Corporate Service Provider Business Amendment Act 2013 (Draft Bill)

Summary

This is a draft amendment bill (not yet enacted) that would change the Corporate Service Provider Business Act 2012 in Bermuda. It introduces a two tier licensing regime, gives the Authority power to impose and vary conditions on licences, extends a transitional licensing period, strengthens corporate governance and prudent conduct requirements, and makes consequential changes to related company and partnership legislation.

• Tiered licensing: Creates two classes of corporate service provider licence: an Unlimited Licence covering all corporate services, and a Limited Licence excluding certain specified services under sections 2(2)(a) and 2(2)(c)(vii).
• Licence conditions: Allows the Authority to impose conditions on the scope of services or manner of operating a corporate service provider business, and to vary or remove such conditions on application.
• Transitional period extended: Extends the transitional period in section 68 of the principal Act from 12 months to two years (or longer if the Minister appoints by Gazette notice) for persons to obtain a licence.
• Corporate governance and prudence: Requires undertakings to implement corporate governance policies and processes proportionate to their nature, size, complexity and risk, and expands the criteria for assessing prudent conduct to include compliance with AML/ATF laws (Proceeds of Crime Act 1997, Anti-Terrorism (Financial and Other Measures) Act 2004, and related 2008 Regulations), codes of practice, and international sanctions.
• Insurance requirement: Adds a requirement that an undertaking maintain insurance cover appropriate to the nature and scale of its operations to be regarded as conducting business prudently.
• Beneficial ownership notification: Amends the Exchange Control Regulations 1973 so that a permit company must inform the Controller within 14 days when a beneficial owner reaches a 10% or more ownership threshold, with no further reporting required after that initial threshold is met.
• Consequential amendments: Amends the Exchange Control Regulations 1973, Exempted Partnerships Act 1992, and Limited Partnership Act 1883 to reference corporate service providers holding an unlimited licence and to exempt certain security transfer permissions where an unlimited licensee acts as registered office or principal representative.

As a draft bill, none of these provisions are currently in force; the explanatory memorandum indicates commencement would be set later by the Minister via Gazette notice, with different provisions possibly commencing on different dates.

Key obligations

• Undertakings applying for a corporate service provider licence must specify which class of licence (Unlimited or Limited) they are seeking.
• Licensees must comply with any conditions the Authority imposes on the scope of services or manner of operation, and may apply to the Authority to vary or remove such conditions.
• Undertakings must implement corporate governance policies and processes proportionate to their nature, size, complexity and risk profile, including sufficient direction by individuals and oversight by non-executive directors as the Authority considers appropriate.
• Undertakings must maintain insurance cover appropriate to the nature and scale of their operations to be regarded as conducting business prudently.
• Undertakings must comply with AML/ATF laws, Authority codes of practice, and applicable international sanctions as part of demonstrating prudent conduct.
• A permit company must inform the Controller within 14 days of a beneficial owner reaching the 10% or more beneficial ownership threshold.
• Persons providing corporate service provider business must obtain a licence within the transitional period (extended to two years, or longer if the Minister appoints by Gazette notice).

Applies to

corporate service providers, permit companies (Exchange Control Regulations), exempted partnerships, limited partnerships

Deadlines

• 31 December 2013: Explanatory memorandum states current requirement for any person providing corporate service provider business to be licensed by this date.
• 31 December 2014, or such longer period appointed by the Minister: Deadline referenced in the explanatory memorandum for applications to be made to the Authority for a new licence under the transitional arrangements.
• two years (extended from 12 months), or such longer period as the Minister may appoint by Gazette notice: Transitional period under amended section 68 for existing providers to obtain a licence.
• within 14 days of the change: Permit company must inform the Controller after a beneficial owner reaches the 10% or more ownership threshold.
• such day as the Minister may appoint by notice published in the Gazette: Commencement date(s) of the Act, which may differ for different provisions.

Related documents

• This document amends Corporate Service Provider Business Act 2012
• This document amends Exchange Control Regulations 1973