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Investment Funds Act 2006

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Investment Funds Act 2006
INVESTMENT FUNDS ACT 2006



BERMUDA

2006 : 37

INVESTMENT FUNDS ACT 2006


Date of Assent: 28 December 2006
Operative Date: 7 March 2007

ARRANGEMENT OF PARAGRAPHS

PART I
PRELIMINARY

1 Short title and
commencement

Interpretation

2 Interpretation

PART II
INVESTMENT FUNDS

3 Investment fund
4 Unit trust funds:

segregated accounts

Prohibition on Unauthorised
Funds

5 Prohibition on funds
6 Excluded funds

Exempted Funds

7 Grant of exemption
8 Applications for exemption

9 Criteria for exemption
10 Exempted fund may

applyto be authorised

Authorisation

11 Classes of funds
12 Applications for

authorisation
13 Authorisation
14 Requirements for

authorisation
15 Authority may exempt

from requirement for fund
property to be entrusted
to a custodian

16 Register of authorisations
and exemptions

Fees

17 Fees

Custodians


1



INVESTMENT FUNDS ACT 2006


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18 Custodian may entrust
property to third party

Title and transfer of units

19 The registrar
20 The register
21 Application of sections 20,

22 to 24 to mutual fund
companies

22 Identification procedures
23 The register as evidence of

title
24 Inspection of register and

copies of entries

Changes to Investment Funds

25 Notice of certain changes
to be given to Authority

Reports to the Authority

26 Reports to the Authority

Revocation of Authorisation

27 Revocation of authorisation
other than by consent

28 Procedure on revocation of
authorisation

29 Request for revocation of
authorisation

Powers of Intervention

30 Directions to an
authorised fund

31 Procedure on giving
directions under section
30 and varying them on
Authority’s own initiative

32 Procedure: refusal to
revoke or vary direction

33 Procedure on revocation of
direction and grant of
request for variation

34 Warning notices

35 Decision notices
36 Winding up on petition

from the Authority

Rules

37 Fund rules
38 Fund prospectus rules
39 Disapplication of the

Statutory Instruments Act
1977

40 Modification or waiver of
rules

PART III
FUND ADMINISTRATORS

41 Restriction on carrying on
fund administration
without a licence

42 Application for a licence
43 Grant and refusal of

application for a licence
44 Form, display and

registration of licences
45 Fees
46 Notification of change of

director, senior executive
and controller

47 Statement of compliance
48 Offences
49 Codes of conduct
50 Surrender of licence

Directions and revocations

51 Directions to protect
interests of clients

52 Revocation of licence
53 Notice of direction or

revocation of licence
54 Winding up on petition

from the Authority

PART IV
APPEAL TRIBUNALS

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55 Rights of appeal
56 Constitution of Tribunal
57 Determination of appeals
58 Costs, procedure and

evidence
59 Further appeals on a point

of law

PART V
INFORMATION GATHERING

AND INVESTIGATION

Information Gathering

60 Power to obtain
information

61 Power to require
production of documents

62 Right of entry to obtain
documents

63 Communication with
Authority

Investigations
64 Investigations on behalf of

the Authority
65 Investigation of suspected

contraventions
66 Powers of entry
67 Obstruction of

investigations

PART VI
RESTRICTION ON
DISCLOSURE OF
INFORMATION

68 Restricted information
69 Disclosure for facilitating

the discharge of functions
of the Authority

70 Disclosure for facilitating
the discharge of functions
by other authorities

71 Information supplied to the
Authority by relevant
overseas authority

PART VII
MISCELLANEOUS AND

SUPPLEMENTAL

72 False documents or
information

73 Offences by companies
74 Section 452 Criminal

Code not to apply
75 Repeals
76 Transitionals
77 Consequential

amendments

SCHEDULE



WHEREAS it is expedient to make new provisions for the
regulation of investment funds; to make provision for regulating fund
administrators; and for connected matters:

Be it enacted by The Queen's Most Excellent Majesty, by and
with the advice and consent of the Senate and the House of Assembly of
Bermuda, and by the authority of the same, as follows:

INVESTMENT FUNDS ACT 2006


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PART I
PRELIMINARY

Short title and commencement
1. This Act may be cited as the Investment Funds Act 2006 and
shall come into operation on such day as the Minister may appoint by
notice published in the Gazette, and the Minister may appoint different
days for different provisions.

Interpretation

Interpretation
2. (1) In this Act —

"auditor" means —

(a) a person entitled to practise as a public accountant in
Bermuda;

(b) a person who has qualified as an accountant by
examination of one of the Institutes of Chartered
Accountants of England and Wales, Ireland and
Scotland or the Canadian Institute of Chartered
Accountants or the American Institute of Certified Public
Accountants; or

(c) a person recognized by the Authority as an auditor;

“Authority” means the Bermuda Monetary Authority;

"authorised" means authorised under this Act;

“chief executive” means a person who, either alone or jointly with
one or more persons, is responsible under the immediate
authority of the directors for the conduct of the business of
the company;

“constitution” in relation to —

(a) a unit trust fund, means its trust deed or other
instrument establishing the trust;

(b) a mutual fund company, means its memorandum of
association and bye-laws;

(c) a partnership fund, means its partnership agreement;

“controller” has the meaning given in section 7(3) of the
Investment Business Act 2003 as it applies to companies;

"custodian" means the person entrusted with the safekeeping of
the fund property and includes the trustee of a unit trust
fund and the persons mentioned in section 18(1);

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“fund administrator” has the meaning given in subsection (2);
and “administrator” has a corresponding meaning;

“fund prospectus” means particulars of a fund prepared in
accordance with fund prospectus rules and “prospectus” has
a corresponding meaning;

"fund prospectus rules" means fund prospectus rules made
under section 38;

"fund rules" means rules made under section 37;

"investment fund" has the meaning given in section 3; and
“fund” has a corresponding meaning;

