NOTICE - Bermuda Investment Funds Amendment Act 2019 (2020-01-20)

Summary

This BMA notice explains the effect of the Investment Funds Amendment Act 2019 and related instruments (the Investment Funds Definition Order 2019, Investment Fund Rules 2019, and Investment Fund Offering Document Rules 2019), which together overhaul Bermuda's investment funds framework across four areas: scope, supervision and enforcement, accounting and auditing, and custody. The most significant change expands the statutory definition of 'investment fund' to capture closed-ended funds in addition to open-ended funds.

• Overseas Fund designation: Overseas investment funds that are managed or promoted in or from within Bermuda must become designated as an Overseas Fund by the Authority.
• Expanded definition: The investment fund definition now includes closed-ended funds; the Investment Funds Definition Order 2019 clarifies arrangements not intended to be captured.
• New fund classes: Creation of a new Registered Fund category (Professional Closed Funds) and a new Designated Overseas Fund category (the 'Overseas Fund' class).
• Fit and proper requirement: Service providers, directors and officers of investment funds must now satisfy an express fit and proper requirement.
• New Rules: The Fund Rules 2007 and Prospectus Rules 2017 are repealed and replaced by the Investment Fund Rules 2019 and Investment Fund Offering Memorandum Rules 2019, with expanded content requirements.

Existing closed-ended and overseas investment funds are given a six-month transition period, ending 30 June 2020, to assess whether the changes apply to them and to come into compliance. The Authority will begin enforcing the new requirements from 30 June 2020, alongside its review of annual certifications, and will assist registrants during the transition period. Updated Investment Funds Guidelines reflecting these changes are also available from the Authority.

Key obligations

• Overseas investment funds managed or promoted in or from within Bermuda must become designated as an Overseas Fund by the Authority.
• Operators of existing closed-ended and overseas investment funds must assess whether the amended IFA framework applies to them and take steps to achieve compliance.
• Existing closed-ended and overseas investment funds must comply with the new legislative provisions by 30 June 2020, the end of the transition period.
• Service providers, directors and officers of investment funds must meet an express fit and proper requirement.
• Funds and their service providers must comply with the new Investment Fund Rules 2019 and Investment Fund Offering Memorandum Rules 2019, which replace the former Fund Rules 2007 and Prospectus Rules 2017.

Applies to

investment funds (open-ended and closed-ended), overseas investment funds, fund operators, service providers to investment funds, directors and officers of investment funds, registered funds

Deadlines

• 30 June 2020: End of the six-month transition period by which existing closed-ended and overseas investment funds must comply with the amended Investment Funds Act; enforcement of the new requirements commences on this date.