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11th Annual Offshore ForumThursday, October 11th 2012
WelcomeAnthony Whaley, Director, Bermuda
Agenda
• Presentation:• Key note speaker – John Collis
• Bermuda – Chris Garrod• BVI – Anton Goldstein• Cayman Islands – Kevin Butler• Mauritius – Craig Fulton
Offshore: Its Global AdvantageJohn Collis, Chairman, Conyers Dill & Pearman
Bermuda
Chris Garrod, Director, Bermuda Office
Bermuda Reinsurance
Bermuda: “The World’s Risk Capital”
Third largest reinsurance market
Two recent trends:
• use of special purpose insurers for ILS/sidecar
transactions
• hedge fund sponsored property catastrophe
reinsurers
Special Purpose Insurers
Introduced in 2009 23 licensed in 2011, 15 so far in 2012 Designed to only write sophisticated, fully
funded transactions Very low regulatory requirements
• minimum capital of $1.00• no return of capital restrictions• audit waiver• low licensing fees
Sidecar Structure
HoldingCompany
Equity Investor
Cedant SPIReinsurer
DebtInvestor
Equity Proceeds
Dividends
Dividends
Equity Proceeds
ReinsuranceTrust
LoanProceeds
Premiums Interest
Catastrophe Bond Structure
Special Purpose Trust
NoteholdersSPI ReinsurerCedingInsurer
Share capital $1
CollateralAccount
Note Proceeds
Direct Investment
Yield
Reinsurance Agreement
Reinsurance Premium
Hedge Fund Sponsored Reinsurers
US hedge fund& others
Holdco
Class 4reinsurer
FundPortfolio
US hedgefund
Investment Management Agreement
$
$shares
shares
$
Examples:
Third Point Re – Daniel Loeb
PaCRe – John Paulson
S.A.C. Re – Steven A. Cohen
British Virgin IslandsAnton Goldstein, Associate, British Virgin Islands
BVI
Number of BVI Incorporations by Year
010,00020,00030,00040,00050,00060,00070,00080,00090,000
2004
2005
2006
2007
2008
2009
2010
2011
2012
- Firs
t 6 m
onths
Joint Ventures
• Neutral • Tax • Choice of Law
• Judicial Committee of the Privy Council• BVI Business Companies Act, 2004
Joint Ventures
“Separate Classes of Shares”
Joint Ventures
“Only ten out of 1,722 providers in America required notarised
documents in line with FATF standards.”
The Economist
September 22, 2012
BVI Business Companies (Amendment) Act, 2012
• Company Names• symbols and emoticons (Incorporate@BVI.com, Ltd.)
• purchase name from company• Security Interests
• partial releases• deeming provisions
• Conversion of Shares• expressly permitted
• Alternate Directors• sign written resolutions
• New Certificates from Registrar of Corporate Affairs• Dissolution after 7 years from strike off (rather than 10
years)
Cayman Islands
Kevin Butler, Director, Head of Office Cayman Islands
Jurisdictional Update - Trending Up
• Number of companies increasing• Number of partnerships increasing• Deal flow increasing
Jurisdictional Update - Trending Up
• Increase in new funds (lots of cash for the established manager)
• Still difficult for the start-up• Back to basics• Independent Directors for hedge funds
and private equity• Side letter update
Cayman Enterprise City
• Special Economic Zone – only of its kind in the world.
• Forms ideal 21st Century hub for world’s knowledge based and high-technology industries
• Internet & Technology• media• biotechnology• commodities & derivatives• outsourcing• academia
MauritiusCraig Fulton, Associate, Cayman Islands andFormer Head of Office Mauritius
Double Taxation Avoidance Agreements
• Mauritius has entered into an extensive network of double taxation avoidance agreements with 36 countries
• Benefits include:• No or greatly reduced capital gains tax payable
when a Mauritius company sells a stake in a company resident in the other treaty country; and
• Reduced or eliminated withholding taxes on dividends, interest and royalties remitted from the treaty country to the Mauritius company
DTA Treaty Network
Wide/strong DTA treaty network, with strong African links, and more treaties forthcoming:
Bangladesh Mozambique Uganda MalawiBarbados Namibia United Arab Emirates MonacoBelgium Nepal United KingdomBotswana Oman Zimbabwe Being NegotiatedChina Pakistan AlgeriaCroatia Qatar Being Ratified Burkina FasoCyprus Rwanda Kenya CanadaFrance Senegal Nigeria Czech RepublicGermany Seychelles Republic of Congo GreeceIndia Singapore Russia MonacoItaly South Africa Zambia PortugalKuwait Sri Lanka Republic of IranLesotho Swaziland Awaiting Signature Saudi ArabiaLuxembourg Sweden Egypt St Kitts & NevisMadagascar Thailand Gabon TanzaniaMalaysia Tunisia Ghana Vietnam
Yemen*Also, TIEAs with Australia and Denmark in force.
Standard Base Structure
Investor Dividends/interest/royalties with no WHT
Tax payable in Mauritius ranges from 0% to 3%
As low as 8% WHT instead
of 20%
IPPA benefits
Reduced/zero withholding tax (WHT) on
dividends/interest/royalties paid to GBC1
IPPA benefits
Category 1 Global Business Company (GBC1) Mauritius
Investment in SenegalInvestment in South Africa
Mining company in Madagascar
• Also basis of standard PE model (GBC1 as Holdco)• Can also provide for leverage via loan to GBC1 and onward loan into target
country
No WHT
Sample Fund Structure
International investor(s)
invests
DTA treatySeeks to invest Bank in Mauritius(Custodian)
Investment in Africancountry
Mauritius fund(CIS/CEF)
invests
DTA treaty
Safeguard assets
List of IPPAs
• Barbados• Belgium/Luxembourg
Economic Union• Burundi• China• Czech Republic• Finland• France• Germany• India• Indonesia• Madagascar
• Mozambique• Pakistan• Portugal• Republic of Korea• Romania• Senegal• Singapore• South Africa• Sweden• Switzerland• UK and Northern
Ireland
Questions
Conyers Dill and Pearman
David Lamb, Partner, Hong Kong Office
Mark Forte, PartnerBVI Office
Fraser Hughes, Counsel, Cayman Office
Peter Ch’ng, Partner, Bermuda Office
Christian Luthi, Partner, Bermuda Office
Craig McIntyre, Partner, Bermuda Office
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