Corporate Service Provider Business Act 2012

Summary

This Act establishes the licensing and regulatory regime for corporate service provider business in Bermuda, administered by the Bermuda Monetary Authority (BMA). It defines what counts as corporate service provider business (company/partnership formation, nominee services, registered office and administrative services, acting as directors/officers/secretaries, resident representative functions, etc.), prohibits carrying on such business without a licence, and sets out licensing, supervisory, disciplinary and information-gathering powers for the Authority.

Licensing: Persons carrying on corporate service provider business in or from Bermuda must hold a licence from the BMA; unlicensed activity is a criminal offence (up to $25,000 fine or 1 year imprisonment on summary conviction; up to $100,000 fine or 5 years on indictment).
Physical presence: Licensed undertakings must maintain a physical presence in Bermuda and be directed and managed from Bermuda, assessed against factors such as location of decision-making, meetings, and residence of directors/controllers/employees.
Ongoing standards: Licensees must have regard to codes of practice issued by the Authority; non-compliance is taken into account in assessing whether the business is conducted prudently under the minimum criteria for licensing (Schedule 1).
Controllers and shareholders: Notification requirements apply for new or increased control of a licensee, and the Authority has powers to object to controllers and restrict share sales.
Disciplinary and enforcement powers: The Authority may impose civil penalties, issue public censures, make prohibition orders, seek injunctions, issue warning and decision notices, and conduct investigations, including powers to require production of documents and rights of entry.
Returns and client funds: Licensees are subject to prudential and other annual returns and must separate client funds, subject to the Authority's power to exempt or modify these requirements.
Confidentiality: Restrictions apply on disclosure of information obtained under the Act, with exceptions for facilitating the Authority's functions or those of other authorities.
AML/CFT designation: Consequential amendments bring persons carrying on corporate service provider business (as defined in section 8) within the definition of AML/ATF regulated financial institution under the Proceeds of Crime Act 2008 and related AML/ATF regulations and the Anti-Terrorism (Financial and Other Measures) Act 2004.

The Act commenced on 1 January 2013 (Royal Assent 8 August 2012) and has since been amended several times, including a 2019 amendment inserting the physical presence requirement. It also makes consequential amendments to the Companies Act 1981, Exempted Partnerships Act 1992, Limited Partnership Act 1883 and Government Authorities (Fees) Act 1971, including provisions removing the need for Authority consent to certain partner changes where a licensed corporate service provider has been engaged.

Key obligations

A person must not carry on corporate service provider business in or from within Bermuda without a licence issued by the BMA under section 11.
Every licensed undertaking must maintain a physical presence in Bermuda and ensure its corporate service provider business is directed and managed from Bermuda.
Licensed undertakings must have regard to any code of practice issued by the Authority in conducting their business.
Licensees must notify the Authority of new or increased control by a shareholder controller.
Licensees must submit prudential and other annual returns to the Authority as required under Part 8, unless exempted or modified by the Authority.
Licensees must keep client funds separate from their own funds.
Licensees must notify the Authority of any change of controller or officer.
Persons carrying on corporate service provider business are treated as AML/ATF regulated financial institutions and are subject to the associated anti-money laundering and anti-terrorist financing supervisory and reporting obligations.

Applies to

corporate service providers, licensed undertakings carrying on corporate service provider business, companies, partnerships, shareholder controllers, directors, officers and senior executives of licensed undertakings

Deadlines

01 January 2013: Operative date of the Act (commencement).
08 August 2012: Assent date of the Act.
31 December 2019: Effective date of the physical presence requirement (section 4A) inserted by 2019 amendment.

Corporate Service Provider Business Act 2012

Summary

Key obligations

Applies to

Deadlines

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