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 sets out the six investment activities accommodated under the framework. They are:
Part 3 of the First Schedule to the Act sets out those activities excluded from the definition of investment activity under the following headings:
What does carrying on investment business ‘in or from Bermuda’ mean?
Pursuant to section 4 of the Act, a person is deemed to be carrying on investment business in or from Bermuda if that person:
(In this connection, the Minister may specify by order the circumstances in which a person, who would otherwise not be regarded as carrying on investment business in or from Bermuda, will be considered as doing so.)
Persons seeking to carry on investment business in or from Bermuda are required to apply to the Authority to be licensed unless they meet the criteria to be registered or have been designated as non-registrable. Persons wishing to be licensed may apply for either:
Holders of a test licence are allowed to carry on one or more investment activities within the controlled environment of the Authority’s general regulatory sandbox, and may offer innovative products and test new technologies and delivery methods in such a manner as agreed with the Authority. The parameters of each test licence, including any conditions or restrictions, are determined on a case-by-case basis prior to licensing and may be adjusted by the Authority during the period of the licence.
Each licensed person must maintain a place of business in Bermuda as its principal place of business. In the case of an individual who is a sole trader, that principal place of business is considered the premises which they occupy for the purpose of conducting investment business; while in any other case, an investment provider’s principal place of business is the place from which it conducts investment business activities, employs staff and pays salaries and other expenses in connection with that business.
In addition to licensed persons, the framework also accommodates two classes of registered persons, being Class A Registered Persons and Class B Registered Persons.
Any Bermuda-formed or incorporated person seeking to carry on investment business that does not qualify as non-registrable must be regulated. To that effect, where such a person:
that person must apply to the Authority to be registered in Bermuda as a Class A Registered Person unless they opt to be fully licensed by the Authority.
Before an investment provider may be granted a licence or registration, 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:
a) The controllers and officers of the Applicant are fit and proper persons;
b) The investment provider’s corporate governance policies and processes are appropriate given the nature, size, complexity and its risk profile;
c) 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 insurance;
d) 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
e) The undertaking’s business must be carried on with integrity and the professional skills appropriate to the nature and scale of its activities.
Applicants and prospective applicants should refer to the Investment Business Guidance Notes for Prospective Applicants here, which outline the application process as well as the information and documentation that will typically be required.