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 LICENSING

 
The following represents the procedure involved in the incorporation and authorisation process for investment funds.
 
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The following information outlines the requirements for Authorised, Excluded and Exempt Funds.

What are Investment Funds?

Investment Funds are pooled investment vehicles structured either as Mutual Fund Companies, Unit Trusts or Partnership Funds:

Mutual Fund Company

The Companies Act 1981 defines a mutual fund company as "... limited by shares and incorporated for the purpose of investing the moneys of its members for their mutual benefit and having the power to redeem or purchase for cancellation its shares without reducing its authorised share capital and stating in its memorandum that it is a mutual fund". Also, any company incorporated by private act and having the power to redeem or purchase for cancellation it’s issued shares at the option of, or on the request of, a member shall be deemed for the purposes of the Companies Act to be a mutual fund company.
 
**N.B.: For reporting purposes, funds commonly referred to as hedge funds fall within our definition of a mutual fund.** 

Unit Trust

A unit trust fund is defined in section 2 of the Act as a fund under which the property is held on trust for the participants.

Partnership Funds

A partnership fund means a fund under which the property is held on behalf of participating partners of the partnership registered under the Limited Partnership Act.

Who is required to obtain authorisation as an Investment Fund?

A Bermuda organised Company, Trust, or Partnership that meets the definition of an Investment Fund above must apply to the Authority for authorisation as a Fund or alternatively must apply to the Authority for an exemption from the Act.

Who is excluded from authorisation as an Investment Fund?

Closed-ended investment fund companies do not fall within the definition of an Investment Fund.
Private Funds are excluded being funds with not more than 20 participants and which do not promote themselves by communicating invitations or inducements to the public generally.
Excluded funds are required to serve on the Authority a notice in writing of the fact that they qualify for exclusion.
Excluded funds, as a non-licensed person, are required to register under section 10 of the Proceeds of Crime (Anti-Money Laundering and Anti-Terrorist Financing Supervision and Enforcement) Act 2008 before commencing business activities. It is a criminal offence to carry on business when not registered.
Registration requires the submission to the Authority of the completed application form along with the application fee. Registration details can be found at the following link: Registration of Non-Licensed Persons

Exemptions from Classification

An Investment Fund, which satisfies the criteria set out in section 9 of the Act, may apply to the Authority to be exempted from authorisation. The Authority has certain powers under that Act to require information and documents from any financial institution.
Such funds must apply to the Authority for exemption and pay the prescribed fee on application and annually thereafter. It should be noted that all investment funds within the meaning of Section 29 of the Act are financial institutions for the purposes of the Bermuda Monetary Authority Act 1969.
Exempted funds also qualify as a non-licesed person and are required to register under Section 10 of the Proceeds of Crime (Anti-Money Laundering and Anti-Terrorist Financing Supervision and Enforcement) Act 2008 before commencing business activities. It is a criminal offence to carry on business when not registered.
Registration requires the submission to the Authority of the completed application form along with the application fee. Registration details can be found at the following link: Registration of Non-Licensed Persons

Classes of Authorised Funds

Upon authorisation, funds are classified as one of the following:

Institutional Funds:

Institutional Funds are targeted essentially at institutional/sophisticated investors and are restricted to qualified participants or those investing at least $100,000.
They are required to have an officer, trustee, or resident representative in Bermuda, being a person who has access to the books and records of the fund.

Administered Funds:

Funds qualify for classification as Administered funds if they have an administrator licensed under Part III of the Act and:
Require participants to invest a minimum amount of $50,000; or
A Fund listed on a Stock Exchange recognised by the Authority for the purpose of Section II of the Act

Standard Funds:

A fund qualifies for classification as a Standard fund if it does not fit within any other class of fund. Such funds are not restricted to sophisticated investors and may include a more significant retail element among their investors. Consequently they are subject to more comprehensive and regulation and supervision.

Segregated Accounts Companies

An Investment Fund may make use of the Segregated Accounts Companies Act 2000 and take the form of a segregated accounts company. See the Investment Fund Guidelines for detailed provisions regarding certain requirements applying to funds making use of this option.