Consultation Paper - Corporate Governance Policy (Trust/Investment Business/Investment Funds Acts) (December 2012)

Summary

This is a Bermuda Monetary Authority consultation paper proposing a Corporate Governance Policy for entities licensed under the Trust (Regulation of Trust Business) Act 2001, the Investment Business Act 2003, and as fund administrators under the Investment Funds Act 2006. It sets out nine draft principles with guidance covering board practices, senior management, risk management, and reporting, and invites comments before the policy is finalised. It does not apply to investment funds themselves, only to licensed fund administrators.

• Board effectiveness: Institutions should have an effective, appropriately sized and composed board with a competent chairperson, clear duties, regular structured and minuted meetings, and periodic performance evaluation.
• Director qualification and conduct: Directors must be fit and proper, adequately trained, act in good faith, disclose other significant commitments, and manage conflicts of interest via a formal written policy.
• Senior management: Senior management, overseen by the board, must be fit and proper and competent; at least two individuals (or partners, except sole traders in limited cases) must effectively direct the business.
• Risk management and internal controls: The board must set risk appetite, ensure policies to identify and manage material risks, maintain a risk register (or formal risk function for larger firms), and review risk management, internal controls, and business continuity plans at least annually.
• Remuneration and reporting: Remuneration must align with sound risk management, and the board must ensure timely internal reporting, compliance with statutory/regulatory reporting obligations, and adequate disclosure to shareholders and other stakeholders.
• Proportionality: Compliance expectations are proportional to an institution's size, complexity, structure and risk profile, with tailored guidance for smaller owner-managed entities versus larger, more complex institutions.

The Authority indicates it will propose adding a dedicated corporate governance licensing criterion to the relevant Acts before finalising the Policy, and clarifies the Policy does not replace existing statutory requirements. Licensed institutions and other interested parties were invited to submit comments to policy@bma.bm by 28 February 2013.

Applies to

trust companies licensed under the Trust (Regulation of Trust Business) Act 2001, investment business licensees under the Investment Business Act 2003, fund administrators licensed under the Investment Funds Act 2006

Deadlines

• 28th February 2013: Deadline for licensed institutions and other interested parties to submit comments on the consultation paper to policy@bma.bm