Investment Business Regulations 1999

Link to law: http://www.bermudalaws.bm/Laws/Annual%20Laws/1999/Statutory%20Instruments/Investment%20Business%20Regulations%201999.pdf

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Investment Business Regulations 1999
Investment Business Regulations 1999 -REVOKED BY 2004


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BR 67 / 1999

INVESTMENT BUSINESS ACT 1998

1998 : 34

INVESTMENT BUSINESS REGULATIONS 1999


In exercise of the powers conferred upon the Minister of Finance
by section 30 of the Investment Business Act 1998, the following
Regulations are here made:―

Citation and commencement
1 These Regulations may be cited as the Investment Business
Regulations 1999 and shall come into operation on 1 January 2000.

Interpretation
2 In these Regulations, “the Act” means the Investment Business
Act 1998.

Licence to carry on investment business

Form of application for licence
3 An application for a licence made under section 6 of the Act shall
be in Form 1 in the Schedule.

Advertising application for a licence
4 (1) A person who has applied for a licence to carry on
investment business in or from within Bermuda shall, at the time of
making the application or as soon as practicable thereafter, advertise in
an appointed newspaper (as defined in the Companies Act 1981)
particulars of his application for a licence.

(2) An advertisement shall contain the following particulars―

(a) the applicant’s name;

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(b) his address, or where the applicant is a body corporate―

(i) the address of its registered office, whether in
Bermuda or outside Bermuda; and

(ii) the address of its principal office whether in
Bermuda or outside Bermuda;

(c) a statement that the applicant has applied to the
Authority for a licence; and

(d) the nature of the business to be carried on by the
applicant.

Form of licence
5 A licence granted by the Authority under section 7 of the Act
shall be in Form 2 in the Schedule.

Register of licences

Contents of register
6 The register of licences complied and maintained by the
Authority pursuant to section 9(4) of the Act shall contain the following
particulars in respect of each licence—


(a) the name of the investment provider;

(b) his address, or where the investment provider is a body
corporate―

(i) the address of its registered office whether in Bermuda
or outside Bermuda; and

(ii) the address of its principal office whether in Bermuda or
outside Bermuda;

(c) the date of grant of licence;

(d) the date of expiry of the licence;

(e) where conditions are imposed on the licence, particulars of
the conditions and date of imposition;

(f) where conditions are varied, particulars of the variation and
date of variation;

(g) where a licence is suspended or cancelled, the date of
suspension or, as the case may be, cancellation of the
licence.

Applications for review of decision of Authority

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Time for making an application for review
7 An application to the Minister for a review of a decision of the
Authority made under section 15(4) of the Act shall be made―

(a) not later than twenty-eight days from the date on which the
investment provider is notified of the decision of the
Authority; or

(b) where the investment provider asks for reasons under
section 14(2) of the Act, not later than twenty-eight days
from the date on which the investment provider is notified of
the reasons for the decision,

whichever is the later.

Form and content of application for review
8 (1) An application for a review of the decision of the Authority
shall be signed by or on behalf of the applicant and shall contain the
following particulars—

(a) the applicant’s name and address;

(b) the name and address of any person appointed by the
applicant to represent the applicant in connection with
the review;

(c) a statement of the decision of the Authority in respect of
which the review is sought.

(2) The application for review shall be accompanied with―

(a) a notice of the grounds of the review containing
sufficient particulars to show why the applicant
considers the decision in respect of which the applicant
is seeking a review, was unlawful or was not justified by
the evidence on which it was based;

(b) where an investment provider has asked for reasons, a
copy of the written reasons of the Authority’s decision
given under section 14(2) of the Act;

(c) such other documents as the applicant considers
relevant in support of the application.

Systems and Records

General duty to maintain systems and records
9 An investment provider, having regard to the size and complexity
of the investment provider’s business, shall maintain adequate systems
of control of the business and records and maintain adequate accounting
and other records as will enable the investment provider to discharge the

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obligations imposed by the licence, the Act, these Regulations and any
code of conduct issued by the Authority under section 22 of the Act.

Duty to provide confirmation note
10 (1) Except as provided in paragraph (2), an investment provider
shall provide each client with a confirmation note containing the
particulars specified in paragraph (3) not later than seven days from the
date of each transaction effected and carried out by the investment
provider.

(2) Where the particulars required by paragraph (3) are in the
possession of a third party who is connected with the transaction, an
investment provider shall, not later than seven days from the date of
receiving such particulars from the third party, provide the client with
the confirmation note required by paragraph (1).