"investment manager" means a person acting on behalf of a fund
who manages its investments under the terms of a
management agreement;

“minimum criteria” means the minimum criteria for licensing set
out in the Schedule;

“Minister” means the Minister of Finance;

"mutual fund company" means a fund under which the property
is held for the participants by a mutual fund company within
the meaning of section 156A of the Companies Act 1981;

“officer” has the meaning given in section 2 of the Investment
Business Act 2003;

"operator", in relation to —

(a) a unit trust fund, means the trustee;

(b) a mutual fund company, means that company; and

(c) a partnership fund, means the general partner;

“participant” in relation to a fund has the meaning given by
section 3(2);

"participate" in relation to a fund means become a participant in
the fund;

"partnership fund" means a fund under which the property is
held on behalf of participating partners of a partnership
registered under the Limited Partnership Act 1883;

"register" has the meaning given in section 20;

"registrar" means the person appointed to establish and
maintain the register;

"senior executive" means a person (other than a chief executive)
who, under the immediate authority of a director or chief
executive of the company ⎯

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(a) exercises managerial functions; or

(b) is responsible for maintaining accounts or other records
of the undertaking.

"service provider" means a fund’s custodian, fund administrator,
investment manager or registrar, and includes any person to
whom a service provider has delegated part or all of his
functions;

“Tribunal” means a Tribunal constituted in accordance with
section 56;

"trustee" in relation to a unit trust fund, means the person
holding the trust property on trust for the participants;

“units" means the rights or interests (however described) of the
participants in a fund;

"unit trust fund" means a fund under which the property is held
on trust for the participants.

(2) In this Act, “fund administrator” means a person who
provides any one or more of the following services to a fund —

(a) applying the subscription monies received by a fund in
accordance with its constitution and its prospectus:

(b) processing the issue, conversion and redemption of units
of a fund;

(c) applying the income of a fund in accordance with its
constitution and its prospectus;

(d) calculating the net asset value of the units, and their
issue, conversion and redemption price;

(e) maintaining the accounts of a fund;

(f) distributing to the participants of a fund all dividends or
other distributions which may from time to time be
declared and paid by it on units in a fund.

PART II
INVESTMENT FUNDS

Investment fund
3. (1) In this Act, "investment fund" means any arrangements
with respect to property of any description, including money, the
purpose or effect of which is to enable persons taking part in the
arrangements to participate in or receive profits or income arising from
the acquisition, holding, management or disposal of the property or
sums paid out of such profits or income.

INVESTMENT FUNDS ACT 2006


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(2) The arrangements must be such that —

(a) the persons who are to participate ("participants") do not
have day-to-day control over the management of the
property, whether or not they have the right to be
consulted or to give directions; and

(b) the participants are entitled to have their units
redeemed in accordance with the fund’s constitution
and prospectus at a price determined in accordance
with such constitution and prospectus.

(3) The arrangements must also have one or both of the
following characteristics —

(a) the contributions of the participants and the profits or
income out of which payments are to be made to them
are pooled;

(b) the property is managed as a whole by or on behalf of
the operator of the fund.

(4) The Minister acting on the advice of the Authority, may by
order, subject to negative resolution procedure provide that
arrangements do not amount to an investment fund —

(a) in specified circumstances; or

(b) if the arrangements fall within a specified category of
arrangement.

Unit trust funds: segregated accounts
4. (1) This section applies to a unit trust fund which is permitted
under the terms of its constitution to operate segregated accounts.

(2) In this section, "segregated account" means a separate and
distinct account or sub-trust (comprising or including entries recording
data, assets, rights, contributions, liabilities and obligations linked to
such account) of a unit trust fund, relating to an identified or identifiable
pool of assets and liabilities of such unit trust fund which are segregated
or distinguished from other assets and liabilities of the unit trust fund.

(3) Notwithstanding any enactment or rule of law to the
contrary, but subject to this section, the constitution of a unit trust fund
to which this section applies may make provision for any of the following
matters.

(4) The trustee of a unit trust fund which operates segregated
accounts shall hold the assets of each segregated account for the benefit
of the participants of such segregated account exclusively.

(5) Any liability linked to a segregated account shall be a
liability only of that account and not the liability of any other account

INVESTMENT FUNDS ACT 2006


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and the rights of creditors in respect of such liabilities shall be rights
only in respect of the relevant account and not of any other account.

(6) Where a liability arises from a transaction or matter relating
to, or is otherwise imposed or attributable to, a particular segregated
account, that liability shall —

(a) extend only to the assets linked to that segregated
account; and

(b) not extend to the assets linked to any other segregated
account.

(7) Any assets of the unit trust fund not readily identifiable as
belonging to any particular segregated account shall be allocated by the
trustee between all of the segregated accounts on the basis of the
respective net asset values of each segregated account or, subject to the
terms of the unit trust fund’s constitution, on such other basis as the
trustee may in its absolute discretion determine.

Prohibition on Unauthorised Funds

Prohibition on unauthorised funds
5. (1) This section applies to the following funds —

(a) a unit trust fund;

(b) a mutual fund company; and

(c) a partnership fund.

(2) Subject to section 7, no person shall operate a fund to
which this section applies or purport to operate such a fund, in or from
Bermuda, unless —

(a) the fund has been authorised under section 13; or

(b) the fund is exempted from authorisation under section
7.

(3) It shall be an offence for a person to operate a fund in
contravention of subsection (2).

(4) A person guilty of an offence under subsection (3) is
liable —

(a) on summary conviction to a fine of $50,000 or to
imprisonment for 2 years or to both, and

(b) on conviction on indictment to a fine of $200,000 or
imprisonment for 5 years or to both.

(5) In proceedings for an offence under this section, it is a
defence for the accused to show that it took all reasonable precautions
and exercised all due diligence to avoid committing the offence.

