Islamic Banking gif
that: “Specific Shariah compliance require- ments and restrictions can be incorporated into a fund’s offering memorandum.” In addition, Jobst said: “The BMA could incor- porate compliance with codified Shariah standards, such as AAOIFI, in the regulatory standards applied upon authorization and supervision upon inception.” Bermuda is lo- cated geographically close to the US, which facilitates trading in these markets and can further help to spur growth in the Islamic in- vestment funds sector.
In addition, the proximity which Bermuda has to investors in the US offshore funds or even in GCC-based family offices trusts can be the prime factor for choosing Bermuda as the investor haven. Bermuda can also be a prime location for investors as it can raise funds from investors who are currently invested in the multitude of Bermuda-domi- ciled conventional funds as they can tap into the Shariah compliant funds that Bermuda has to offer.
Islamic investment fund structures which are commonly used in the investment fund industry can be created and utilized in Ber- muda. Common structures are shown in Figure 4 which include. Shariah-compliant Islamic investment fund sponsors can also benefit from the presence in Bermuda as there are worldclass asset management firms, fund administrators and other profes- sionals at their convenience.
Investment funds can be listed on the Ber- muda Stock Exchange (BSX), and Bermuda umbrella funds can be created as SACs. Bermuda boasts a wealth of expertise in the area of mutual funds, hedge funds, private equity funds and real estate funds. Bermu- da is home to hundreds of fund managers, nearly two thousand funds are officially reg- istered and there are thousands more that are administered by its world class fundad- ministration professionals. The country rec- ognises and addresses the ever changing needs of investors, including calls for great-
er transparency and regulatory oversight, whilst maintaining an efficient and entrepre- neurial environment that allows funds and fund managers to succeed in the competi- tive fund industry. Bermuda’s offers ample choice and flexibility to Islamic investment fund promoters who can confidently struc- ture, manage and administer such funds in Bermuda. This advantage arouses inno- vative investment products, such as Sukuk funds and ETFs, to the global market which can hold lucrative returns.
Another advantage of Islamic investment funds in Bermuda is that there are no im- pediments to authorising Shariah compli- ant funds under the current framework. Shariah-compliant funds are similar in their set up to conventional funds and compli- ance with Islamic financial principles can be viewed very much Shariah-compliant innovative investment funds and global in- vestment fund platforms established with a “socially responsible” investment ethos. The same principles and requirements under the Bermuda Investment Fund Act apply to Shariahcompliant funds. There are currently no restrictions in the investment objectives under the Bermuda’s Companies Act and Investment Fund Act which make investing in Bermuda a perfect choice especially for Shariah compliant investments.
Bermuda Islamic Banking, Wealth Man- agement and Trusts Islamic Banking in Bermuda is booming with the industry spurring the Islamic banking sector forward as Bermuda has the right legislation and jurisdictions which can ac- commodate Shariah compliant banking suc- cessfully. For individuals in Bermuda looking for Islamic banking products and services Christopher Dye, corporate legal counsel for BCB Charter Corporate Services, said that “Bermuda Commercial Bank offers ve- hicles and structures that can be tailored for Shariah compliant financing. Bermuda’s excellent reputation as both a stable and well-regulated jurisdiction and a flexible in-
Figure 4: Key Benefits for Using Bermuda SPV’s Sukuk
Bermuda offers SPVs that are tax efficient, based under common law principles, where the rights of all parties are clearly understood, recognized and consistently applied.
The GE Capital Sukuk is proof that Bermuda’s laws are tried and tested by rating agencies, regulators and investors globally for Sukuk structures.
Bermuda-based SPVs and trusts vehicles are suitable for financing structures for the acquisition of global portfolios of assets.
There are no restrictions in the ‘objects’ of a company under Bermuda company law. An entity may apply the principles of Islamic finance to its business dealings to achieve its objects.
Bermuda companies may adopt a secondary name in non-roman script such as Arabic with the approval of the Registrar of Companies.
Bermuda’s private trust company legislation is attractive for Islamic finance structures. A private trust company is a company with trustee powers which is not required to be licensed under Bermuda trust legislation, provided that by the terms of its memorandum of association it is empowered to act as trustee of only a limited number of identifiable trusts.
Financiers/institutions benefit from effective structuring of Shariah compliant structured products through a combination of Bermuda SPVs and trusts, for example to create ‘off balance sheet’ or ‘bankruptcy remoteness’ structures.
There is no exchange control for non-resident undertakings and no restriction on repatriation of funds.
There is no stamp duty on any instrument affecting or relating to international businesses in Bermuda. This is a key consideration for global Sukuk issuances.
Source: PWC Figure 5:
Exempted companies; Segregated account companies; Exempted partnerships; and Unit trusts. Source: PWC
2012 May Global Islamic Finance 47
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