CURACAO FUNDS AND ADMINISTRATORS

Statutory requirements applicable to the organizational and legal structure

The National Ordinance on the Supervision of Investment Institutions and Administators (Landsverordening regelende het toezicht op beleggingsinstellingen en administrateurs; NOSIIA) provides for a regime of supervision for investment institutions and administrators with the objective of an adequate operation of the financial markets and the protection of investors in such markets.

With regard to the business operation of a local fund that operates within the scope of the NOSIIA it provides for requirements applicable to the organizational and legal structure as expressed in the fund’s constitutive documents. Such requirements address the conditions …
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05
Oct 2012
CATEGORY

Finance

COMMENTS No Comments

THE TRANSFER OF BEARER BONDS IN THE DUTCH CARIBBEAN

No deed required

Under the laws of the Dutch Caribbean (Aruba, Bonaire, Curacao, St. Maarten) transferring the title of bearer bonds (i.e. bonds which are owned by whoever is holding them, rather than having a registered owner) does not require a transfer deed. In other words: such a bond is transferred by surrendering the original document. The transfer of ownership is thus accomplished simply by the transfer of said document.

Under Dutch Caribbean international private law, the general rule is that the ‘lex rei sitae’ determines who holds legal title to movable assets (such as bearer bonds) and whether and …
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20
Sep 2012
CATEGORY

Finance

COMMENTS No Comments

REGULATORY LEGISLATION IN CURACAO

General requirements on the business operation

Regulatory legislation in Curacao does not distinguish between different kinds of products, such as for instance hedge funds, but is of a more general nature. The regulatory legislation of Curacao applicable to financial institutions is divided into four categories being: credit institutions, institutional investors, investment institutions & administrators and trust service providers.

The authority entrusted with the supervision on the financial institutions mentioned above is the Central Bank of Curacao and Sint Maarten.

The regulatory legislation does provide for general requirements on the business operation of the financial institutes involved. The National Ordinance on …
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12
Mar 2012
CATEGORY

Finance

COMMENTS No Comments

CURACAO TRUST LEGISLATION

Entered into force on 1 January 2012

On January 1st 2012, new legalization entered into force pursuant to which it is now possible to set up a trust, similar to the trust in Anglo-Saxon common law jurisdictions, in Curacao. This trust is a legal exception to the paritas creditorum rule as we know it and serves as an important instrument which could be used for asset segregation purposes.

With the introduction of the Curacao Trust and the new paragraph 3 to section 231 of Book 3 of the Curacao Civil Code the need for a parallel debt construction in the …
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29
Feb 2012
CATEGORY

Finance

COMMENTS No Comments

PARALLEL DEBT IN CURACAO

New legislation

It has become market practice in Curacao, and also in the Netherlands, to create a separate (parallel) obligation, owed by the borrower (or guarantor) to the security agent in its own name, on the terms and in an amount equal to the original (principal) obligations owing by the borrower (or guarantor) to the lenders.

The security rights are then granted to the security agent in its own name to secure the parallel debt. This “parallel debt” structure is usually reflected in the facility agreement and gives the security agent an own and independent right to demand payment by …
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18
Feb 2012
CATEGORY

Finance

COMMENTS No Comments

CREDIT INSTITUTIONS IN ARUBA

A license is required

According to Section 4 of the Aruba State Ordinance on the Supervision of the Credit System 1998 (SOSC), no enterprise or institution established in Aruba shall pursue the business of a credit institution unless it has obtained authorization to that end from the Central Bank. No enterprise or institution established outside Aruba shall pursue the business of a credit institution through a branch in Aruba, unless it has obtained authorization from the Central Bank to do so (Section 24(1) SOSC).

A “credit institution” under the SOSC means an enterprise or institution, not being an institution established …
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29
Nov 2011
CATEGORY

Finance

COMMENTS No Comments

CREDIT INSTITUTIONS IN CURACAO AND ST. MAARTEN

A license is required

The National Ordinance on the supervision of banking and credit institutions 1994 (Landsverordening toezicht bank- en kredietwezen, the “NOSB”) of both Curacao and St. Maarten prohibits any one (other than a licensed Credit Institution) from – directly or indirectly – soliciting funds from the public or extending credit to the public (art. 45 NOSB).