INVESTMENT FUNDS ACT 2006


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Excluded Funds
6. (1) Section 5 shall not apply to investment funds that are
private funds.

(2) For the purposes of subsection (1) a fund is a private fund
if the number of participants does not exceed 20 persons and if the fund
does not promote itself by communicating an invitation or inducement to
the public generally.

(3) An operator of a private fund falling within this section shall
serve on the Authority a notice in writing of the fact that the private fund
qualifies for exclusion under this section.

(4) Such notice shall be served as soon as practicable after
the establishment of the private fund.

Exempted Funds

Grant of exemption
7. (1) The Authority may, on an application made under section 8,
exempt a fund from the requirement of authorisation under this Act, if


(a) it is satisfied that the fund satisfies the criteria for
exemption set out in section 9;

(b) it is satisfied that the operator of the fund and its service
providers are fit and proper persons to act as such; and

(c) it has been provided with such information as it may
reasonably require for the purposes of determining the
application.

(2) An exemption granted under subsection (1) shall be
registered.

(3) The operator of an exempted fund shall in each year on or
before 30 April certify in writing to the Authority that the fund continues
to qualify for exemption under this section.

(4) Such certificate shall be in such form as the Authority may
determine.

(5) The operator of an exempted fund shall pay to the
Authority−

(a) on the making of an application for exemption, and

(b) annually thereafter on or before 30 April,

such fees as may be prescribed under section 20B of and the Fourth
Schedule to the Bermuda Monetary Authority Act 1969; but no annual
fee shall be payable in the calendar year in which an application fee shall
have been paid.

INVESTMENT FUNDS ACT 2006


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Applications for exemption
8. (1) An application for exemption may be made to the Authority
in such form, and shall contain such information, as the Authority may
require.

(2) At any time after receiving an application and before
determining it, the Authority may require the applicant to furnish
additional information.

(3) Any information to be furnished to the Authority under this
section must be in such form or verified in such manner as it may
specify.

(4) An application may be withdrawn by notice in writing to the
Authority at any time before it has determined the application, but in
any such case no fees shall be refunded to the applicant.

Criteria for exemption
9. (1) The criteria for exemption referred to in section 7(1)(a) are
as follows⎯

(a) the fund is only open to qualified participants;

(b) the administrator of the fund falls within a class of
persons

recognised by the Authority;

(c) the fund has appointed an auditor; and

(d) the fund has an officer, trustee or representative
resident in Bermuda who shall be a person who has
access to the books and records of the investment fund.

(2) In this section “qualified participants” means ⎯

(a) high income private investors;

(b) high net worth private investors;

(c) sophisticated private investors;

(d) bodies corporate, each of which has total assets of not
less than five million dollars, where such assets are held
solely by the body corporate or held partly by the body
corporate and partly by one or more members of a group
of which it is a member;

(e) unincorporated associations, partnerships or trusts,
each of which has total assets of not less than five
million dollars, where such assets are held solely by
such association, partnership or trust or held partly by
it and partly by one or more members of a group of
which it is a member;

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(f) bodies corporate, all of whose shareholders fall within
one or more of the subparagraphs of this subsection;

(g) partnerships, all of whose members fall within one or
more of the paragraphs of this subsection;

(h) trusts, all of whose beneficiaries fall within one or more
of the paragraphs of this subsection.

(3) In this section —

"high income private investor" means an individual who has had
a personal income in excess of $200,000 in each of the two
years preceding the current year or has had a joint income
with that person's spouse in excess of $300,000 in each of
those years, and has a reasonable expectation of reaching the
same income level in the current year; and "current year"
means the year in which he purchases an investment;

"high net worth private investor" means an individual whose net
worth or joint net worth with that person's spouse in the year
in which he purchases an investment exceeds $1,000,000;
and "net worth" means the excess of total assets at fair
market value over total liabilities;

"group" has the meaning given in section 2 of the Investment
Business Act 2003;

"sophisticated private investor" means an individual who has
such knowledge of, and experience in, financial and business
matters as would enable him to properly evaluate the merits
and risks of a prospective purchase of investments.

Exempted fund may apply to be authorised
10. (1) An investment fund exempted under section 7 ("exempted
fund") may make application under section 12 for authorisation.

(2) Where pursuant to such application, the Authority grants
the application for authorisation, then from the date of such
authorisation ⎯

(a) such fund shall cease to be an exempted fund; and

(b) the provisions of this Act shall apply to the fund as an
authorised fund.

Authorisation

Classes of funds
11. (1) The Authority may authorise funds in the following
classes —

(a) institutional fund;

INVESTMENT FUNDS ACT 2006


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(b) administered fund;

(c) standard fund.

(2) A fund qualifies for classification as an institutional fund
if —

(a) pursuant to its constitution and prospectus —

(i) it is only open to qualified participants; or

(ii) it requires each participant to invest a minimum
amount of $100,000 in the fund; and

(b) it has an officer, trustee or representative resident in
Bermuda who is a person who has access to the books
and records of the investment fund.

(3) In this section “qualified participants” has the meaning
given in section 9(2).

(4) A fund qualifies for classification as an administered fund if
it is a fund whose administrator is licensed under Part III of this Act
and —

(a) pursuant to its constitution and prospectus it requires
participants to invest a minimum amount of $50,000 in
the fund; or

(b) it is listed on a stock exchange recognized by the
Authority for the purposes of this section.

(5) A fund qualifies for classification as a standard fund if it
does not fall within any other class of fund.

(6) The Minister acting on the advice of the Authority may, by
order subject to negative resolution procedure, amend the qualifications
for any class of fund, and may add additonal classes of funds.

Applications for authorisation
12. (1) An application for the authorisation of a fund must be
made to the Authority by the operator or proposed operator of the fund.

