L Burke Files examines Nevis’ uniquely crafted LLC legislation and other recent innovations in the financial centre.
Nevis, as an international finance centre, started its IFC economic life with its very own uniquely crafted LLC legislation.
In time many other laws, expanding the choice for the IFC professionals, followed that unique LLC legislation. The choices of legal entities and financial constructions grew with the professional community allowing those in Nevis greater choice.
These new choices were those supported by laws, not constructions merely permitted in the absence of the laws. Many of these new laws were laws that were Nevisian adaptations from other jurisdictions. Successful and well-crafted laws were taken as a template and adapted, revised and updated for a better fit into the Nevisian scheme of a competitive finance centre.
This is the natural evolution of legislation. Some jurisdiction are leaders in some forms of laws and other jurisdiction take what they like from those jurisdictions and craft new laws that better fit their needs and their domestic legal framework. As Nevis has made effective use of the prior legal art to fuel its foundation and expansion as a finance centre, so have others adapted several of Nevis’s legal innovations to expand their opportunities as an IFC. This model of innovation and adaptation is a natural progression for most jurisdictions – not just international finance centres but even the large industrial nations.
As you can quickly surmise if IFCs are all adopting and adapting the best parts of each other’s legislation, in time, without new innovations a homogenisation of the body of law and choices begins to take shape.
Once this homogenisation occurs there is no competition between jurisdictions based upon an individual jurisdiction’s specialties. The competition between jurisdictions is reduced to consumer choices based upon ease of use and the lowest price.
As we all have often heard the critics of IFCs declare – ‘they [IFCs] are all the same it is just a race to the bottom with the lowest level of price and compliance that will win the day’. The same criticism can be said about the “levelling” of laws between industrialised nations being forced on these nations by the Financial Action Task Force and the Bank for International Settlements. These institutions, through their initiatives at harmonisation, remind me of the Borg and the Borg tag line from Star Trek, “You will be assimilated, resistance is futile.”
So while many other IFCs are copying each other, and the legislative Borg are meeting in Brussels - Nevis is getting back to innovation.
The Nevis Island Service Providers Association (NISPA) is beginning the process of looking at new economic opportunities for the jurisdiction as an IFC. In particular the NISPA is looking at legal innovations in the fields of intellectual property and Internet based businesses.
In the last 25 years the value of public companies has gone from 20 per cent intangible assets to over 80 per cent intangible assets. The IFCs began working with the tangible assets; it is now time for the IFCs to start working with the intangible assets. It is these intangible assets that represent the other 80 per cent of a modern company’s balance sheet.
Internet based businesses are growing rapidly. Innovations in merchandising are eliminating the middleman and manufacturers are going direct to customers all over the world. Chinese manufactures are selling directly to European consumers. Latin American resorts are selling directly to tourists without travel agents. Books are being sold as digital content and are not even being printed. Education of all sorts - from simple seminars to fully accredited degrees - are being provided on the and over the Internet. Software can be paid for and downloaded in minutes from anywhere in the world.
These opportunities with intangible assets, collective known as Intellectual Property and Critical Information (IPCI), and the Internet are at the forefront of the economic forces of the future. These are wise choices by NIPSA.
Further, NIPSA is also having its members work on a methodical review of the laws and regulations currently in place for Nevis’ offshore sector with an eye to best practices and new opportunities.
The willingness to actively explore new economic and legislative advantages and the work to keep laws already on the books current and economically relevant are signs, not of a small nimble jurisdiction, or of a larger jurisdiction with a deep pool of talent, but that of a jurisdiction with good and conscientious stewardship.
I look forward to the process as I do the eventual fruits of the collaboration.
L. Burke Files DDP CACM
Mr. Files is an international financial investigator and due diligence expert who has run cases in over 130 countries and has visited over 100 countries. Mr. Files has tackled investigations running from a few hundred thousand dollars to over 20 billion. Along the way, he became familiar with the knowledge of what people need to do, for due diligence, preventing corruption, and to avoid helping criminals launder money. He brings this experience of hands-on investigating and problem-solving experience to his lectures on Due Diligence, AML, and Anti-Corruption. Prior to founding FE&E, Inc., he served as the Director of Corporate Finance for American National an investment bank focused on development stage venture capital. He was also employed by Oppenheimer/Rouse as a commodities specialist trading customer accounts in Agri-Business, 24-hour gold and silver, and foreign currencies. Mr. Files has authored six books, and many white papers and articles. He has been quoted in major publications including The Guardian, The Financial Times, Forbes, US Newsweek, and more. He is the author of the award-winning book Due Diligence For The Financial Professional 2nd Edition. Mr. Files serves on the board of directors for several private companies, funds, and non-profits. The companies include Unicus Research a specialty advisory service for fund managers and family offices, SGS Glazing a specialty glazing design and estimating firm, and NSI a premium spirits company.