We previously provided an update that Bermuda's Investment Funds Act 2006 (IFA) had been amended with effect from 1 January 2020. The amendments were made with a six month transitionary period for existing funds.
Given that we are now over half way through that period, it seemed timely to provide a reminder that operators of such funds should be considering whether they are now within scope of the IFA or if your business needs to make any changes or take additional steps in order to ensure continued compliance.
In addition to changes to the IFA, changes have been made to the rules which were previously promulgated thereunder. These also need to be considered as part of this exercise.
The first set of rules, which are the Investment Fund Offering Document Rules 2019, were made in relation to the issuance and contents of offering documents. Previously, these rules only applied to authorised funds but now apply to both authorised and registered funds. In practice, we are finding that many funds' offering documents are largely compliant and already contain much of the materials required by the new rules. Notwithstanding this, it is still important to complete a review of the applicable fund offering document. In some cases, funds will need to take steps to produce offering documents that comply with the requirements of the rules.
The second set of rules were made pursuant to the Bermuda Monetary Authority's (BMA) broader ability under the IFA to make rules as to the powers, duties, rights and liabilities of operators, service providers, directors and participants of funds, which is referred to as the Investment Fund Rules 2019. At a high level, requirements are included in connection with, amongst other things, custody of assets, valuations and the publication and making available of information and documentation to investors. These rules formerly applied only to authorised funds that were registered as standard funds, but now apply to all authorised and registered funds.
It should be noted that, in accordance with the IFA, a fund may apply to the BMA for a waiver or modification of the new rules. The BMA may only grant such a modification or waiver in certain circumstances, which will need to be considered in the context of the fund in question.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.