(2) The application —

(a) must be made in such manner as the Authority may
direct;

(b) must state the corporate name and registered or
principal office of each service provider of the fund;

(c) must be accompanied with a certificate signed by the
operator to the effect that the fund complies, or will on
authorisation comply, with section 14;

INVESTMENT FUNDS ACT 2006


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(d) must contain or be accompanied with such information
as the Authority may reasonably require for the purpose
of determining the application; and

(e) must be accompanied by an application fee.

(3) At any time after receiving an application and before
determining it, the Authority may require the applicant to provide it with
such further information as it reasonably considers necessary to enable
it to determine the application.

(4) The Authority may require an applicant to present
information which it is required to give under this section in such form,
or to verify it in such a way, as the Authority may direct.

(5) Different directions may be given, and different
requirements imposed, in relation to different applications.

(6) An application may be withdrawn by notice in writing to the
Authority at any time before it has determined the application, but in
any such case no application fee shall be refunded to the applicant.

Authorisation
13. (1) If, on an application under section 12 in respect of a fund,
the Authority is satisfied that the fund complies with the requirements of
section 14, the Authority may grant the application for the fund to be
authorised in the appropriate class.

(2) The Authority may determine an incomplete application if it
considers it appropriate to do so.

(3) The applicant may withdraw its application, by giving the
Authority written notice, at any time before the Authority determines it.

(4) An operator may apply to the Authority for a change of
classification of an authorised fund.

(5) Section 12 (Applications for authorisation) applies to an
application under subsection (4) as it applies to an application for
authorisation.

(6) If the Authority is satisfied that the fund meets the
qualifications of the class for which it is applying and is otherwise
satisfied that the fund complies with the general requirements of
authorisation set out in section 14, the Authority may reclassify the
fund.

Requirements for authorisation
14. (1) The requirements referred to in section 13(1) are as
follows —

(a) the fund shall prepare annual financial statements
which will be audited;

INVESTMENT FUNDS ACT 2006


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(b) the fund has appointed, or will on authorisation appoint,
an investment manager, an auditor and a fund
administrator;

(c) the fund property has been or will on authorisation be
entrusted to a custodian;

(d) the person appointed as custodian of the fund must —

(i) if incorporated in Bermuda, be licensed under
the Banks and Deposits Companies Act 1999,
the Trusts (Regulation of Trust Business) Act
2001 or the Investment Business Act 2003;

(ii) if incorporated elsewhere, be subject to
regulatory supervision equivalent to that
imposed by or under the Acts referred to in
subparagraph (i); and

(iii) be independent of the operator and —

(a) in the case of a mutual fund company, of the persons
appointed as directors of the company;

(b) in the case of a partnership fund, of the partners;

(c) the operator of the fund and its proposed service
providers are fit and proper persons to act as such;

(d) in relation to the operator and service providers, the
combination of their experience and expertise is such as
is appropriate for the purposes of the fund; and

(e) the fund complies, or will on authorisation, comply with
the requirements of fund rules and fund prospectus
rules.

(2) The person appointed as auditor of the fund must be
independent of the operator of the fund and its service providers.

(3) The constitution of a fund must include provisions for the
following —

(a) the rights and restrictions attaching to the units;

(b) the terms for valuation of assets and liabilities;

(c) the manner of calculation of the net asset value of each
unit and the issue price and redemption price of units;

(d) the terms upon which units are issued;

(e) the terms upon which units may be transferred or
converted, if applicable;

INVESTMENT FUNDS ACT 2006


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(f) the terms upon which units may be redeemed and the
circumstances in which redemptions may be suspended;
and

(g) the investment restrictions or borrowing limitations, if
any.

(4) The Authority may on the application of the operator of a
fund disapply the requirement that the custodian must —

(a) be independent of the operator of a fund;

(b) in the case of a mutual fund company, be independent
of the directors or any one or more of them; or

(c) in the case of a partnership fund, be independent of the
partners, or any one or more of them,

in any particular case where the Authority determines that it is
appropriate to do so.

(5) The Authority may on the application of the operator of a
fund disapply the requirement that the financial statements of a fund
shall be audited in any particular year, where the Authority considers it
appropriate to do so.

Authority may exempt from requirement for fund property to be
entrusted to a custodian
15. The Authority may, where satisfied that appropriate alternative
arrangements are in place for safeguarding fund property, exempt a fund
in any particular case from the requirement of section 14(1)(c) that the
fund property be entrusted to a custodian.

Register of authorisations and exemptions
16. The Authority shall establish and maintain in such manner as it
thinks fit a register containing, in respect of each authorisation and
exemption granted under this Act, such particulars as it may determine;
and the register may be published in such manner as the Authority
thinks fit.

Fees

Fees
17. (1) The operator of a fund shall pay to the Authority —

(a) on the making of an application for authorisation;

(b) on the making of an application for a change of
classification; and

(c) annually thereafter on or before 30 April,

INVESTMENT FUNDS ACT 2006


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such fees as may be prescribed under section 20B and the Fourth
Schedule of the Bermuda Monetary Authority Act 1969; but no annual
fee shall be payable in the calendar year in which an application fee shall
have been paid.

(2) Different fees may be prescribed for different classes of
authorisation.

Custodians

Custodian may entrust property to third party
18. (1) Nothing in this Part prevents a custodian from —

(a) entrusting to a third party all or some of the property in
its safekeeping; or

(b) in a case falling within paragraph (a), authorising the
third party to entrust all or some of that property to
other specified persons.

(2) In every case where property is entrusted to third parties,
the custodian shall give notice in writing of that fact together with
particulars of such person to —

(a) the operator of the authorised fund; and

(b) the fund administrator of the authorised fund.

Title and Transfer of Units

The registrar
19. (1) Every authorised fund shall appoint a registrar.

(2) The registrar shall establish and maintain in Bermuda, in a
legible form or in a form capable of being reproduced in a legible form a
register of the participants in the authorised fund in accordance with the
provisions of the following sections and fund rules.

