2014 proved to be a significant year for expansion of Gibraltar’s overseas representation politically and for business development, but this year is likely to play an even more critical role

James Lasry, Chairman of the year-old AMCHAM (American Chamber of Commerce) Gibraltar group told Gibraltar International in April that following a US trade mission by ten firms in November, “we have a couple of big deals that are still cooking – deals in the areas of energy and renewable energy that will really impact on Gibraltar in a big way”.

“They are subject to a tender process that began last May; if successful, they will mean millions of pounds of inward investment”, promised the Hassans lawyer.

AMCHAM Gibraltar – now with 27 member firms – was promoted by Chief Minister, Fabian Picardo, to give impetus to his push for inward investment from beyond traditional (principally, UK) markets.

Picardo said in the Gibraltar International interview nearly 18 months ago: “I think you can expect to see great interest from US commercial entities seeing what they can do in Gibraltar with access to the EU and also to North Africa, which is becoming increasingly important to the US.”

Since establishing representation in Washington in 2012, several high profile visits by the Chief Minister and his deputy, Dr Joseph Garcia, has given Gibraltar greater prominence.

The pair have met with the Council on Environmental Quality in the White House and outlined Gibraltar’s aim for carbon neutrality, including changing power generation fuel from diesel to gas to reduce emissions and introduction of alternative energy sources.

Gibraltarian and long-time US resident, Joe Carseni, a member of the Gibraltar-American Council, was appointed The Rock’s American representative to garner political support, but he also promotes “the attraction of business opportunities and commercial investment in Gibraltar”.  Holland & Knight, a law and lobbying specialist agency, was appointed in May to raise Gibraltar’s profile before the Executive and Legislative branches of the Government in Washington.

A mix of politics and business generation is on the agenda too for significantly expanded EU representation. Last October former South West & Gibraltar MEP, Sir Graham Watson, was appointed to lead and direct lobbying from new, larger Brussels premises, as well as “facilitating the promotion of business in Gibraltar”. Sir Graham’s emphasis is on relations with the European Parliament and MEPs elected last year, and with the new European Commission, enhancing communication with the UK’s Permanent Representation to the EU (UKREP).

The Rock’s business interests with particular EU significance include eGaming, taxation, aviation, environmental and maritime matters. Sir Graham – an MEP for ten years – arranged meetings with the Parliament and Commission in April for Garcia’s second Brussels visit this year, to include the latest developments relating to Gibraltar’s position in the EU.

It was timely: Picardo had controversially just called for each part of the UK to have an individual say in negotiations if there is to be a vote on Britain’s possible EU exit – something that will become clearer after the UK General Election on 07 May. “The only existential threat to our economy is one where we are pulled out of the European Union against our will and denied access to the single market,” he told the Financial Times in an interview.

The push for greater EU recognition began under the previous administration.  However, “it is true to say that the Brussels office had been downgraded in the past and that this Government has chosen to upgrade it once again”, Dr Garcia told Gibraltar International.

“There are a whole host of issues that affect Gibraltar’s position in the European Union and we must be there to meet those challenges”, he explained, pointing to Spain’s decision to abandon a 2006 Cordoba agreement with Gibraltar that has seen efforts to exclude Gibraltar Airport from EU civil aviation legislation, which he told MEPs would be “illegal and contrary to the [EU] Treaties”.  Spain was also hindering the free movement of people at the La Linea border.

Two Gibraltar exhibitions – accompanied by numerous meetings with EU politicians and officials and media – have been held at the Brussels Parliament.  The first – in June 2013 – marked the 300th anniversary of the signing of the Treaty of Utrecht, which gave Gibraltar its British credentials, as well as the 40th anniversary of Gibraltar’s entry into the European Economic Community (as then) as a European Territory for whose external affairs a Member State [the UK] was responsible.

Gibraltar engages with the EU directly, because it otherwise relies on the UK to represent its interests. As part of mainland Europe, Gibraltar is able to passport financial services such as funds and insurance throughout the 27 EU countries: “Gibraltar may have more appetite for more Europe than the UK in the coming years”, Picardo has emphasised.

Dr Garcia admits the Brussels office focus will be mainly political, but said: “There is scope for commercial and economic activity as well and many of the issues that the office will touch upon, like aviation, the frontier and tax, will have a clear economic impact as well”.

EU representation is being modelled on the success of Gibraltar House in London’s Strand: it has been “essential to maintain the position there and to lobby for Gibraltar on the different political issues that arise”, Dr Garcia opined.

But it wasn’t always so. As London office director, Albert Poggio, recounts: “Initially, when I began in 1988 we had opposition from the Foreign Office, which didn’t want us working in London and didn’t recognise us.  In those days, when the Chief Minister came to London we were lucky to get five MPs to meet him; now the Gibraltar Group is the second largest lobby group in Parliament with 120 MPs”.

After May’s UK general election however, “we will need to build up again the support for Gibraltar”, Poggio noted, adding: “But at least the Foreign Office is now on-side.”

Gibraltar Finance (GF) no longer has its own full-time representative at the London office following Victor Galliano’s decision to return to the City.  The London role, for which members of the Gibraltar Finance Centre Council long campaigned, was described as “a strategic presence in the heart of Europe’s largest financial centre and one of the most important globally”.

Galliano assisted three Gibraltar-based colleagues – in insurance, funds and private clients – with London contacts and sought opportunities for business development.  Jimmy Tipping, GF director, says there are no plans at present for a replacement – that aspect has been “paused”.

