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

Q&A: Brevan Howard’s Charlotte Valeur Talks Strategy

Sep 18 2014 | 11:18am ET

Charlotte Valeur chairs the board of Brevan Howard Credit Catalysts, an LSE listed...

Lifestyle

Hedgies Rock Out For Children's Charity

Sep 15 2014 | 8:40am ET

It's that time of year again—when hedgies trade in their spreadsheets for guitars...

Guest Contributor

Volkered: How Financial Sector Reforms are Creating Opportunities for Hedge Funds

Sep 16 2014 | 11:28am ET

New regulations have dramatically curtailed proprietary trading activity in investment...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

September 2014 Cover

The London Whale: Rogue risk management

Credit default swaps brought down the London Whale and cost JPMorgan $6.2 billion. Here is how it happened.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.