funds

Who is caught

These instruments regulate both investment funds themselves and the businesses that service them, all administered by the Bermuda Monetary Authority (BMA). The Investment Funds Act 2006 is the principal statute for funds; fund administration is regulated separately under the Fund Administration Provider Business Act 2019, and certain fund managers fall under the Investment Business Act 2003.

Investment funds

An investment fund must be authorised, registered or designated by the BMA before it may operate in or from Bermuda. The Act sets out several categories, each with its own qualification and procedural 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: Since the 2019 amendments, the statutory definition of investment fund captures closed-ended funds in addition to open-ended funds.
• Overseas funds: An overseas fund managed or promoted in or from Bermuda must be designated as an Overseas Fund by the Authority.
• LLC Funds: A Limited Liability Company Fund registered under the Act must be independently managed rather than member-managed to meet the statutory definition.
• Persons caught: Operators, officers and service providers of authorised, registered or designated funds, who must be fit and proper persons.

Fund service providers

• Fund administration providers: Any person, company, partnership or individual providing defined fund administration services (applying subscription monies, processing unit issues/redemptions, calculating NAV, maintaining fund accounts, distributing dividends) from a Bermuda presence is caught by the Fund Administration Provider Business Act 2019.
• AIFMs: Under the Investment Business Act 2003, an alternative investment fund manager managing an AIF must be licensed.
• Custodians, valuers and managers: The Investment Fund Rules 2019 impose duties on custodians, external valuers, investment managers and fund administrators servicing authorised or registered funds.

Sources: Fund Administration Provider Business Act 2019 · Investment Business Act 2003 · Investment Fund Rules 2019 · Investment Fund Offering Document Rules 2019 (BR 134 / 2019) · Investment Funds (Definition) Order 2019 · Investment Funds Act 2006 · Investment Fund Guidelines (Updated December 2023) · 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

Authorisation and licensing

• Fund authorisation: A fund must be authorised, registered or designated before carrying on business as a fund in or from Bermuda; operating an unauthorised, unregistered or undesignated fund is prohibited.
• Administration licence: No person may carry on, or hold out as carrying on, fund administration provider business in or from Bermuda without a BMA licence; applicants submit a business plan, management arrangements, AML/ATF policies and an application fee, and must meet the Schedule 1 minimum criteria.
• Fit and proper: Operators, officers and service providers of funds, and controllers and officers of administration providers, must be and remain fit and proper persons.

Offering documents

• Approval before use: An offering document must comply with the Investment Fund Offering Document Rules 2019 and be approved by the Authority before it is used to offer units, and submitted when applying for authorisation or registration.
• Publication and updates: Operators must make the offering document available free of charge at a Bermuda office and must forthwith publish an updated document reflecting material changes.
• Prescribed contents: The document must contain the disclosures prescribed in Rule 6 and the mandatory disclaimer regarding BMA authorisation or registration.

Valuations and reporting

• Valuations: 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.
• Audited financial statements: 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.
• Periodic filings: Under the BMA's Investment Fund Guidelines, funds file annual and (for certain classes) monthly or quarterly NAV/subscription/redemption statements and compliance certifications via the INTEGRA platform.
• Administration provider filings: A fund administration provider must submit annual financial statements within four months of its financial year end and an annual Statement of Compliance (FA Form 4).

Notifications

• Material change: Fund operators must give written notice to the Authority of proposed material changes and other specified matters.
• Control and officers: Licensees and controllers must notify the Authority of new or increased shareholder control and of changes of controller or officer.
• Disqualifying events: Registered funds must give notice of any disqualifying event; auditors must communicate certain matters to the Authority.

Governance and AML/ATF

• Corporate governance: Licensees under the Investment Business Act and fund administrators must implement corporate governance policies proportionate to their business and be effectively directed by at least two individuals (or one where the Authority approves), with non-executive oversight. Investment funds themselves are outside the scope of the corporate governance policy.
• AML/ATF: Registered and authorised funds are regulated financial institutions under POCA and must appoint a Money Laundering Reporting Officer and Compliance Officer, conduct customer due diligence on investors, and independently audit AML/ATF controls at least annually; fund boards remain responsible even where due diligence is outsourced.

Fees

• Administration provider fees: A fund administration provider pays a fee on grant of licence and an annual fee on or before 31 March each year following the year of grant.
• Fund fees and extensions: Funds pay fees to the Authority; up to three annual filing extensions may be requested at $300 each, and late filings attract late fees under the Fourth Schedule to the Bermuda Monetary Authority Act 1969.