(3) A confirmation note shall contain the following particulars―

(a) the name and address of the investment provider, and
the capacity in which the investment provider is acting;

(b) the client’s designation and account number;

(c) the date of the transaction;

(d) the quantity and description of the securities that are
the subject of the transaction;

(e) the nature of the transaction and the unit price (forward
or historic) of the securities;

(f) the fees, commissions and expenses, if any, charged to
the client (directly or indirectly) in connection with the
transaction;

(g) if a purchase, the total cost;

(h) if a sale, the total proceeds;

(i) the settlement date;

(j) if the transaction involves a currency conversion, the
relevant rate of exchange.

Duty to provide portfolio statement
11 (1) An investment provider shall provide each client with a
portfolio statement containing particulars of―

(a) all transactions effected and carried out on behalf of the
client during the period covered by the statement; and

(b) all assets held for the account of the client by the
investment provider as at the date of the statement.

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(2) An investment provider shall provide the first portfolio
statement within a period of six months beginning with the date of the
opening of the client’s account, and thereafter shall provide a statement
at least once in every period of six months.

Duty to keep accounting records
12 (1) An investment provider shall keep and maintain up-to-date
accounting records in the English language which shall―

(a) in respect of the investment provider’s business, disclose
particulars of―

(i) assets held for the investment provider’s own
account;

(ii) liabilities incurred for the investment provider’s own
account; and

(iii) entries of income and expenditure made and an
explanation of their nature; and

(b) in respect of the affairs of the clients of an investment
provider, disclose particulars of―

(i) all assets held, managed or controlled by the
investment provider for the account of clients, both
individually respecting each client and collectively
respecting all clients;

(ii) all liabilities incurred by the investment provider on
behalf of clients, both individually respecting each
client and collectively respecting all clients;

(iii) all transactions effected and carried out on behalf of
clients, both individually respecting each client and
collectively respecting all clients;

(iv) every document evidencing title to a client’s asset
held by the investment provider;

(v) where such document is held by a third party,
particulars of such document and the name and
address of that person; and

(vi) entries of the date on which every document
evidencing title to a client’s asset came into or left
the possession or control of the investment provider.

(2) For the purpose of paragraph (1), an investment provider may accept
and rely on records kept by a third party where such records are
capable of being reconciled with records kept by the investment
provider.

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(3) An investment provider shall permit any client of the investment
provider during business hours to inspect, either personally or by his
agent, any entry in a record kept by the investment provider of
matters relating exclusively to the client as soon as practicable and,
in any event, not later than fourteen days from the date on which the
investment provider receives a request from the client to carry out
the inspection.

(4) An investment provider shall keep either at the investment provider’s
principal office or registered office, or in such a manner that it can
be produced to the Authority within such period as the Authority
may specify, the following records for the following periods―

(a) entry records which shall include account opening records,
verification documentation and written introductions, for a
period of at least five years from the date of the closing of the
account;

(b) account ledger records, for a period of five years from the date of
the relevant transaction or series of transactions; and

(c) supporting records, which shall include all records in support of
ledger entries, credit and debit slips and cheques, for a period of
five years form the date of the relevant transaction or series of
transactions.

Information may be kept in electronic form
13 The information required to be kept by an investment provider
under the Act or these Regulations may be recorded and kept by an
investment provider in electronic form or such other form as the
investment provider thinks fit, provided that it is possible to inspect the
information and to produce a copy of it in legible form.

Minimum capital requirements
14 (1) An investment provider shall not be regarded as having
sufficient capital to carry on investment business as required by the
licensing criteria if the investment provider does not satisfy the minimum
capital requirement specified in paragraphs (2) and (3).

(2) An investment provider that carries on investment
business―

(a) as principal, shall maintain a minimum capital of
$250,000;

(b) as agent, shall maintain a minimum capital of $100,000;

(c) otherwise than as principal or agent, shall maintain a
minimum capital of $12,000.

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(3) The Authority may in any particular case require an
investment provider to maintain capital in excess of the minimum capital
requirements specified in paragraph (2) if, having regard to the nature
and scope of the investment provider’s business, the Authority is
satisfied that those minimum capital requirements are insufficient.

(4) Where the capital of an investment provider falls below the
minimum amount specified in paragraph (2) or below the amount
required by the Authority pursuant to paragraph (3), the investment
provider shall inform the Authority of the event not later than the first
business day after the day that the investment provider becomes aware
of its occurrence.

