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

Malik: The Science of Deal Sourcing 201

Aug 27 2015 | 5:35pm ET

Deal sourcing is understandably a hot topic among private equity firms because it...

Lifestyle

Rolling Art Advisors Marketing Collectible Car Fund As Uncorrelated Alternative

Aug 27 2015 | 6:47pm ET

A new fund is trying to provide investors with greater access to an emerging asset...

Guest Contributor

Agecroft Partners: Hedge Fund Industry Assets to increase $250B by Summer 2016

Aug 11 2015 | 11:29am ET

Assets will continue to flow into the hedge fund industry despite long-standing...

 

Editor's Note