Bermuda: Changes To The Investment Funds Act 2006

Last Updated: 25 January 2019
Article by Dawn C. Griffiths, Elizabeth Denman, Neil Henderson, William Cooper and Stephanie Henderson Wernbo

Most Read Contributor in Bermuda, July 2019

The recent Economic Substance Act, 2018 ("ESA"), passed in December 2018, included within it a series of amendments to the Investment Funds Act, 2006 (the "IFA"). These amendments to the IFA are for the purpose of enhancing Bermuda's regulatory framework with respect to certain categories of unregulated investment funds, namely, the private Excluded funds and the Class A and Class B Exempt funds.

This alert deals solely with the amendments to the IFA. For information on the broader implications of the ESA for Bermuda entities, please refer to the Conyers alerts on Economic Substance.

The original IFA framework

Qualifying investment funds previously had the option to register with the Bermuda Monetary Authority (the "BMA") as authorised/regulated funds or in one of three non-regulated categories of funds: (i) the private Excluded fund; (ii) the Class A Exempt fund; and (iii) the Class B Exempt fund. This group of non-regulated funds was exempted from the requirement to be authorised under the IFA and the BMA's focus was largely on self-certification by the fund operator. That has now changed to an application and registration process.

The amendments to the IFA

The various amendments to the IFA primarily relate to the replacement of the existing "Excluded", "Class A Exempt" and "Class B Exempt" fund designations with "Private fund", "Professional Class A funds" and "Professional Class B funds", respectively. This group is now referred to collectively as "registered funds".

The amendments generally seek to increase BMA oversight of these entities and bring them more in line with the BMA's oversight of authorised and regulated funds. In summary, the amendments include (among other things) extending the BMA's powers to make and modify/waive rules, require the production of information or documents and conduct investigations in relation to such funds. The amendments also expand the matters in respect of which the BMA may make rules to include obligations with respect to depositary functions and safekeeping obligations and additional requirements related to reports to the BMA, public disclosure and disclosure to investors.

New requirements and ongoing obligations

Going forward, all funds will need to apply to the BMA for recognition and registration as a Private Fund, Professional Class A fund or Professional Class B fund prior to launch. All existing affected funds will need to consider re-registering under the new regime within the six month transition period expiring at the end of June 2019.

In addition to the application and registration process, there are some extra requirements and obligations that are worth highlighting:

  • Private funds will need to appoint a Bermuda-based service provider. While there is flexibility on the nature of this service provider (e.g., fund administrator, custodian), most funds will likely find it convenient to satisfy this new requirement through the appointment of a corporate service provider (providing registered office and director services) as most will have such an arrangement in place already.
  • All registered funds (including Private funds) will need to appoint a custodian although the BMA may waive this requirement if it is satisfied that alternative arrangements have been made that would uphold safekeeping obligations.
  • The application for registration will require submission of information relating to the fund, a copy of the offering document, details on the service providers and the applicable fee.
  • Private funds will (much as currently exists for Class A and Class B Exempt funds) have a new obligation to file an annual certification to the BMA that the fund continues to satisfy the relevant qualifying criteria and requirements for registration which will include information on NAV and underlying assets, a copy of management accounts or audited financial statements, and information on material changes that may have taken place during the reporting period.
  • The BMA may make fund rules as to (i) prudential requirements of the fund and obligations of the fund operator with respect to its service providers; (ii) obligations with respect to depositary functions and safekeeping obligations; (iii) additional requirements related to reports to the BMA, public disclosure and disclosure to investors.

Conyers will provide further details on the introduction of new or amended fund rules as they are drafted and published.

The changes overall are intended to enhance Bermuda's investment fund regulatory framework to better align with developing global standards. Many clients will find that they are well placed with their existing structures to comply easily with the new requirements. Existing fund clients are encouraged to discuss this development with their usual Conyers lawyer contact.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions