funds

Who is caught

Bermuda's fund regime is built around three statutes administered by the Bermuda Monetary Authority (BMA): the Investment Funds Act 2006 (funds themselves), the Fund Administration Provider Business Act 2019 (fund administrators), and the Investment Business Act 2003 (managers and other investment providers). An arrangement is caught if it falls within the statutory definition of an investment fund and is operated in or from Bermuda.

Investment funds

The Investment Funds Act 2006 prohibits operating an investment fund in or from Bermuda unless it is authorised, registered or designated. The Act establishes several fund categories, each with its own qualification requirements.

• Fund categories: Authorised funds, registered funds, designated (including Overseas) funds, and private funds such as Professional Class A, Professional Class B and Professional Closed Funds.
• Closed-ended funds: The Investment Funds Amendment Act 2019 expanded the definition of investment fund to capture closed-ended funds in addition to open-ended funds, and created the Professional Closed Fund and Overseas Fund classes.
• Overseas funds: An overseas fund may not be managed or promoted in or from Bermuda unless designated as an Overseas Fund by the Authority.
• LLC Funds: A Limited Liability Company Fund may be registered under the Act but must be independently managed rather than member-managed to meet the definition.
• Specialist structures: The framework also applies to specified jurisdiction funds (for example the Japan class), Islamic Collective Investment Schemes (authorised on the same basis as any other fund), and funds established as segregated accounts or incorporated segregated accounts structures.

Fund administrators

The Fund Administration Provider Business Act 2019 established a standalone regime for fund administration provider business, replacing the fund administrator licensing provisions formerly in Part III of the Investment Funds Act 2006. It applies to any person, company, partnership or individual providing defined fund administration services (such as applying subscription monies, processing unit issues and redemptions, calculating net asset value, maintaining fund accounts, or distributing dividends) from a Bermuda presence, or otherwise determined by the Authority to be carrying on such business in Bermuda.

Managers and investment providers

Under the Investment Business Act 2003, persons carrying on investment business in or from Bermuda must be licensed, registered (Class A or Class B) or designated Non-registrable, subject to exemptions. A dedicated chapter requires Alternative Investment Fund Managers managing an AIF to be licensed.

Sources: Fund Administration Provider Business Act 2019 · Investment Business Act 2003 · Investment Funds (Specified Jurisdiction Fund) (Japan) Rules 2012 · Investment Funds (Definition) Order 2019 · Investment Funds Act 2006 · Guidance Notes for Incorporated Segregated Accounts Company Structures (Insurance and Hybrid Structures) (December 2020) · Guidance Notes - Islamic Collective Investment Schemes (April 2011) · Fund Administration Provider Business Guidance Note - Guidance for Prospective Applicants · NOTICE - Bermuda Investment Funds Amendment Act 2019 (2020-01-20) · NOTICE - Amendments to Investment Funds Act 2006 (2016-10-19)

Key duties

The core continuing obligations fall on funds and their operators, on fund administration providers, and on the service providers around them. Many duties carry fixed deadlines, and late filing triggers statutory late fees under the Fourth Schedule to the Bermuda Monetary Authority Act 1969.

Authorisation and fit and proper

• Authorisation: An investment fund must be authorised, registered or designated by the BMA before carrying on business as a fund in or from Bermuda.
• Fit and proper: Operators, officers and service providers of authorised, registered or designated funds must be, and remain, fit and proper persons and conduct business prudently, per the Schedule minimum criteria.
• Fund administrator licence: No person may carry on, or hold out as carrying on, fund administration provider business in or from Bermuda without a licence; applicants must submit a business plan, management arrangements, AML/ATF policies and an application fee, and meet the Schedule 1 minimum criteria.

Offering documents and valuations

• Offering document approval: Under the Investment Fund Offering Document Rules 2019, an offering document must comply with the Rules, contain the prescribed disclosures and disclaimer, and be approved by the Authority before use; updated documents reflecting material changes must be published forthwith.
• Valuations: Under the Investment Fund Rules 2019, operators must value fund assets at least monthly (standard funds), quarterly (institutional, administered and specified jurisdiction funds) or annually (registered funds), and file valuations with the Authority within 20 business days of the relevant period.
• Periodic statistical filings: Per the Investment Fund Guidelines, standard funds file monthly and institutional, administered and specified jurisdiction funds file quarterly NAV, subscription and redemption statements within 20 business days after the period end, via INTEGRA.
• Japan specified jurisdiction funds: The operator must submit a written monthly activity report to the Authority within 20 business days of month end, containing net asset value, subscription and redemption activity and units in issue.

Financial reporting and audit

• Audited financials: Authorised funds and registered Professional Class A, Class B and Professional Closed funds must prepare audited financial statements within six months of financial year end; registered Private funds may prepare audited or unaudited statements in the same period, distributed to participants free of charge.
• Standards: Financial statements must follow IFRS or recognised GAAP, and audits ISA or recognised GAAS.
• Fund administrator accounts: Fund administration provider licensees must prepare annual financial statements and appoint an approved auditor; guidance indicates annual financial statements are submitted within four months of financial year end, alongside an annual Statement of Compliance.

Governance, custody and notifications

• Corporate governance: Fund administrators (and investment providers and trust companies) must implement corporate governance policies proportionate to their nature, size, complexity and risk profile, be effectively directed by at least two individuals (or one if the Authority approves), and have appropriate non-executive oversight. This governance criterion does not apply to investment funds themselves.
• Custody: Fund property must be entrusted to a custodian unless the Authority grants an exemption; the custodian of a standard fund must be licensed under the Banks and Deposit Companies Act 1999, the Trusts (Regulation of Trust Business) Act 2001 or the Investment Business Act 2003, unless the administrator carries on fund administration provider business in Bermuda.
• Change notifications: Funds must notify the Authority of specified changes and material changes to the fund; registered funds must give notice of disqualifying events; Overseas Funds must submit annual declarations. Fund administration providers and their controllers must notify the Authority of changes of control, controller or officer, and self-report breaches and material changes.
• AML/ATF: Registered and authorised funds are regulated financial institutions under POCA and must appoint a Money Laundering Reporting Officer and Compliance Officer, maintain board-approved AML/ATF policies, conduct customer due diligence and ongoing monitoring, and ensure overseas administrators apply POCA-equivalent standards.
• Fees: Fund administration providers pay a fee on grant of licence and an annual fee on or before 31 March each year; funds are subject to late fees for missed fee or filing requirements (the Guidelines describe a $1,000 late annual filing fee, a $200 late statistical filing fee, and a $300 fee per annual filing extension, up to three).

Sources: Fund Administration Provider Business Act 2019 · Investment Funds (Specified Jurisdiction Fund) (Japan) Rules 2012 · Investment Fund Rules 2019 · Investment Fund Offering Document Rules 2019 (BR 134 / 2019) · Investment Funds Act 2006 · BMA Corporate Governance Policy for Trust (Regulation of Trust Business) Act 2001, Investment Business Act 2003 and Investment Funds Act 2006 (October 2013) · Investment Fund Guidelines (Updated December 2023) · Fund Administration Provider Business Statement of Principles (October 2020) · Fund Administration Provider Business Guidance Note - Guidance for Prospective Applicants · NOTICE - Bermuda Investment Funds Amendment Act 2019 (2020-01-20) · Corporate Governance Policy for Trust, Investment Business and Fund Administration Providers (Revised August 2022)

Exemptions and carve-outs

The main scope carve-outs sit in the Investment Funds (Definition) Order 2019, which excludes specified arrangements from the statutory definition of an investment fund so that operators do not need authorisation for those arrangements. Further exemptions appear within the fund rules and the historic reclassification regime.

Excluded arrangements

• Business and group structures: Arrangements not operated by way of business, or entered into for a participant's non-investment commercial business; arrangements where all participants are in the same corporate group as the operator; and holding entities under regulation 14 of the Economic Substance Regulations 2018.
• Single-asset and non-pooled: Arrangements involving rights in only one asset, or property that is managed but not pooled.
• Employee and family schemes: Schemes limited to employees (or former employees and certain family members) of a group company, and certain deposit-based arrangements between commonly controlled companies or close relatives and directors.
• Shared use, securities and clearing: Arrangements for shared enjoyment of an asset, arrangements where interests are transferable securities, and clearing services operated by a recognised clearing house or exchange.
• Named excluded types: Pension funds, sovereign wealth funds, securitisation special purpose vehicles, joint ventures, debt issues, contracts of insurance, occupational pension schemes, credit unions licensed under the Credit Unions Act 2010, insurers registered under the Insurance Act 1978, and digital asset businesses licensed under the Digital Asset Business Act 2018.

Other carve-outs

• Custody exemption: Fund property need not be entrusted to a custodian where the Authority grants an exemption, and the standard-fund custodian licensing requirement does not apply where the administrator carries on fund administration provider business in Bermuda.
• Governance scope: The BMA Corporate Governance Policy applies to fund administrators but expressly excludes investment funds themselves.
• Historic grandfathering: Funds exempt under the repealed Section 7 provisions were grandfathered following the Investment Funds Amendment Act 2013 and required to reclassify as Class A or Class B Exempted Funds; that deadline was extended to 31 October 2017, after which grandfathered funds lost exempted status.

The instruments also record that a tokenisation exemption framework (to avoid dual licensing across DABA, the Investment Business Act, the Investment Funds Act and the Fund Administration Provider Business Act) is under consideration but not yet in force.

Sources: Investment Fund Rules 2019 · Investment Funds (Definition) Order 2019 · Investment Funds Act 2006 · BMA Corporate Governance Policy for Trust (Regulation of Trust Business) Act 2001, Investment Business Act 2003 and Investment Funds Act 2006 (October 2013) · Stakeholder Letter - Feedback from Discussion Paper on Asset Tokenisation (2026-03-30) · NOTICE - Reclassification of Grandfathered Exempt Funds to Class A/Class B Exempt Funds (2017-09-27) · NOTICE - Grandfathering of Class A/Class B Exempt Funds (2016-09-23)

Enforcement and penalties

The BMA has broad supervisory and enforcement powers across all three regimes, ranging from directions and licence action through to petitioning the Supreme Court to wind up a fund. Operating without required authorisation or a licence is a criminal offence.

Enforcement powers

• Fund powers: Under the Investment Funds Act 2006 the Authority may issue directions, revoke authorisation, registration or designation, petition for winding up, impose civil penalties, issue public censures and prohibition orders, and seek injunctions.
• Fund administrator powers: Under the Fund Administration Provider Business Act 2019 the Authority may restrict or revoke licences, issue civil penalties, public censures and prohibition orders, conduct investigations, require production of documents and enter premises.
• Investment business powers: Under the Investment Business Act 2003 the Authority may restrict, revoke or direct licensees, object to controllers, impose civil penalties, issue public censures, prohibition orders and notices, and take protective measures including winding up, injunctions and restitution.

Fines and civil penalties

• Late-filing penalties: The draft Statement of Principles on enforcement (intended to apply across the core Acts, including the Investment Funds Act 2006) describes a civil penalty of up to $5,000 per week imposed by supervisory departments for late lodgment of statutory filings, and up to $500,000 per breach imposed by the Enforcement Committee for breaches of obligations under the relevant Act.
• Fund late fees: The Investment Fund Guidelines describe late fees of $1,000 for late annual filings and $200 for late statistical filings, recoverable as a civil debt.
• Historic fund administrator offence: Under the earlier Part III guidance, failure to give required notices or file the annual compliance statement was an offence punishable by a fine of up to $10,000.
• AML/ATF penalties: For funds, fund administrators and investment providers as regulated financial institutions, the securities-sector AML/ATF guidance notes that non-compliance is a criminal offence (fines up to $50,000 on summary conviction, or up to $750,000 and/or two years' imprisonment on indictment) and the BMA may impose civil penalties of up to $10,000,000 per breach.

Enforcement in practice

• Prohibition orders: The BMA prohibited a former fund director found not fit and proper from acting as a controller, operator, officer, chief executive or service provider to any fund under the Investment Funds Act 2006 for five years.
• Winding up: The BMA has petitioned the Supreme Court to wind up funds for regulatory breaches, including failures to prepare audited financial statements, file annual statements and quarterly valuations, maintain a Bermuda representative, and conduct business prudently.

Sources: Fund Administration Provider Business Act 2019 · Investment Business Act 2003 · Investment Funds Act 2006 · Annex III - Sector-Specific Guidance Notes for the Securities Sector (2022) · Notice - Statement of Principles on the Use of Enforcement Powers · Investment Fund Guidelines (Updated December 2023) · Fund Administrators - Information for Prospective Applicants and Guidance Notes (February 2011) · Winding Up - Rapture Global Investment Fund Ltd. (2025-11-26) · Order of Prohibition - Mr Martin Pitoňák (2025-08-14) · BMA Winds Up Investment Fund For Regulatory Breaches - Cumulus Eastern European Property Fund Limited (2017-08-11) · AML/ATF Sector-Specific Guidance Notes for the Securities Sector (Annex III) 2021