(3) The registrar may also appoint such person as it considers
fit to be a sub-registrar or branch registrar to carry out on its behalf any
or all of its obligations.

(4) Where an appointment is made under subsection (3), the
registrar shall remain responsible for the discharge of all the registrar’s
duties in relation to the register under this Act and fund rules and shall
be responsible for the acts and omissions of the appointed person.

(5) Where the registrar delegates any of its functions to a sub-
registrar or branch registrar it shall give notice in writing to —

(a) the operator of the authorised fund; and

(b) the authorised fund administrator.

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The register
20. (1) There shall be entered in the register —

(a) the name and address of each participant;

(b) the number of units (including fractions of a unit) of
each type held by each such participant; and

(c) the date on which the participant was registered in the
register in respect of the units standing in his name;

but the registrar shall not be obliged to register more than four persons
as the joint participants of any units.

(2) The registrar shall—

(a) take all reasonable steps; and

(b) exercise all due diligence,

to ensure that the information contained in the register is, at all times,
accurate, complete and up to date.

(3) In pursuance of subsection (2), the registrar shall in
particular take such steps as are necessary to obtain information
concerning any new participant to enable the entry in the register to be
made.

Application of sections 20, 22 to 24 to mutual fund companies
21. Sections 20, 22, 23 and 24 shall apply to the units of a mutual
fund company without prejudice to sections 65 to 68 of the Companies
Act 1981, and the register maintained under this Part in respect of such
a company shall be treated as if it is the register of members for all
purposes.

Identification procedures
22. Nothing in section 20 shall be construed as requiring the
registrar to make or alter any entry in the register or any certificate or
other document or accept any transfer or conversion in any case where
he considers it necessary or appropriate to carry out or complete
identification procedures in relation to the participant or another person
pursuant to any statutory or regulatory obligation.

The register as evidence of title
23. (1) The register shall be conclusive evidence as to the persons
respectively entitled to the units entered therein.

(2) No notice of any trust which may be entered in the register
in respect of any unit shall be binding on the registrar.

INVESTMENT FUNDS ACT 2006


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Inspection of register and copies of entries
24. (1) Except where otherwise provided in a fund’s constitution or
prospectus, the registrar shall make the register available in Bermuda
for inspection by or on behalf of the participants free of charge at all
times during ordinary office hours but the register may be closed at such
times and for such periods (not exceeding 30 days in any one year) as
the registrar may from time to time determine.

(2) The registrar shall supply a participant or his authorised
representative at such reasonable charge, if any, as the registrar shall
determine, with a copy in print of the entries on the register relating to
that participant.

Changes to Investment Funds

Notice of certain changes to be given to Authority
25. (1) Subject to this section, the operator of an authorised fund
shall forthwith give written notice to the Authority of any proposal to —

(a) make a material change in the authorised fund’s
prospectus;

(b) replace a service provider of the authorised fund;

(c) in relation to an authorised unit trust fund, replace a
trustee of the unit trust or appoint any additional
trustee or decrease the number of trustees;

(d) in relation to an authorised mutual fund company,
replace a director of the company or appoint any
additional director or decrease the number of directors
in post;

(e) in relation to an authorised partnership fund, replace a
general partner of the fund;

(f) in relation to an authorised mutual fund company,
reconstruct or amalgamate the company; and

(g) wind up the affairs of the authorised fund.

(2) Subject to subsections (3) and (4), effect is not to be given to
any proposal of which notice has been given under subsection (1) unless
the Authority shall have first approved such proposal by notice in writing
served on the operator.

(3) No approval is required to a proposal of which notice has
been given under paragraph (d) of subsection (1).

(4) No approval is required to a proposal of which notice has
been given under paragraphs (c), (e), (f) and (g) of subsection (1) if such
proposal were given by the operator of an institutional fund or an
administered fund.

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(5) For the purpose of this section, a change is a material
change if it would, if known, reasonably affect the mind of a prudent
participant in deciding whether to participate or to continue to
participate in the fund; and “materially” has a corresponding meaning.

(6) An operator of an authorised fund —

(a) that fails to give notice as required by subsection (1),

(b) that gives effect to a proposal in contravention of
subsection (2),

is guilty of an offence and liable on summary conviction to a fine of
$50,000.

Reports to the Authority

Reports to the Authority
26. (1) The operator of an authorised fund shall —

(a) at such time or times or at such intervals or in respect of
such period or periods as may be required, furnish the
Authority with a report on such activities of the fund as
the Authority may reasonably require for the
performance of its functions under this Act;

(b) submit to the Authority within six months of its financial
year end —

(i) a statement confirming that the fund has at all
times during the preceding financial year been
in compliance with the provisions of this Act,
fund rules and prospectus rules applicable to it;

(ii) (in the event that the fund has not been in such
compliance) a statement setting out particulars
of the breach.

(2) Where a service provider becomes aware of any of the
matters specified in subsection (3), the service provider shall —

(a) within 14 days of the occurrence of any specified matter
notify the Authority of its occurrence and the
circumstances applicable thereto; and

(b) make a report in writing of such event to the operator;

and that report shall be included in the authorised fund’s next annual
report and next periodic report if such periodic report is to be distributed
before the annual report.

(3) The specified matters are —

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(a) that the assets of an authorised fund have not been
invested materially in accordance with its prospectus;
or

(b) that the general management of an authorised fund is
not materially in accordance with the fund’s
constitution.

(3) A service provider shall not be in breach of any duty to
which it is subject as a service provider of an authorised fund under this
section by reason of its making a report to the Authority in good faith of
any reportable event or any information on any matter of which it
becomes aware in its capacity as such service provider of that fund and
which relates to the business or affairs of that fund.

(4) For the purposes of this section ─

“reportable event” means an event in relation to which a report is
required under subsection (2);

“materially” has the meaning given in section 25(5).

