Dear Mr. Stubbs, - Securities Commission of the …

1 No. FIN! In reply please quote this number Mr. Philip Stubbs Chairman & Acting Executive Director MINISTRY OF FINANCE P. O. BOXN-3017 TELEX: 20-255 TEL: (242) 327-1530 FAX: (242) 327-1618 327-1620 NASSAU, BAHAMAS I ih January 2012 Securities Commission of The Bahamas 3,d Floor, Charlotte House Box N 8347 Nassau, Bahamas Dear Mr. Stubbs, RE; Securities Industry Regulations. 2012 Please find enclosed a copy of the Securities Industry Regulations 2012 which were gazetted on 9th January 2012. EpdQ511re Yours si/cereIY, f ~-'7 /// \ " /' K. L. ain ~/ 3' Legal A vis'!,"/ (for) Financial..ectetary (Actg.) L~~ \ I. JAN 1 3 ZOlL MlNlSTIlY OF FIN. ,) If f j I , ! I I I , ~ i I j I C6 ~ j~ 'a! -e !> -<\). ' . I f'; li; ,. I ~. i') , l"i t;.~ j (' < r.~ , , . t.: I', S i "'" "1.

2 {."J ;-" ~-~ ~3 Securities INDUSTRY REGULATIONS, 2012 ngement of Sections Section PART I -PRELIMINARY 7 I. Citation .. 7 2. Interpretation .. 7 3. Determination of "fit and proper" .. 9 4. Solvency .. 11 5. Fees .. 11 6. Late Fees .. 11 7. Forms .. 11 8. Applications .. 12 9. Application to investment funds ..12 PART II -THE Commission 12 10. Filing of documents .. 12 PART III -APPROVED AUDITOR 12 II. Approved auditor .. 12 12. Qualification for .. 13 13. Duties .. 13 14. Duty to notifY the Commission .. 14 IS. Duties of person required to appoint an approved auditor ..14 PART IV -BOOKS AND RECORDS AND RECORDS RETENTION REQUIREMENTS 14 16. general Standards .. 14 17. Books and records for registered firms .. IS 18. Books and records for persons registered under Part V .. 15 19. Storage Medium.}

3 17 20. Records location and retention requirements ..17 PART V -REGISTRATION OF PERSONS UNDER PART V OF THE ACT 18 Division I-Registration of Marketplaces and Clearing Facilities 18 21. Application for registration ..18 22. Requirements .. 18 23. Systems and controls .. 18 24. Promotion and maintenance ofstandards .. 19 25. Regulatory instruments .. 19 Division 2 -Reporting to the Commission 20 26. Notice of change in ..20 27. Notice of change in information after registration ..20 28. Form of notice ..22 29. Transactions affecting financial resources .. 22 30. Reporting to the Commission -annual reporting ..22 31. Reporting to the Commission -interim reporting ..23 32. Reporting to Commission -other ..23 Division 3- general 23 33. Amendments to incorporating documents etc ..23 34. Security holders and transfers of Securities .

4 24 35. Renewal process ..24 36. Liquidation and voluntary surrender of registration ..24 PART VI -REGISTERED FIRMS AND INDIVIDUALS 25 Division 1 -Firms 25 37. Application to be a registered firm ..25 38. Requirements .. 25 39. Name of registered firm .. 25 40. Supervisory officers .. " .. , .. , ..26 41. Holding client assets .. 26 42. Regulatory capitaL ..26 43. Insurance .. , .. 26 44. Outsourcing ..27 45. Renewal process .. ' ..27 46. Security holders and transfers of Securities .. 28 Division 2 -Reporting to Commission 28 47. Employment of representative .. 28 48. Termination of representative ..28 49. Reporting to the Commission -annual reporting .. 29 50. Reporting to the Commission -interim reporting .. 29 51. Reporting to Commission -other ..30 52. Notice of change in ..30 53. Notice of change in information-after registration.

5 30 54. Form of notice ..33 55. Transactions affecting financial resources ..33 Division 3-Registration of Individuals 33 56. Categories of individual registration ..33 57. Application to be a registered ..33 58. Requirements ..33 59. Education and experience ..34 60. Trainees ..34 61. Notice of change in ..34 62. Notice of changes in information-after registration ..34 63. Suspension and reinstatement of registration ..35 Division 4- general 36 64. Voluntary surrender of registration or liquidation ..36 PART VII -CONDUCT OF BUSINESS 36 Division I- general 36 65. Application ..36 66. Required standards of a registered fIrm or individuaL .. 36 67. Know your client..37 68. Client account opening form and documentation .. 37 69. Suitability obligation ..37 70. Discretionary trading ..38 71.

