Bermuda Makes Changes to Investment Funds Act

Jan 3 2011 | 10:30am ET

Bermuda has amended its 2006 Investment Funds Act, making new provisions for the regulation of investment funds on the island.

The changes found in the Investment Funds Amendment Act 2010 are designed to “strike a balance between securing appropriate protection for investors in Bermuda funds, while not imposing an undue regulatory burden on the industry.”

The key changes include extending the definition  of “service provider” to include auditors appointed to a fund. As a result, auditors are now required to comply with the “fit and proper” tests set out elsewhere in the Act.

Operators of exempted funds and their service providers are required to be “fit and proper persons to act as such.” Funds are now required to have a recognized fund administrator, an auditor and a Bermuda resident officer or trustee or resident representative who has access to the books and records of the investment fund. Exempted funds are also required to appoint an investment manager, registrar, custodian and/or prime broker.

Under the amended act, fund administrators must notify the Bermuda Monetary Authority in advance when there is a prospective change of control and the Authority now has power to object to a change in control to prevent it happening or to object to existing controllers where they are no longer deemed to be fit and proper to be controllers.

The amended also provides for a right of appeal in cases where the Authority has exercised this power to object.

Fund administration businesses in Bermuda must also meet the “four-eyes” criterion, that is, they must be directed by at least two people to ensure no one person exercises “excessive” control.

Finally, fund officers must be “fit and proper” at the time of authorization to ensure that the business of the fund is being conducted in a prudent manner.

 


In Depth

David Yarrow On Growing His Hedge Fund And Shooting The Animals And People Of Africa - As A Photographer

Jul 23 2014 | 6:44am ET

While he’s always been a photographer, recent expeditions to Iceland, Ethiopia...

Lifestyle

Einhorns Busts At WSOP, Finishes In 173rd

Jul 15 2014 | 10:48am ET

Greenlight Capital founder David Einhorn’s World Series of Poker won’t end at...

Guest Contributor

Common Risk Parity Misperceptions

Jul 16 2014 | 11:02am ET

Over the past few years, risk parity has become a component of most investors’...

 

Sponsored Content

    Northern Trust Helps Hedge Funds Navigate Derivatives Regulations

    Jul 8 2014 | 10:48am ET

    The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…

Publisher's Note