Investment Business Regulations 2004
INVESTMENT BUSINESS REGULATIONS 2004

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BR 7/2004

THE INVESTMENT BUSINESS ACT 2003

2003 : 20

THE INVESTMENT BUSINESS REGULATIONS 2004

In exercise of the powers conferred upon the Minister of Finance
by sections 16, 18, 39 and 86 of the Investment Business Act 2003, the
following Regulations are hereby made :

Citation
1 These Regulations may be cited as the Investment Business
Regulations 2004.

Interpretation
2 In these Regulations, "the Act" means the Investment Business
Act 2003.

Form of licence

Form of licence
3 An application for a licence made under section 16 of the Act
shall be in the form set out in the Schedule.

Register of licences

Contents of register
4 The register of licences compiled and maintained by the
Authority pursuant to section 18(4) of the Act shall contain the following
particulars in respect of each licence—

(a) the name of the investment provider;

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(b) his address, or where the investment provider is a firm,
its address;

(c) 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;

(d) the date of grant of the licence;

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

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

(g) where a licence is revoked, the date of revocation of the
licence.

Systems and records

General duty to maintain systems and records
5 (1) 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 obligations imposed by or under the Act or
other provision of law.

(2) An investment provider must maintain accounts for all
clients' assets separately from its own, in such a way as to enable such
assets, individually and in aggregate to be identified and reconciled at
any time.

Duty to provide confirmation note
6 (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).

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(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
7 (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.

(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
8 (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;

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(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.

(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 in respect of

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all investment business conducted by or through the investment
provider—

(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 from the date of the
relevant transaction or series of transactions.

Information may be kept in electronic form
9 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.

BR67/1999 revoked
10 The Investment Business Regulations 1999 are revoked.

SCHEDULE (Regulation 3)

FORM OF APPLICATION FOR AN INVESTMENT BUSINESS LICENCE

PART I: DETAILS OF APPLICANT

(complete as appropriate)

Name of applicant

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Address of registered office Address of principal place of
business in Bermuda

Other places of business in Bermuda Other places of business outside
Bermuda

Any other names which the applicant uses or proposes to use for
purposes of or in connection with any business carried on

Date and place of formation of company/partnership or other body

Contact name E-mail address

Fax number Telephone number

Scope of investment activities proposed (as defined in Part 2 of the First
Schedule to the Act) – please check as appropriate

q Dealing in investments

q Managing investments

q Safeguarding and administering
investments

q Arranging deals in
investments

q Investment advice

PART II: OPERATIONS OF THE UNDERTAKING

1. Name(s) and address(es) of the applicant’s principal banker(s)
within the last 10 years.

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2. Name(s) and address(es) of banker(s) with whom the applicant
maintains or proposes to maintain client accounts.

3. Name(s) and address(es) of the main custodian(s) of the client
assets:

 securities

 other

4. Name and address of the applicant’s auditors (where applicable).
Please give the name and professional qualification of the relevant
partner(s).

5. Names and addresses of any other regulatory body with
responsibility for the applicant.

6. Names of all directors and senior executives (identify with an
asterisk independent executive directors).

7. Names of all controllers of the undertaking, indicating the relevant
category of controller and whether individual or corporate, (for
example, “majority shareholder controller” if the person controls 50
per cent or more of the shares or voting power of the institution).

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8. Names and positions in the undertaking of the persons who
effectively direct the business for the purposes of paragraphs 2
and 3 of the minimum criteria for licensing set out in the Second
Schedule to the Act.

9. (a) Where applicable, amount and currency of the company’s
issued and paid-up share capital.

(b) Where applicable, amount and currency of the company’s
authorized share capital.

10. Applicant’s financial year-end.

PART III: INSURANCE COVER

Indicate below whether the Applicant has cover in respect of the
following:-

Limit Deductible Insurer Broker

Errors and
omissions

Yes
q

No
q

Directors' and
officers'
liabilities

Yes
q

No
q

Fidelity and
forgery Yes

q
No
q

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Loss of
property Yes

q
No
q

Computer
crime Yes

q
No
q

Computer
damage Yes

q
No
q

Business
interruption Yes

q
No
q

Office contents

Yes
q

No
q

Political risk

Yes
q

No
q

Other
insurance
(please provide
details)

Yes
q

No
q

Has any application for insurance by
the applicant or any predecessors in
business ever been refused?
Have any material insurance claims
been made by the applicant or any
predecessors in business?

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Name(s) and address(es) of insurer(s):

PART IV: PRIOR ISSUES

If the answer to any of the questions below is yes, please give full
particulars in the space provided at the back of this questionnaire clearly
stating to which question the details relate.

(a) Has the applicant ever applied for and been
refused a licence or an equivalent authorisation
or registration to conduct banking, investment,
insurance or trust business in Bermuda or
elsewhere?

Yes/No

(b) Has the applicant failed to satisfy a judgement
debt under a court order in Bermuda or
elsewhere within a year of the making of the
order?

Yes/No

(c) Has the applicant made any compromise or
arrangement with its creditors or otherwise failed
to satisfy creditors in full?

Yes/No

(d) Has the applicant ever had a receiver appointed
over any of its property in Bermuda, or has the
substantial equivalent of any such person been
appointed in any other jurisdiction? If so, give
full particulars.

Yes/No

(e) Has the applicant ever had a petition for an
administration order or the substantial
equivalent of such a petition served on it in any
jurisdiction?

Yes/No

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(f) Has the applicant ever had a notice of resolution
for liquidation in Bermuda, or had the
substantial equivalent of such a notice given in
any other jurisdiction?

Yes/No

(g) Has a petition ever been served in Bermuda for
the compulsory liquidation of the applicant or
any member of a group of which the applicant is
a member or has the substantial equivalent of
such a petition ever been served in any other
jurisdiction?

Yes/No

(h) Has an inspector or other authorised officer of
any government department or agency,
professional association or other regulatory body
appointed under any Bermuda law (e.g. the
Companies Act 1981) or equivalent overseas
enactment, ever investigated the affairs of the
applicant or any member of a group of which the
applicant is a member?

Yes/No

(i) Has the applicant or any member of a group of
which the applicant is a member been required
to produce books or records pursuant to section
110 of the Companies Act 1981 or similar
provisions of regulatory legislation (e.g. section
40 of the Banks and Deposit Companies Act
1999) within Bermuda or elsewhere?

Yes/No

(j) Has the applicant or any member of a group of
which the applicant is a member ever been
censured, prosecuted or warned as to future
conduct, or disciplined or publicly criticized by,
or made the subject of a court order at the
instigation of any supervisory or regulatory
authority?

Yes/No

(k) Has the applicant or any member of a group of
which the applicant is a member ever been
refused entry in Bermuda or elsewhere to any
professional body, stock exchange or trade
association concerned with banking, trust or
financial services?

Yes/No

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(l) Is the applicant or any member of a group of
which the applicant is a member engaged or does
it expect to be engaged in Bermuda or elsewhere
in any litigation which may have a material effect
on the resources of the undertaking?

Yes/No

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 2003 (the “Act”) 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 undertaking

Date

WARNING Any person who, in relation to an application for a
licence, issues a document or supplies information
which is false or misleading in a material respect; or
signs a document which is false or misleading in a
material respect; or takes part in the preparation or

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issue of a document, or the supplying of information,
which is false or misleading in a material respect,
shall be guilty of an offence and liable on summary
conviction to a fine of $25,000 or to imprisonment for
two years or to both; and on conviction on indictment
to a fine of $100,000 or imprisonment for four years
(Section 82 of the Investment Business Act 2003).

Dated this day 3rd day of February, 2004.

Minister of Finance