It should be noted that the Explanatory Memorandum to the NOSB bestows a wide scope on the term “public”, i.e. anyone other than a licensed Credit Institution. The Central Bank of Curacao and St. Maarten may grant individual exemptions from this prohibition. …
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17
Sep 2011
CATEGORY

Finance

COMMENTS No Comments

INVESTMENT INSTITUTIONS IN CURACAO AND ST. MAARTEN

Raising money without a license is prohibited

The National Ordinance on the Supervision of Investment Institutions and Administrators 2002 (Landsverordening toezicht beleggingsinstellingen en administrateurs, a.k.a. “NOSIIA”) of both Curacao and St. Maarten prohibits raising, or obtaining, pecuniary means or other property for the purpose of participating in an investment institution that has not been granted a license by the Central Bank of Curacao and St. Maarten, and prohibits  offering participating interests in such an investment institution in or from Curacao or St. Maarten respectively.

Investment institutions may be exempted from this prohibition if the moneys or goods to be exchanged for …
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07
Sep 2011
CATEGORY

Finance

COMMENTS No Comments

SECURITIZATION IN CURACAO

Curacaoan special purpose vehicles are commonly used in cross–border financing transactions

Curacaoan special purpose vehicles (SPVs) are commonly used in both cross–border financing transactions as well as in Curacao domestic financing transactions. As far as cross–border transactions are concerned, (synthetic and cash) securitizations, repackagings, collateralized debt obligations (CDOs), collateralized loan obligations (CLOs), leasing transactions, MTN and other note issuance programs are among the most popular transactions involving a Curacao SPV.

There are a number of reasons that make Curacao an attractive jurisdiction in which to set up SPVs in structured financing transactions. The first of these is the favorable Curacaoan …
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24
Jul 2011
CATEGORY

Finance

COMMENTS No Comments

EUROPEAN COURT OF JUSTICE ON INSIDER DEALING

Market Abuse Directive defines insider dealing objectively

The European Court of Justice, in its decision dated 23 December 2009 (Case C‑45/08; Spector Photo Group NV and Chris Van Raemdonck versus Commissie voor het Bank-, Financie- en Assurantiewezen (CBFA)), has clarified the elements of insider dealing following a request from the Court of Appeal of Brussels.

The European Court of Justice was to interpret the expression ‘use of inside information’ in Article 2(1) of EU Directive 2003/6 (the Market Abuse Directive or MAD). That provision provides that the Member States are to prohibit any person referred to in …
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30
Jan 2010
CATEGORY

Finance

COMMENTS No Comments

THE CUSTODY OF SECURITIES IN THE NETHERLANDS CARIBBEAN

Separate legal entity

Generally, securities that must be held by a Netherlands Antilles bank on behalf of its clients will be held by a custodian. In most cases the custodian is either a foundation (‘stichting’) or a wholly owned subsidiary (NV or BV) of the bank.

The scope of the activities of the custodian will be limited to holding shares, bonds, notes, certificates and other securities. The insolvency risk of the custodian is therefore minimized. Alternatively, these securities can also be held in the name of the custodian by independent custody companies abroad, including brokers, agents and sub-custodians. In both …
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05
Dec 2009
CATEGORY

Finance

COMMENTS No Comments

RESTARTING SECURITIZATION MARKETS IS CRITICAL

IMF: securitization can positively contribute to financial stability and sustainable economic growth

Although recent public opinion has focused on what went wrong with securitization, according to the International Monetary Fund (IMF), it is important to recognize the many benefits associated with sound securitization. Mobilizing illiquid assets and transferring credit risk away from the banking system to a more diversified set of holders continues to be an important objective of securitization, and the structuring technology in which different tranches are sold to various investors is meant to help to more finely tailor the distribution of risks and returns to potential …
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22
Sep 2009
CATEGORY

Finance

COMMENTS No Comments