(5) A service provider that −

(a) fails to give notice as required by subsection (2)(a); or

(b) fails to make a report as required by subsection (2)(b),

is guilty of an offence and is liable on summary conviction to a fine of
$50,000.

Revocation of Authorisation

Revocation of authorisation other than by consent
27. The Authority may revoke the authorisation of an authorised
fund, if it appears to the Authority that —

(a) one or more requirements for authorising the fund are
no longer satisfied;

(b) the operator of the authorised fund or any of the
authorised fund’s service providers —

(i) has contravened or is likely to contravene a
requirement imposed on the operator or service
provider by or under this Act; or

(ii) has, in purported compliance with any such
provision, knowingly or recklessly given the
Authority information which is false or
misleading in a material particular; or

(c) no investment activity has been carried on in relation to
the authorised fund for the previous twelve months.

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Procedure on revocation of authorisation
28. (1) If the Authority proposes to revoke an authorisation under
section 27, it must give separate warning notices to the operator and
service providers of the authorised fund.

(2) If the Authority decides to revoke an authorisation, it must
without delay give each of them a decision notice and either of them may
refer the matter to the Tribunal.

Request for revocation of authorisation
29. (1) An authorisation may be revoked by the Authority at the
request of the operator of the authorised fund concerned.

(2) If the Authority revokes an authorisation under subsection
(1), it must give written notice of the revocation to the operator of the
authorised fund.

(3) The Authority may refuse a request to revoke an
authorisation under this section if it considers that the public interest
requires that any matter concerning the fund should be investigated
before a decision is taken as to whether authorisation should be revoked.

Powers of Intervention

Directions to an authorised fund
30. (1) Where the Authority is satisfied that the matters specified
in paragraph (a) or (b) of section 27 apply but the circumstances are not
such as to justify revocation, the Authority may in relation to an
authorised fund give directions under this section.

(2) The Authority may also give a direction under this section if
it concludes that neither paragraph (a) or (b) of section 27 apply, but that
it is desirable to give directions in order to protect the interests of
participants or potential participants in such a fund.

(3) For the purposes of subsection (2), the Authority may take
into account any matter relating to —

(a) the authorised fund and any of its service providers;

(b) any director or controller of any service provider;

(c) any operator of an authorised fund; or

(d) any person exercising influence over any operator of an
authorised fund, or any of its service providers by
virtue of provisions contained in the authorised fund’s
constitution; or

(e) any person employed by or associated, for the purposes
of the business of the authorised fund, with the
authorised fund, or any its service providers.

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(4) A direction under this section may -

(a) require the operator of an authorised fund to cease
communicating an invitation or inducement to the
public to participate in the authorised fund; or

(b) require the operator of an authorised fund to cease the
issue, or redemption, or both, of units.

(5) The Authority may, on its own initiative or on the
application of the operator revoke or vary a direction given under this
section if it appears to the Authority —

(a) in the case of revocation, that it is no longer necessary
for the direction to take effect or continue in force;

(b) in the case of variation, that the direction should take
effect or continue in force in a different form.

(6) It shall be an offence for a person to fail without reasonable
excuse to comply with a direction given under this section.

(7) A person guilty of an offence under subsection (6) is liable
on summary conviction to a fine of $25,000.

Procedure on giving directions under section 30 and varying them
on Authority's own initiative
31. (1) A direction takes effect —

(a) immediately, if the notice given under subsection (3)
states that that is the case;

(b) on such date as may be specified in the notice;

(c) if no date is specified in the notice, when the matter to
which it relates is no longer open to appeal.

(2) A direction may be expressed to take effect immediately (or
on a specified date) only if the Authority, having regard to the ground on
which it is exercising its power under section 30, considers that it is
necessary for the direction to take effect immediately (or on that date).

(3) If the Authority proposes to give a direction under section
30, or gives such a direction with immediate effect, it must give separate
written notices to the operator of the fund and its service providers.

(4) The notice must —

(a) give details of the direction;

(b) inform the person to whom it is given of when the
direction takes effect;

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(c) state the Authority's reasons for giving the direction and
for its determination as to when the direction takes
effect;

(d) inform the person to whom it is given that it may make
representations to the Authority within such period as
may be specified in it (whether or not it has referred the
matter to the Tribunal); and

(e) inform the person of its right to refer the matter to the
Tribunal.

(5) If the direction imposes a requirement under section
30(4)(b), the notice must state that the requirement has effect until —

(a) a specified date; or

(b) a further direction.

(6) The Authority may extend the period allowed under the
notice for making representations.

(7) If, having considered any representations made by a person
to whom the notice was given, the Authority decides —

(a) to give the direction in the way proposed, or

(b) if it has been given, not to revoke the direction,

it must give separate written notices to the operator of the fund and its
service providers.

(8) If, having considered any representations made by a person
to whom the notice was given, the Authority decides —

(a) not to give the direction in the way proposed,

(b) to give the direction in a way other than that
proposed, or

(c) to revoke a direction which has effect,

it must give separate written notices to the operator of the fund and its
service providers.

(9) A notice given under subsection (8) must inform the person
to whom it is given of his right to refer the matter to the Tribunal.

(10) A notice under subsection (8)(b) must comply with
subsection (4).

(11) This section applies to the variation of a direction on the
Authority's own initiative as it applies to the giving of a direction.

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Procedure: refusal to revoke or vary direction
32. (1) If on an application under section 30(5) for a direction to be
revoked or varied the Authority proposes —

(a) to vary the direction otherwise than in accordance
with the application, or

(b) to refuse to revoke or vary the direction,

it must give the applicant a warning notice.

(2) If the Authority decides to refuse to revoke or vary the
direction —

(a) it must give the applicant a decision notice; and

(b) the applicant may refer the matter to the Tribunal.

Procedure on revocation of direction and grant of request for
variation
33. (1) If the Authority decides on its own initiative to revoke a
direction under section 30 it must give separate written notices of its
decision to the operator of the authorised fund and its service providers.