Sources: Fund Administration Provider Business Act 2019 · Investment Fund Rules 2019 · Investment Fund Offering Document Rules 2019 (BR 134 / 2019) · Investment Funds Act 2006 · Annex III - Sector-Specific Guidance Notes for the Securities Sector (2022) · Stakeholder Letter - AML/ATF Sector Specific Guidance Notes for Investment Business Providers, Investment Funds and Fund Administrators (2017-07-25) · 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 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) · AML/ATF Sector-Specific Guidance Notes for the Securities Sector (Annex III) 2021

Exemptions and carve-outs

Scope is limited principally through the Investment Funds (Definition) Order 2019, which carves specified arrangements out of the statutory definition of investment fund, and through category-specific and structural carve-outs in the Act and Rules.

Excluded arrangements

• Definition Order carve-outs: Arrangements not operated by way of business, single-asset or non-pooled arrangements, group and holding structures, employee and family schemes, deposit-based arrangements, transferable securities and clearing arrangements fall outside the definition.
• Named excluded entities: Pension funds, sovereign wealth funds, securitisation special purpose vehicles, joint ventures, debt issues, insurance contracts, occupational pension schemes, credit unions, registered insurers and licensed digital asset businesses are excluded; persons operating these are not required to comply with the Investment Funds Act in respect of those arrangements.

Structural and category carve-outs

• Custodian exemption: Fund property must be entrusted to a custodian unless the Authority grants an exemption; the standard-fund custodian licensing requirement does not apply where the administrator carries on fund administration provider business in Bermuda.
• Class A/Class B Exempted Funds: The 2013 amendments created Class A and Class B Exempted Fund categories; grandfathered exempt funds were required to reclassify (deadline extended to 31 October 2017), failing which they lost exempted status.
• Governance policy scope: The BMA corporate governance policy excludes investment funds themselves (and Corporate Service Providers) from its scope.
• Islamic schemes: Islamic Collective Investment Schemes are authorised on the same basis as any other fund, with no additional or varied statutory requirements.

Sources: Investment Fund Rules 2019 · Investment Funds (Definition) Order 2019 · Investment Funds Act 2006 · Guidance Notes - Islamic Collective Investment Schemes (April 2011) · BMA Corporate Governance Policy for Trust (Regulation of Trust Business) Act 2001, Investment Business Act 2003 and Investment Funds Act 2006 (October 2013) · 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) · Corporate Governance Policy for Trust, Investment Business and Fund Administration Providers (Revised August 2022)

Enforcement and penalties

The Authority has broad supervisory and enforcement powers across the fund and fund administration regimes, ranging from late fees to criminal offences, licence revocation and court-ordered winding up.

Offences and enforcement powers

• Unlicensed business: Carrying on fund administration provider business without a licence is a criminal offence, as is misuse of the protected term; the Investment Business Act likewise creates offences, including for false documents or information.
• Supervisory measures: The Authority may restrict or revoke authorisations, registrations, designations or licences, issue directions, object to controllers, impose civil penalties, issue public censures and prohibition orders, seek injunctions and petition for winding up.
• Prohibition orders: An enforcement notice records a five-year prohibition against a former fund director found not fit and proper, barring him from acting as controller, operator, officer, chief executive or service provider to any fund under the Act.
• Winding up: Enforcement notices record court-ordered winding up of funds for breaches such as failure to conduct business prudently, failure to prepare audited financial statements, failure to file annual and quarterly filings, and failure to maintain a Bermuda representative.

Late fees and civil penalties

• Late filing fees: Failure to file valuations or financial reports on time makes the operator liable to a late fee under the Fourth Schedule to the Bermuda Monetary Authority Act 1969; the Guidelines specify $1,000 for late annual filings and $200 for late statistical filings, recoverable as a civil debt.
• Enforcement statement of principles: Under the BMA's Statement of Principles on the use of enforcement powers (intended to apply across several Acts including the Investment Funds Act), a civil penalty of up to $5,000 per week may be imposed for late lodgment of statutory filings, and up to $500,000 per breach by the Enforcement Committee.

AML/ATF penalties

• Criminal and civil: For securities-sector regulated financial institutions (which include funds and fund administrators), non-compliance with specified AML/ATF regulations is a criminal offence carrying 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.

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) · 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