Bahamas Supreme Court Judge Says Securities Commission Is Powerless To Liquidate IBCs

by Amanda Banks, Tax-news.com, London

19 April 2001

It was decided last week by Supreme Court Senior Justice Emmanuel Osadebay that his court had no power to grant the Securities Commission of the Bahamas' request to liquidate any companies that are found to have operated without a licence.

According to a report in the Nassau Guardian, Justice Osadebay explained that the Bahamas' parliament has not granted the Commission any powers allowing it to close down businesses and, therefore, the Supreme Court is also powerless in granting the Commission its wishes in this matter. He further called upon parliament to clarify just what powers the Securities Commission does possess under the Mutual Funds Act 1995 and the International Business Act 2000.

The problem came to light last week as Justice Osadebay was presiding over a court case of two applications brought by a group of International Business Companies (IBCs) to question the powers of the Commission in its efforts to close down the companies. The Justice upheld the applications after reviewing the relevant sections of the Mutual Funds and IBA Acts.

In the first application, entitled The Securities Commission of The Bahamas versus Alastair Prescott Ltd, the Commission accused the company of operating without a mutual funds licence and appointed a receiver on the assets of several mutual fund companies. The second application involved the Commission's attempt to petition for liquidation. The Justice discharged the receivership by citing the Supreme Court Act which allows the court jurisdiction over a freestanding receivership. He decided that the receiver was 'freestanding' which gave him the power to dismiss the receiver and deny requests for liquidation.

The companies' corporate status was reinstated with their assets and they were allowed to continue their business.

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