6 Unregistered, suspended or barred individuals ..38 72. Reporting to clients-<:ontract note .. 38 73. Reporting to client~lient account statements .. 39 74. Supervision, compliance and risk management systems ..39 75. Complaints ..40 76. Trading listed Securities ..40 77. Prompt delivery ..40 78. Priority of client orders .. 40 79. Trading as principaL ..41 80. Conflicts of inter est..41 81. Fair allocation of investment opportunities ..42 82. Churning ..42 83. Transactions in Securities of .. 42 84. Improper use of client assets .. 42 85. Voting Securities not beneficially owned ..42 86. Forwarding documents to clients ..43 Division 2 -Reconciliations and Client Assets 43 87. Reconciliations ..43 88. Segregation of client cash and assets .. 44 89. Securities subject to safekeeping.

7 44 90. Securities not subject to safekeeping ..44 91. Reporting to the Commission ..45 Division 3 -Advertising and Communication Standards 45 92. Registration not to be advertised ..45 93. Advertising standards ..45 PART VIII -DISTRIBUTIONS AND PROSPECTUS REQUIREMENTS 46 Division 1 -Public Distributions 46 94. Definitions ..46 95. Prospectus form ..46 96. Materials to be filed with preliminary prospectus .. 46 97. Materials to be filed with final prospectus or made available for public inspection ..47 98. Advertisements in connection with a distribution ..47 99. Marketing restrictions for prospectus offerings ..48 100. Prospectus certificates ..48 I 0 I. Expert opinions .. ' ..48 102. Experts' consents ..49 103. Statement of rights ..50 104. Reasons the Commission shall refuse ..50 105.

8 Prospectus amendments .. 51 106. Distribution lisL ..51 107. Withdrawal from purchase ..52 108. Escrow requirements .. 52 Division 2 -Exempt Offerings 53 I 09. Offering to accredited investors .. 53 110. Exemptions not available ..53 III. Rights offerings ..53 112. Offering memorandum and other disclosure documents ..54 113. Sale by selling security holder on registered marketplace ..54 114. Sales to employees ..55 115. Approved foreign issuer distributions .. 55 116. Notices required to be filed with Commission on exempt sales ..56 117. Resale restrictions ..56 Division 3 - general 57 118. Commission may require preparation and filing of supplementary information ..57 119. Prohibition .. ' ..57 PART IX -CONTINUING DISCLOSURE OBLIGATIONS OF PUBLIC ISSUERS 57 Division 1 -Routine Reporting 57 120.

9 Annual financial statements .. 57 121. Interim financial statements ..58 122. Annual report ..59 123. Management discussion and analysis ..59 Division 2 -Material Change Reporting 59 124. Reporting to the Commission .. 59 Division 3 -Proxies 60 125. Definitions .. 60 126. Proxy statements .. 60 127. Form of Proxy .. 6I 128. Discretionary authority -form of proxy .. 62 129. Security holder proposals .. 62 130. Proxy statements - general .. 64 131. Requirement to file draft copies of proxy materials .. 64 132. Commission authority .. 65 PART X-MISCONDUCT 65 133. Application .. 65 134. Policies and procedures to prevent insider trading .. 65 135. Exemption to prohibited representations .. 65 PART XI -REPORTING BY SECURITY HOLDERS OF PUBLIC ISSUERS 65 136. Insider reports .. 65 13 7. Register of security holders of public issuer.

10 66 PART XII - CIVIL LIABILITY FOR MISREPRESENTATIONS 66 138. Promoter liability for misrepresentation in a prospectus .. 66 PART XIII - general PROVISIONS 66 139. Application .. 66 140. Recognized foreign jurisdictions .. 66 141. Official Register~ontents .. 67 PART XIV - TRANSITION 67 142. Definition .. , .. 67 143. Approved auditor .. 68 144. Books and records requirements .. 68 145. Ongoing obligation to meet registration requirements for existing registered Securities exchanges and clearing facilities .. 68 146. Change of registration categories-firms .. 68 147. Ongoing obligation to meet registration requirements for existing registered firms .. 69 148. Obligation to have a compliance officer .. 69 149. Capital requirements .. 69 150. Insurance requirements .. 69 151. Change of registration categories-individuals.