Lawyer sees new paradigm

(CNS): Local offshore legal expert and Ogier partner, James Bergstrom has said that in future only jurisdictions that meet certain regulatory and tax transparency requirements will be operating in the global financial system. "Transparency is the new paradigm," Bergstrom who is based in Cayman told members of the Hedge Funds sector at a global investment funds seminar recently.

According to Hedge Funds Review an industry website the seminar looked at the past, present and future of offshore investment funds, including proposed structuring and language clarification, the current litigious climate and the issues surrounding claims against funds and their service providers and the various international regulatory initiatives.

"In the near future only those offshore financial centres which meet the regulatory and tax transparency requirements of the new Financial Stability Board will be permitted to participate in the international financial system," Bergstrom added

His Cayman colleague at Ogier, partner Peter Cockhill also noted that Hedge fund managers naturally seek international as well as national investors. “To continue to do so in today’s evolving regulatory environment, managers are likely to need to establish operations in the EU for EU domiciled investors, in the US for US investors and offshore for international investors," he said.

The Ogier seminar which formed part of a series traced the origins of the current international initiatives back to 1996 when the OECD’s harmful tax practices project was launched. By analysing the development of the different initiatives since then, Ogier said it is possible to discern the key criteria that will need to be met by offshore financial centres (OFCs) and the offshore funds domiciled there.

"The number of OFCs in which they can be domiciled is likely to decrease," said British Virgin Island (BVI) partner Simon Schilder. "The changes in the regulatory landscape will mean that only those OFCs that adapt to meet the new internationally mandated criteria on regulation and tax transparency will survive as structuring and administration centres for offshore funds."

Schilder said the costs of regulator-to-regulator reporting and the ongoing scrutiny by international bodies is likely to be prohibitive for many OFCs. However," the status of the pre-eminent OFCs such as the Cayman Islands, BVI and the Channel Islands, should be enhanced by the coalescence of international standards," Schilder added.