(2) If on an application made under section 30(5) for a direction
to be revoked or varied, the Authority decides to revoke or vary it in
accordance with the application, it must give the applicant written notice
of its decision.

(3) A notice under this section must specify the date on which
the decision takes effect.

Warning notices
34. (1) A warning notice shall ⎯

(a) state the action which the Authority proposes to take;

(b) be in writing; and

(c) give reasons for the proposed action.

(2) The warning notice shall specify a reasonable period (which
may not be less than 28 days) within which the person to whom it is
given may make representations to the Authority.

(3) The Authority may extend the period specified in the notice.

(4) The Authority shall then decide, within a reasonable period,
whether to give the person concerned a decision notice.

Decision notices
35. (1) A decision notice shall ⎯

(a) be in writing;

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(b) give the Authority's reasons for the decision; and

(c) give an indication of any right to have the matter
appealed to the Tribunal which is given by this Act.

Winding up on petition from the Authority
36. (1) The Authority may present a petition to the Supreme Court
for the winding up of a fund which ⎯

(a) having been authorised under this Act has had its
authorisation revoked; or

(b) is operating, or has been operating, as an investment
fund in contravention of any provision of this Act.

(2) On such a petition, the Supreme Court may wind up the
fund if it is of the opinion that it is just and equitable that the fund be
wound up.

(3) Part XIII (Winding Up) of the Companies Act 1981 shall
apply to the winding up of a mutual fund company under this section.

Rules

Fund rules
37. (1) The Authority may make rules ("fund rules") as to —

(a) the constitution, management and operation of
authorised funds;

(b) the powers, duties, rights and liabilities of —

(i) the operators of an authorised fund;

(ii) any of its service providers;

(iii) the directors of an authorised mutual fund
company;

(c) the rights of the participants in any such authorised
fund; and

(d) the winding up of any authorised fund.

(2) Fund rules may, in particular, make provision —

(a) as to the issue and redemption of the units by an
authorised fund;

(b) as to the expenses of an authorised fund and the means
of meeting them;

(c) for the appointment, removal, powers and duties of a
service provider of an authorised fund;

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(d) requiring any of the service providers of an authorised
fund to be resident, or have a place of business in
Bermuda;

(e) for restricting or regulating the investment and
borrowing powers exercisable in relation to an
authorised fund;

(f) requiring the keeping of records whether in Bermuda or
elsewhere, with respect to the transactions and financial
position of an authorised fund and for the inspection of
those records; and

(g) requiring the preparation of periodical reports with
respect to the authorised fund and the provision of those
reports to the participants and to the Authority.

(3) Fund rules may make different provisions for different
classes of authorised funds and shall be published in such manner as
the Authority may determine.

Fund prospectus rules
38. (1) The Authority may make prospectus rules ("fund prospectus
rules") requiring the operator of an authorised fund —

(a) to submit the fund prospectus to the Authority; and

(b) to publish the fund prospectus or make it available to
the public on request.

(2) “Fund prospectus” means a prospectus containing
particulars in such form, containing such information about the fund
and complying with such requirements as are specified in fund
prospectus rules.

(3) Fund prospectus rules may require the operator of an
authorised fund to submit, and to publish or make available, a revised or
further fund prospectus if there is a significant change affecting any
matter −

(a) which is contained in a fund prospectus previously
published or made available; and

(b) whose inclusion in the prospectus was required by the
rules.

(4) Fund prospectus rules may require the operator of an
authorised fund to submit, and to publish or make available, a revised
fund prospectus if —

(a) a significant new matter arises; and

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(b) the inclusion of information in respect of that matter
would have been required in a previous prospectus if it
had arisen when that prospectus was prepared.

(5) Fund prospectus rules may provide for the payment, by the
person or persons who in accordance with the rules are treated as
responsible for any fund particulars, of compensation to any qualifying
person who has suffered loss as a result of —

(a) any untrue or misleading statement in the particulars; or

(b) the omission from them of any matter required by the
rules to be included.

(6) "Qualifying person" means a person who has become or
agreed to become a participant in the fund.

(7) Fund prospectus rules do not affect any liability which any
person may incur apart from the rules.

(8) Fund prospectus rules made under this section may make
different provisions for different classes of funds and shall be published
in such manner as the Authority may determine.

Disapplication of the Statutory Instruments Act 1977
39. Sections 6, 7 and 8 of The Statutory Instruments Act 1977 shall
not apply to rules made under sections 37 and 38.

Modification or waiver of rules
40. (1) The Authority may, on the application or with the consent of
any person to whom any fund rules or fund prospectus rules apply,
direct that any of such rules —

(a) are not to apply to him as respects a particular
authorised fund; or

(b) are to apply to him as respects a particular authorised
fund with such modifications as may be specified in the
direction.

(2) An application must be made in such manner as the
Authority may direct.

(3) The Authority may not give a direction unless it is satisfied
that —

(a) compliance with the rules, or with the rules as
unmodified, would be unduly burdensome or would not
achieve the purpose for which the rules were made; and

(b) the direction would not result in undue risk to persons
whose interests the rules are intended to protect.

(4) A direction may be given subject to conditions.

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(5) The Authority may —

(a) revoke a direction; or

(b) vary it on the application, or with the consent, of the
person to whom it relates.

(6) "Direction" means a direction under subsection (1).

PART III
FUND ADMINISTRATORS

Restriction on carrying on fund administration without a licence
41. (1) A person shall not carry on, or purport to carry on, the
business of a fund administrator in or from Bermuda unless that person
is licensed as a fund administrator under section 43.

(2) A person who carries on or purports to carry on the
business of a fund administrator without being in possession of a licence
is guilty of an offence and liable on summary conviction to a fine of
$50,000.

