investment Schemes and Closed-end Funds) Regulations 2008 (“Regulations”) as a company or any other legal entity approved by the FSC, holding a Category 1 Global Business Licence (GBL 1) and authorized to carry out activities falling within the definition of a Collective Investment Scheme.

Conditions applicable to Global schemes

The FSC may grant an authorisation for a Global scheme provided that:

1. information relating to the CIS Manager and the custodian as prescribed in the Regulations is submitted with the application for authorisation;
   
2. a CIS administrator [e.g. OCRA (Mauritius) Limited] with a place of business in Mauritius is appointed;
   
3. the accounting and reporting services are carried out by the CIS Manager, or the CIS Administrator of the scheme, having a place of business in Mauritius.
   
4. The prospectus or other offering document contains the following statements in a prominent position -
   
   "Investors in [name of the Global scheme] are not protected by any statutory compensation arrangements in Mauritius in the event of the fund's failure."
   
   "The Mauritius Financial Services Commission does not vouch for the financial soundness of the fund or for the correctness of any statements made or opinions expressed with regard to it."
   
   
5. a certified copy of the prospectus or other offering document filed in a jurisdiction where the collective investment scheme is regulated or exempted from regulation is filed with the FSC;
   
6. information is provided on the CIS Manager and the custodian, including name and registered addresses and where regulated, if applicable;
   
7. information is given on whether the collective investment scheme is regulated, or shall be subject to regulation, in any jurisdiction and if so, a copy of the authorisation or similar consent of the regulator and if not, indication on what basis it is exempted from securities regulation in other jurisdictions;
   
8. adequate measures are taken to prevent money laundering and financing of terrorism and provided that the FSC is satisfied that these measures meet legislative requirements.

An authorisation under section 97(5) SA 2005 may be granted subject to such terms and conditions the FSC considers necessary or desirable for the protection of participants.

Subject to FSC approval, a Global scheme may appoint and retain a CIS Manager and/or a custodian established in a foreign jurisdiction.