Having grown from three Gibraltar House staff to ten, Poggio in 2008 persuaded the then government to buy the present £6m+ four-storey premises that has since quadrupled in value. Poggio now plans retirement next year, but aims to continue as a part time consultant.

His nominated successor is Jason Cruz, the 41 years old representative of Gibraltar in Hong Kong (HK), where opening of the Asian office a year ago was a surprise; no reference had previously been made to the former British colony being a target for trade development.

But Cruz, in the course of work for major Asian firms in financial services, banking and property investment, had introduced over previous years several local business partners and investors to “a dialogue with Gibraltar”.

Candidly, Picardo recently admitted it was a move that “should have happened a long time ago. It is an area that has unfortunately been neglected.

“We have therefore seen the growth of the Chinese economy to a great extent pass us by and we’re arriving late to the party, but it’s a party we cannot afford to miss, even if we are arriving late to it.”

Cruz, with an assistant, has organised six ministerial visits to Hong Kong covering education, the financial sector, tourism and maritime services, which he believes have resulted in “some business”.  Another visit is imminent – this time led by the private sector and includes representatives of the new Gibraltar Stock Exchange on their fourth trip.

But Cruz, in the course of work for major Asian firms in financial services, banking and property investment, previously had introduced several local business partners and investors to “a dialogue with Gibraltar”.

The new office will encourage Chinese investors to use Gibraltar for both direct investment on the Rock and crucially as an entry-point into the European market, something that Financial Services Minister Albert Isola emphasised to HK funds sector firms last September.

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With Listing Members now signed up and approved, and listing applications being filed with GSX Limited (GSX), interest is turning towards the listing process itself. What are the benefits and how does the listing process work?

GSX was granted its authorisation to commence its operations as Gibraltar’s first ever regulated stock exchange on the 10th October 2014 with the listings business expected to commence during the first quarter of 2015. GSX currently operates as a listing only exchange for open-ended funds that are licensed, registered, authorised and/or regulated as a Collective Investment Scheme (CIS) by a competent authority empowered to supervise financial services in a GSX recognised State. To that end, GSX is a regulated exchange that operates in many ways as a European fund distribution platform. Some allocators are restricted from investing a % of a fund or clients assets in vehicles that are un-regulated or unlisted and GSX provides a straightforward solution to a European listing option for a fund. Similarly, a listing can form an important part of any investors due diligence process on a fund and the approval of a regulated exchange, support from a Listing Member (or ‘sponsor’), and approval from the listing authority can provide a strong message to potential investors.

GSX offers a simple, cost effective, and professional listing option for a fund in a European jurisdiction. In the most recent independent Global Financial Centres Index (16th Edition) Gibraltar ranked higher than the Cayman Islands, Malta, the Isle of Man or Jersey as a Financial Centre.

The advantages of a GSX listing

GSX provides a secure platform for investors and managers to come together, and it delivers a reliable, fast to market, and cost effective service that enables applicants to market to investors looking for greater transparency and visibility through an EU listing.

The GSX portal allows investors to filter their searches by individual or multiple criteria in order to identify their preferred choice of investments including geography, asset class, manager, and currency.

Over time, GSX plans to adopt a graduated progression to a full service stock exchange providing trading and execution services across a wide range of products, but not limited to debt and equities.

Listing of open-ended collective investment schemes: need to know

Other than the conditions specified in the CIS Code, the following general conditions must be met for those wishing to apply for listing:

^l An applicant must be duly incorporated or otherwise validly established according to the relevant laws of its place of incorporation or establishment of a GSX Recognised State, and must operate in conformity with its Constitutive Documents.

^l An applicant must be an Open-Ended Fund and must be regulated by the Competent Authority of a GSX Recognised State or be otherwise acceptable to GSX Limited and the Listing Authority.

^l An applicant must have audited accounts for the last financial year.

^l An applicant may not change its principal investment objectives and policies as set out in its Listing Particulars unless the consent of the unit-holders representing a majority of the Units of the applicant that are in issue has been obtained in advance.

^l An applicant must not be permitted to issue bearer shares and/or Units under its constituting documents.

^l The applicant must satisfy GSX and the Listing Authority that its Controllers together with any appointed investment manager have sufficient and satisfactory experience in the management of investments of the type in which the applicant intends to invest, or currently invests.

^l The Controllers of the applicant must be able to demonstrate their ability to act independently of any appointed investment manager of the applicant.

^l The aggregate market value of the Units of an applicant must be at least €1,000,000 or the foreign currency equivalent within 12 months of the applicant’s launch if the applicant is a new Fund, or above €1,000,000 if the Fund has been active for more than 12 months.

^l Once listed, an applicant must continue to comply with all requirements of the CIS Code.

Application process: an outline

Typically, the fund will select a Listing Member (who are approved by GSX, and listed on the GSX website). The Listing Member will manage the application process adhering to the application for admission to listing set down in the CIS Code.

The Listing Member is then responsible for dealing with GSX on all matters relating to the listing application and will work closely with their advisors and the applicant in preparing the applicant for listing. The Listing Member will also work with the applicant post-listing in ensuring that the applicant is aware of and adheres to its continuing obligations, fulfilling its regulatory responsibilities.

The applicant will require that its Listing Particulars comply with the GSX requirements. This will involve the disclosure of detailed information relating to the fund and its business, including the fund’s controller names and contact information, its location, legal status, investment strategy and assets under management.

Once an application has been completed and submitted, membership is then considered by GSX’s Membership Committee. Documents that need to be submitted include the application for the listing, as well as a completed checklist, and the listing particulars which will need to be compliant with the Listing Code. Once the application is completed, GSX will then consider the application and, once approved, deliver this to the Listing Authority.

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