Investment Funds Act 2006

Summary

This is Bermuda's principal statute governing investment funds, administered by the Bermuda Monetary Authority (BMA). It establishes the framework under which investment funds must be authorised, registered or designated before they may operate, sets fit and proper requirements for operators, officers and service providers, and creates the Authority's supervisory, information gathering, disciplinary and enforcement powers over the sector. It also sets out categories of private funds (including Professional Class A, Class B and Professional Closed Funds) that qualify for lighter-touch treatment.

Fund classification: Establishes categories of investment funds - authorised funds, registered funds, designated (including Overseas) funds, and private funds such as Professional Class A, Professional Class B and Professional Closed Funds - each with its own qualification and procedural requirements.
Prohibition: Prohibits the operation of unauthorised, unregistered or undesignated investment funds in or from Bermuda.
Fit and proper standard: Requires operators, officers and service providers of authorised, registered or designated funds to be fit and proper persons and to conduct business prudently, per the Schedule's minimum criteria.
Custodians and registers: Sets rules on custodianship of fund property, the appointment and duties of registrars, maintenance of the register of unitholders, and identification procedures.
Notification and reporting: Requires notice to the Authority of certain changes to a fund, periodic reports to the Authority, and notice of disqualifying events affecting registered funds.
Fees: Provides for fees payable to the Authority and a late fee for non compliance with fee or filing requirements.
Overseas Funds: Sets out designation, annual declaration, and cancellation of designation procedures specific to overseas investment funds.
Intervention and enforcement: Gives the Authority powers to issue directions, revoke authorisation/registration/designation, petition for winding up, impose civil penalties, issue public censures and prohibition orders, and seek injunctions.
Information gathering and investigation: Empowers the Authority to obtain information and documents, enter premises, and conduct investigations into suspected contraventions, and requires auditors to report certain matters to the Authority.
Confidentiality: Restricts disclosure of information obtained under the Act, subject to specified exceptions for the Authority's functions and cooperation with other authorities.
Fund administrators: Original licensing provisions for fund administrators under Part III have been repealed; fund administration is now regulated separately under the Fund Administration Provider Business Act 2019.

The Act has been amended numerous times since its 2006 enactment (assented 28 December 2006, operative 7 March 2007), most recently in 2023, reflecting evolving fund classifications, disciplinary procedures and definitions; readers should check the amendment history for provisions applicable to a specific fact pattern.

Key obligations

Investment funds must be authorised, registered or designated by the BMA before carrying on business as a fund in or from Bermuda
Operators, officers and service providers of authorised, registered or designated funds must be fit and proper persons and conduct business in a prudent manner (Schedule minimum criteria)
Registered funds must give notice to the Authority of any disqualifying event
Overseas Funds designated under the Act must submit annual declarations to the Authority
Funds must notify the Authority of certain specified changes to the fund
Funds must submit periodic reports to the Authority as required under the Act
Auditors must communicate certain matters concerning a fund to the Authority
A late fee is payable for non-compliance with fee or filing requirements
Fund property must be entrusted to a custodian unless the Authority grants an exemption

Applies to

investment funds, authorised funds, registered funds, designated funds, Overseas Funds, private funds, Professional Class A funds, Professional Class B funds, Professional Closed Funds, fund operators, fund officers, service providers, custodians, fund administrators, auditors

Investment Funds Act 2006

Summary

Key obligations

Applies to

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