Guidance for Prospective Applicants for Licensing and Registration (Investment Business)

Summary

This BMA guidance explains how the Investment Business Act 2003 (IBA) regulates persons carrying on investment business in or from Bermuda, and sets out the licensing, registration and supervisory framework prospective applicants will encounter. It covers what counts as investment business, who must be licensed or registered, the application process, and the ongoing supervisory regime once authorised.

• Scope: Investment business means engaging by way of business in one or more of six investment activities (dealing, arranging, managing, advising, safeguarding and administering, or promoting investments) involving eleven types of instruments listed in the Act's First Schedule; certain activities are excluded.
• Licensing: Persons not eligible for registration or non-registrable status must apply for a standard licence (for ongoing business) or a test licence (time-limited, within the Authority's regulatory sandbox).
• Registration: Bermuda-formed persons without a local place of business but licensed by a recognised foreign regulator may apply as a Class A Registered Person (with a Bermuda-based senior representative); other eligible persons (e.g. serving only institutional/sophisticated investors or 20 or fewer private clients) may apply as a Class B Registered Person.
• Non-registrable persons: Certain persons and classes (e.g. investment funds, certain insurance intermediaries, ancillary DABA licensees, government bodies) are designated Non-Registrable Persons and fall outside the Act's obligations, unless found to be operating inconsistently with the relevant Order.
• Permissible structures: Applications may be made by local or exempted companies, permitted overseas companies, partnerships, exempted partnerships, permitted overseas partnerships, or LLCs.
• Place of business: Licensed persons and Class B Registered Persons must maintain a principal place of business in Bermuda; Class A Registered Persons must appoint a Bermuda-resident senior representative.
• Supervision: Once authorised, investment providers are subject to ongoing reporting requirements, prudential visits, on-site supervision, auditor communication obligations, information disclosure rules, and potentially consolidated group supervision.

The guidance is informational and interpretive rather than a standalone source of new binding rules; substantive requirements derive from the IBA, related Orders (Class B Registered Persons Order 2022, Non-Registrable Persons Order 2022), the Authority's Rules on net assets/capital/liquidity and statutory returns, the Statement of Principles and the Code of Conduct and Practice, all referenced throughout.

Key obligations

• Persons carrying on investment business in or from Bermuda that are not registrable or non-registrable must apply to the BMA for a licence (standard or test).
• Bermuda-formed persons without a Bermuda place of business but licensed by a recognised foreign regulator must apply to be registered as a Class A Registered Person, unless they opt for full licensing.
• Persons meeting the criteria in the Investment Business (Class B Registered Persons) Order 2022 must apply for registration as a Class B Registered Person.
• Each licensed person must maintain a principal place of business in Bermuda.
• Class A Registered Persons must appoint and maintain a Bermuda-resident senior representative who must notify the Authority of specified material changes.
• A Class A Registered Person may not operate until it demonstrates to the Authority that it has secured the requisite licence, authorisation or registration from its recognised regulator; if that approval is not secured or lapses, the entity must notify the Authority immediately and, if it wishes to continue, apply for a licence or Class B registration.
• Class B Registered Persons must maintain a principal place of business in Bermuda.
• A Non-Registrable Person found operating inconsistently with the conditions of the relevant Order may be required to apply for an investment business licence.
• Where the Authority assumes responsibility for consolidated supervision of a wider group, the investment provider must be licensed by the Authority.
• Auditors and accountants are obliged under sections 42 and 45 of the Act to give the Authority written notice of certain facts or matters.

Applies to

licensed persons under the Investment Business Act, Class A Registered Persons, Class B Registered Persons, Non-Registrable Persons, investment providers, test licence holders (regulatory sandbox participants), auditors and accountants of investment providers