Corporate Service Provider Business Amendment Act 2024 - Illustrative Draft

Summary

This is an illustrative draft bill (still at consultation stage) that would amend Bermuda's Corporate Service Provider Business Act 2012. It introduces a new accounts and audit regime, expanded prudential rulemaking powers for the Bermuda Monetary Authority (BMA), a late fee system replacing certain civil penalties, minimum net asset and liquidity requirements, and a mechanism for extending statutory filing deadlines.

• Accounts and audit (new Part 7A): Licensed undertakings must prepare annual financial statements or accounts; those holding client money must have them audited and laid before a general meeting; audited or unaudited statements/accounts must be filed with the BMA within four months of financial year end, and copies kept at the undertaking's offices with the auditor's report.
• Auditor requirements: Undertakings required to prepare audited statements must annually appoint an approved auditor; failure to appoint, or an auditor's failure to notify the BMA of resignation, non-reappointment, or a qualified/adverse opinion, is an offence carrying a fine up to $25,000.
• Consolidated statements: The BMA may permit group entities to submit consolidated financial statements in place of individual ones, subject to conditions, and may request additional information.
• Annual and quarterly returns: Licensed undertakings must prepare annual returns and submit quarterly returns to the BMA within 21 days of each quarter end, signed by specified officers, and retained for five years.
• Late fees replace civil penalties: Failure to pay prescribed fees, file certificates of compliance, financial statements, consolidated statements, or annual/quarterly/statutory returns triggers a late fee (per the Fourth Schedule to the Bermuda Monetary Authority Act 1969) instead of the previous $5,000-per-week civil penalty.
• Filing extensions: The BMA may grant extensions of specified filing time periods on an application made at least five business days before the deadline, subject to conditions and a $300 application fee.
• Minimum capital and liquidity: Licensed undertakings must maintain minimum net assets of $50,000 (unlimited licence) or $12,000 (limited licence), or a higher amount directed by the BMA, plus adequate liquidity having regard to their risk profile.
• Other rule-making powers: The BMA's rule-making power under section 55 is expanded to cover financial statements, capital, liquidity, statutory returns, client money, and cybersecurity standards, which may differ by licence class or activity.
• New fees introduced: New fees include a $1,000 late fee, $1,000 certificate of compliance late fee, $635 fee for exemption/modification of prudential standards, and $300 fee for a filing extension application.

The Bill would take effect on a date to be appointed by the Minister of Finance by notice in the Gazette; no commencement date has yet been set, and as an illustrative draft the provisions are subject to change before formal introduction.

Key obligations

• Licensed undertakings holding client money must prepare audited annual financial statements and lay copies before a general meeting.
• Licensed undertakings not holding client money must prepare annual accounts in a form directed by the BMA.
• Every licensed undertaking must provide the BMA with a copy of its financial statements or accounts (and auditor's report if audited) not later than four months after the close of its financial year.
• Undertakings required to prepare audited statements must annually appoint an approved auditor and notify the BMA in writing before removing or replacing an auditor.
• Auditors must give the BMA prompt written notice of resignation, non-reappointment, a qualified/adverse opinion, or any matter of material significance to the BMA's functions.
• Every licensed undertaking must prepare and retain annual returns, signed by specified officers, for five years.
• Every licensed undertaking must submit quarterly returns to the BMA within 21 days of the end of each calendar quarter and retain copies for five years.
• Licensed undertakings must maintain minimum net assets of $50,000 (unlimited licence) or $12,000 (limited licence), or a higher amount the BMA directs, and adequate liquidity.
• Applications to extend a specified filing time period must be made at least five business days before the deadline expires.
• Undertakings that fail to pay prescribed fees or file required statements/returns become liable to pay a late fee rather than a civil penalty.

Applies to

corporate service providers, licensed undertakings under the Corporate Service Provider Business Act 2012, approved auditors of licensed undertakings

Deadlines

• four months after the close of its financial year: Deadline for a licensed undertaking to provide the BMA with its financial statements or accounts (and audit report if applicable)
• within 21 days of the end of each quarter of the calendar year: Deadline for submitting quarterly returns to the BMA
• not less than five business days before the end of the specified time period: Deadline for applying to the BMA for an extension of a specified filing time period
• on such day as the Minister of Finance may appoint by notice published in the Gazette: Commencement date of the Act (not yet set)

Related documents

• This document amends Bermuda Monetary Authority Act 1969
• This document amends Corporate Service Provider Business Act 2012