Liquidity requirements
15 (1) An investment provider shall maintain such liquidity as the
Authority may determine to be adequate, having regard to the
relationship between the investment provider’s liquid assets and the
investment provider’s actual and contingent liabilities, to the times at
which those liabilities will or may fall due and the investment provider’s
assets mature, to the nature and scale of the investment provider’s
operations and to any other factors appearing to the Authority to be
relevant.

(2) For the purposes of paragraph (1) the Authority may, to such
extent as it thinks appropriate, take into account as liquid assets, assets
of the investment provider and facilities available to the investment
provider which are capable of providing liquidity within a reasonable
period.

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SCHEDULE (Regulations 3 and 5)

FORM 1

FORM OF APPLICATION FOR AN INVESTMENT BUSINESS LICENCE

INVESTMENT BUSINESS ACT 1998

(Section 6)

APPLICATION

FOR AN INVESTMENT BUSINESS LICENCE

Completed applications with any supporting material should be sent
to:―

Bermuda Monetary Authority

Attention: Authorisation and Compliance Division

Burnaby House

26 Burnaby Street

Hamilton HM 11

Bermuda

Part I: Details of Application (Complete as appropriate)

Name of Applicant

Address of Registered Office
in Bermuda and outside of
Bermuda

Address of Principal Office
in Bermuda and outside of
Bermuda

Contact Name


Telephone Number

Fax Number


E-Mail Address

Date of Formation


Place of Formation

Amount of Authorised Share Capital Amount of Issued and Paid-up
Share Capital


Give the following particulars of all senior executives:―
Name and position Mailing Address Nationality PQ attached

Name and Address of any Supervisory or Regulatory Authority to
which the Applicant reports or is registered with.
Supervisory/Regulatory Authority Address

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Part II: Banker Information
Name and Address of Banker(s)



Name(s) and Address(es) of Bank(s) with whom office and client accounts
are maintained or where it is intended to open such accounts

Name Address

Part III: Auditor Information
Name and address of Auditor

Applicant’s Financial Year-end



Part IV: Insurance
Indicate below whether the Applicant has cover in respect of the
following:―

Limit Deductible Insurer

Professional Yes No
Indemnity □ □



Employee Yes No
Fidelity □ □



Loss of Yes No
Property □ □



Forgery Yes No
□ □



Electronic and Yes No
Computer □ □
Crime



Buildings and Yes No
Office Contents □ □



Computer Yes No
Damage □ □



Business Yes No
Interruption □ □



Political Risk Yes No
□ □



Directors and Yes No
Officers □ □



Other Yes No
Insurance □ □
(please provide
details)





Has any application for

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insurance by the Applicant or
any predecessors in business, or
any former officers or directors
ever been refused?
Name(s) and Address(es) of
insurer(s)



Declaration
This declaration must be completed by the Applicant in block capitals or
typed.

I, (full name and address) confirm that I have read and understand the
provisions of the Investment Business Act 1998 and I declare that the
business in respect of which this application is made will be conducted
in accordance with the provisions of the Act, the Regulations and any
codes of conduct.

I declare that the particulars supplied in the application are true to the
best of my knowledge and belief.

Signature of applicant:

Position in company:

Date:

WARNING A person who, in relation to any application for a licence,

makes a statement or issues a document which he knows to
be false or misleading in a material particular or recklessly
makes a statement or issues a document which is false or
misleading in a material particular shall be guilty of an
offence and liable on summary conviction to a fine of
$25,0000 and imprisonment for twelve months and on
conviction on indictment to a fine of $100,000 and
imprisonment for five years: section 26 of the Investment
Business Act 1998.

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FORM 2

FORM OF LICENCE

BERMUDA MONETARY AUTHORITY

INVESTMENT BUSINESS ACT 1998

INVESTMENT BUSINESS LICENCE

In exercise of the powers conferred upon it by section 7 of the
Investment Business Act 1998, the Bermuda Monetary Authority hereby
grants to―

(Name and address of licensee)

A licence to carry on investment business in or from within
Bermuda.

This licence is subject to the following conditions―

1. …………………………………………………

2. …………………………………………………

3. …………………………………………………

4. …………………………………………………

This Licence shall be valid from the date of issue and shall, unless
sooner cancelled, expire on

Issue this day of .

(Signature of issuing authority)


Made this 1st day of December 1999




Acting Minister Finance