In addition to these new economic substance requirements, the Substance Act also introduced legislative changes to the Investment Funds Act 2006 (IFA):

  • References to Excluded Funds have been removed. The term Excluded Fund(s) can no longer be used interchangeably with that of Private Fund(s), being a fund with few than 20 investors that does not promote itself by communicating an invitation or inducement to the public generally.
  • Exempted Funds will now be known as Professional Funds. Exempted Funds included Class A Exempt Funds and Class B Exempt Funds which will now be known as Professional Class A Funds and Professional Class B Funds.
  • Professional Funds and Private Funds are now Registered Funds. The current self-certification process (for Class A Exempt Funds), procedure for exemption (for Class B Exempt Funds) and notification process (for Private Funds) is no longer available. New Registered Funds now must apply to the BMA for registration and approval before commencing trading. Registered Funds are no longer required to separately register as NLPs under AML/ATF regulations.
  • Private Funds must appoint a local service provider authorised and regulated by the BMA and a custodian with regard to the safekeeping of the fund’s assets. The IFA expanded the definition of “service provider” to include corporate service providers; as such, most funds will meet the local service provider requirement through the engagement of a Bermuda corporate services provider. Waiver from the requirement to appoint a custodian is possible.

Confirmation of Compliance

“Existing Funds” (i.e. Private Funds, Class A Exempt Funds or Class B Exempt Funds which existed as of 31 December 2018) have until June 30 to comply with any new requirements.

Professional Class A Funds and Professional Class B Funds are likely to already comply with the applicable provisions of the IFA as amended by section 17 of the Substance Act. An assessment should be undertaken to confirm compliance with applicable provisions. Funds that comply with the requirements should note this in their annual filings due at the end of June.

Private Funds must also confirm that they comply with applicable provisions of the IFA as amended by section 17 of the Substance Act. In order to confirm compliance, existing Private Funds must complete the new Private Fund form and submit this form via ERICA (the BMA’s electronic filing system). A notation should be included on the form to indicate that this is an existing Private Fund. The following information must also be provided to the BMA:

  • information related to the fund;
  • a copy of its offering document, or if a master fund in a master/feeder structure, the offering document of its feeder fund; and
  • details of the service providers.

There is no separate registration fee that is payable for existing Private Funds.

Ongoing filings

Registered Funds are also required to make an annual filing by 30 June. For Professional Funds, these filing requirements are unchanged from previous years.

The operators of a Private Fund must also certify annually that it satisfies the qualifying criteria and the requirements for registration and will continue to satisfy them on an ongoing basis. The operators must also file annually:

  • information on the fund’s net asset value and its underlying assets;
  • a copy of the fund’s management accounts or audited financial statements; and
  • information on any material changes that took place during the year.

Existing funds are required to file the annual certification with the BMA this year.

We recommend that operators of funds that were previously Private Funds, Class A Exempt Funds and Class B Exempt Funds reach out to the fund’s legal counsel in Bermuda to confirm the applicable filing and/or registration requirements.

Share
Twitter LinkedIn Email Save as PDF
More News
24 Jun 2022 | News

Gold Sponsor Appleby to Speak on Three Panels at Bermuda Trusts Conference

Appleby is pleased to be a Gold sponsor of the Transcontinental Trusts: Bermuda 2022 conference on 2...

21 Jun 2022 | News

Vanessa Schrum to Co-Chair and Speak at Private Client Exchange Bermuda 2022

Vanessa Schrum, Appleby partner and Group Head of the Private Client and Trusts department in Bermud...

1 Jun 2022 | News

Navigating Sanctions: Expansion of Russian Sanctions Regime in Bermuda

Bermuda entities should carefully assess their business in light of rapidly evolving financial and t...

Contributors: Sally Penrose
1 Jun 2022 | News

Economic Substance Update: Compliance Reviews, Proposed Penalties and Filing Declaration Preparations

On 16 May 2022, Bermuda’s Registrar of Companies (Registrar) announced that reviews of Bermuda ent...

Contributors: John Wasty
18 Apr 2022 | News

New Dispute Resolution Lawyer Joins Appleby Bermuda

Appleby Bermuda is delighted to welcome new Associate Justin Lafferty to its growing and specialised...

4 Apr 2022 | News

Bermudian Duncan Card Joins Appleby As Partner

Appleby is delighted to announce Bermudian Duncan Card, a leading commercial lawyer that was based i...

1 Apr 2022 | News

Appleby announces new Partners and Counsel promotions

Appleby announces the promotion of two Partners and the appointment of five lawyers to the position ...

24 Mar 2022 | News

Ojeda Smith Joins Appleby Trainee Programme

Hamilton, Bermuda – 24 March 2022 - Appleby is pleased to welcome Ojeda Smith to its legal trainee...

8 Mar 2022 | News

Appleby Celebrates International Women’s Day on 8 March 2022

Appleby marks the day with 2022 campaign theme #BreakTheBias.

4 Mar 2022 | News

Appleby Bermuda Supports Week-Long Tech Summit Events

Hamilton, Bermuda – 4 March 2022 - Appleby announced its sponsorship of the annual International T...