Investment Business Amendment Act 2015 (Bill)

Summary

This is a draft Bill that would amend Bermuda's Investment Business Act 2003 to create a new licensing and regulatory regime for alternative investment fund managers (AIFMs), modelled on the EU AIFM Directive framework. It inserts a new Chapter 1A into the Act covering definitions, licensing, ongoing compliance duties, notification of material changes, and rule-making powers for the Bermuda Monetary Authority (BMA). As a Bill, it is not yet in force and will commence on a date to be appointed by the Minister by notice in the Gazette.

• Scope: Applies to a person who carries on the investment activity of managing investments, whose ordinary business is managing AIFs (alternative investment funds), and who qualifies for exemption under section 13 of the principal Act.
• Licensing: Such persons may apply to the BMA under section 16 for an investment business licence covering AIFM activity; the Authority must be satisfied the applicant is the sole manager of each AIF it manages and meets prescribed information and eligibility requirements.
• Compliance oversight: An external AIFM must ensure the AIFs it manages comply with the Act and AIFM rules, must immediately notify the BMA of any non-compliance it cannot ensure, and must take BMA-directed remedial steps; persistent non-compliance can lead to the AIFM being required to cease managing or marketing the AIF.
• Material change notification: An AIFM must notify the BMA of any material change to the conditions underlying its initial licensing, using the manner required by AIFM rules.
• Rule-making power: The BMA is empowered to make detailed AIFM rules covering capital requirements, operating conditions, governance, valuation, depositaries, annual reporting, leverage, investor disclosures, reporting obligations, and related matters.
• Transitional provision: Persons already licensed under section 17 of the principal Act may apply to the BMA for a variation of their existing licence under section 17(4) to bring their AIFM activity within the new regime.

The Explanatory Memorandum confirms the Bill's purpose is to implement a voluntary AIFM supervisory regime in Bermuda aligned with EU AIFMD concepts, allowing AIFMs to elect BMA supervision. No specific commencement date is fixed in the text; it will be set later by ministerial notice.

Key obligations

• An AIFM applicant must satisfy the BMA that it is the sole manager of each AIF it manages and provide information prescribed in AIFM rules before a licence will be granted
• An external AIFM must ensure that AIFs it manages, or entities acting on their behalf, comply with the Investment Business Act and AIFM rules
• An external AIFM must immediately inform the BMA if it is unable to ensure an AIF's compliance with applicable provisions
• An AIFM must take steps directed by the BMA to remedy identified non-compliance by an AIF it manages
• If non-compliance persists, the AIFM must cease acting as manager of the AIF and stop marketing it, as required by the BMA
• An AIFM must give the BMA notice, in the manner required by AIFM rules, of any material change to the conditions for its initial licensing
• Existing section 17 licensees wishing to conduct AIFM business may apply to the BMA for a variation of their licence under section 17(4)

Applies to

alternative investment fund managers (AIFMs), external AIFMs, internal AIFMs, alternative investment funds (AIFs), existing investment business licensees under section 17

Deadlines

• 28 days: If the BMA decides to exercise powers to prevent or restrict a proposed material change notified by an AIFM, it must inform the AIFM within 28 days of receiving the notice
• up to 30 additional days: The BMA may extend the 28 day decision period by up to 30 days where it considers this necessary, after notifying the AIFM
• on such date as the Minister may appoint by notice published in the Gazette: Commencement date of the Act's provisions, to be fixed later by ministerial notice

Related documents

• This document amends Investment Business Act 2003