What is Investment Business?
Section 3 of the Act defines investment business as
“engaging in one or more investment activities by way of business”. Part 2 of
the First Schedule to the Act defines investment activity as: -
- Dealing in Investments - buying, selling,
subscribing for, or underwriting, investments, or offering or agreeing to
do so, either as principal or agent.
- Arranging Deals in Investments - making or
offering, or agreeing to make –
- arrangements with a view to another person
buying, selling, subscribing for or underwriting a particular investment,
being which bring about or would bring about the transaction
- arrangements with a view to a person who
participates in the arrangements buying, selling, subscribing for or
- Managing Investments - managing or offering,
or agreeing to manage, assets belonging to another person where those
assets consist of or include investments.
- Investment Advice - giving or offering, or
agreeing to give, to persons in their capacity as clients or potential
clients, advice on the merits of their purchasing, selling, subscribing
for or underwriting an investment, or exercising any right conferred by an
investment to acquire, dispose of, underwrite or convert an investment.
- Safeguarding and administering Investments –
safeguarding and administering or arranging for the safeguarding and
administration of assets belonging to another where –
- those assets consist of or include
investments falling within any of paragraphs 1 to 8 of Part 1 of the
First Schedule to the Act; or
- the arrangements for their safeguarding and
administration are such that those assets may consist of or include
investments and the arrangements have at any time been held out as being
arrangements under which investments would be safeguarded and
Who is required to be Licensed?
Section 4 of the Act states that a person carries
on investment business in or from Bermuda if such person –
- carries on investment business from a place of
business maintained by such person in Bermuda; or
- engages in an investment activity the doing of
which constitutes the carrying on by such person of investment business in
or from Bermuda under an order made by the Minister of Finance.
A person maintains a place of business –
- in the case of an individual who is a sole
trader, if he carries on investment business from premises that he
occupies for that purpose;
- in any other case, if he carries on investment business from premises he occupies for that purpose,
at which he employs staff and pays salaries and other expenses in
connection with that business.
Excluded Investment Activity
Part 3 of the First Schedule to the Act
sets out those activities excluded from the definition of investment activity
under the following headings:
- Groups, Firms and Joint Enterprises
- Sale of Goods and Supply of Services
- Employee Share Schemes
- Sale of Body Corporate
- Trustees and Personal Representatives
- Advice Given or Arrangements Made in Course of
- Advice Given in Newspapers and Broadcasting
Exemptions from Licensing
The Investment Business (Exemptions) Order 2004
provides for a number of exemptions from licensing depending on investment
activities and the general makeup of an entity’s clients. Completion and
submission of an Exemption Notification is required by persons seeking to take
advantage of certain categories of exemption detailed in the Order. For a copy
of the Exemption Notification click here
Minimum Licensing Criteria
Before an investment provider may be
granted a licence the Authority has to be satisfied that all criteria as set
out in the Second Schedule to the Act are capable of being fulfilled by the
applicant on an ongoing basis.
The Authority must be satisfied of the following:
The controllers and officers of the Applicant are
fit and proper persons;
The investment provider’s corporate governance
policies and processes are appropriate given the nature, size, complexity and
its risk profile;
The business is to be conducted in a prudent manner,(including but not limited to) maintaining minimum net assets, adequate liquidity, adequate
accounting and other records, adequate systems of control and adequate
Consolidated supervision - The position of the
undertaking within the structure of any group to which it belongs or its links
with any related companies shall be such that it will not obstruct the conduct
of effective consolidated supervision; and
The undertakings business must be carried on with
integrity and the professional skills appropriate to the nature and scale of
The Authority has provided details of its interpretation of the minimum licensing criteria in its Statement of Principles, published pursuant to section 9 of the Act.
General Summary of Information Required in Connection with License Applications
The following information must be submitted to the
Authority when applying for a licence to conduct investment business:
- In the case of a company, the Memorandum and
Articles of Association; equivalent documentation for non-incorporated
- Most recent financial statements (audited
where applicable) together with financial statements for any parent
company and other members of the group (where relevant).
- Copies of clients’ agreements used or intended
to be used for the business.
- Business plan setting out the nature and scale
of the investment business which is to be carried out by the applicant,
and particulars of the arrangement(s) proposed for the operation of that
- Questionnaires completed by all proposed
institutional and/ or individual controllers and officers of the entity.
- Description of group structure, and an
up-to-date chart for licensed institutions forming part of wider groups.
- Fees: a cheque or online payment representing
the appropriate application fee. (See Fees & Penalties section on the
BMA website for more details).
- (a) Anti-Money Laundering and Anti-Terrorist
Financing policies and procedures which are in compliance with the
Proceeds of Crime (Anti-Money Laundering and Anti-Terrorist Financing)
Regulation 2008; and (b) Name, contact details and relevant qualification
for the appointed Reporting Officer in accordance with Regulations 16 and
- Policies and procedures implemented by the
applicant, (including but not limited to) Compliance, adequate systems of
control and adequate accounting procedures.
- Proof of adequate insurance cover.