Application for a licence
42. (1) An application for a licence shall be made to the Authority
in such manner as the Authority may direct and shall be accompanied
with —

(a) a business plan setting out the nature and scale of the
business which is to be carried on by the applicant;

(b) such other information as the Authority may reasonably
require for the purpose of considering the application;
and

(c) the application fee.

(2) An application may be withdrawn by notice in writing to the
Authority at any time before it has determined the application, but in
any such case no application fee shall be refunded to the applicant.

Grant and refusal of application for a licence
43. (1) Subject to this section, the Authority may on an application
duly made in accordance with section 42, and after being provided with
all such information as it may reasonably require, grant or refuse the
application for a licence.

(2) The Authority shall not grant an application unless —

(a) the applicant is a company incorporated in Bermuda or
elsewhere; and

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(b) it is satisfied that the minimum criteria are fulfilled with
respect to the applicant.

(3) It shall be a condition of every licence issued under this
Part to a fund administrator that the administrator shall not hold client
monies or any other client assets.

(4) The Minister acting on the advice of the Authority may by
order subject to negative resolution procedure amend the Schedule by
adding new criteria or by amending or deleting the criteria for the time
being specified in the Schedule.

(5) For the purposes of subsection (3) ‘client monies or any
other assets’ means monies or other assets that belong to a fund or, as
the case may be, participants in a fund, that is being administered by
the licensed fund administrator.

Form, display and registration of licences
44. (1) A licence shall be in such form as the Authority may
determine.

(2) A licensed fund administrator shall at all times keep the
licence on display in Bermuda at its principal place of business or at its
registered office.

(3) The Authority shall publish in the Gazette a notice of every
grant of a licence.

(4) The Authority shall cause to be compiled and maintained a
register containing, in respect of each licence, such particulars as the
Authority may determine.

Fees
45. A fund administrator shall pay to the Authority such fees as may
be prescribed under the Bermuda Monetary Authority Act 1969 —

(a) on the making of an application for a licence; and

(b) on or before 30 April in every year after the year in
which the licence was granted.

Notification of change of director, senior executive and controller
46. (1) A licensed fund administrator shall give written notice to
the Authority of the fact that any person has become or has ceased to be
a director, senior executive or controller of the company.

(2) A notice required to be given under subsection (1) shall be
given before the end of the period of fourteen days beginning with the
day on which the company becomes aware of the relevant facts.

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Statement of compliance
47. A licensed fund administrator shall, within four months from the
end of its financial year, submit to the Authority —

(a) a statement confirming that it has, with respect to the
preceding financial year, complied with the requirements
of this Part; and

(b) (where it has failed to comply with any such requirement
within such period), a statement setting out the
particulars of the breach.

Offences
48. A licensed fund administrator that —

(a) holds client monies or other client assets in breach of
the condition of its licence imposed by virtue of section
43(3);

(b) fails to display a licence as required by section 44;

(c) fails to notify the Authority of a change of director,
senior executive or controller as required by section 46;

(d) fails to submit a statement as required by section 47; or

(e) fails to submit such a statement after the end of the
period specified in section 47;

is guilty of an offence and liable on summary conviction to a fine of
$10,000.

Codes of conduct
49. (1) The Authority may issue codes of conduct as to the duties,
requirements and standards to be complied with, and the procedures
(whether as to client identification, record-keeping, internal reporting
and training or otherwise) and sound principles to be observed by
persons carrying on the business of fund administration.

(2) Before issuing a code of conduct, the Authority shall
publish a draft of that code in such manner as it thinks fit and shall
consider any representations made to it about the draft.

(3) Every licensed fund administrator in the conduct of its
business shall comply with any code of conduct issued by the Authority.

(4) A failure on the part of a licensed fund administrator to
comply with the provisions of such a code shall be taken into account by
the Authority in determining whether the business is being conducted in
a prudent manner as required by paragraph 2 of the minimum criteria.

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Surrender of licence
50. (1) A licensed fund administrator may surrender its licence by
notice in writing to the Authority.

(2) A surrender shall take effect on receipt of the notice by the
Authority or, if a later date is specified in the notice, on that date.

(3) A surrender of a licence shall be irrevocable unless it is
expressed to take effect at a later date and before that date the Authority
by notice in writing allows the surrender to be withdrawn.

Directions and Revocations

Directions to protect interests of clients
51. (1) Subject to section 53, the Authority may give a licensed
fund administrator directions in writing under this section.

(2) Directions under this section shall be such as appear to the
Authority to be desirable for safeguarding the interests of the licensed
fund administrator's clients or potential clients and, without prejudice to
the foregoing, may in particular −

(a) require the licensed fund administrator to take certain
steps or to refrain from adopting or pursuing a
particular course of action;

(b) impose restrictions on the scope of its business; or

(c) require the licensed fund administrator to remove any
of its controllers or officers.

(3) Directions which are in force with respect to an
administrator shall cease to have effect when the administrator ceases to
provide fund administration services to any clients.

(4) A licensed fund administrator which fails to comply with
any requirement or contravenes any prohibition imposed on it by a
direction under this section shall be guilty of an offence and liable on
summary conviction to a fine of $50,000.

Revocation of licence
52. (1) Subject to section 53, the Authority may revoke the licence
of a licensed fund administrator if the Authority is satisfied that —

(a) any of the minimum criteria is not or has not been
fulfilled, or may not be or may not have been fulfilled, in
respect of the licensed fund administrator;

(b) the licensed fund administrator has failed to comply
with any provision of this Part;

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(c) the Authority has been provided with false, misleading
or inaccurate information by or on behalf of the licensed
fund administrator or, in connection with an application
for a licence, by or on behalf of a person who is or is to
be an officer or controller of the licensed fund
administrator.

Notice of direction or revocation of licence
53. (1) Where the Authority proposes to give a direction under
section 51 or revoke a licence under section 52 the Authority shall give to
the licensed fund administrator concerned written notice of its intention
to do so.

(2) A notice under subsection (1) shall state the ground or
grounds on which the Authority intends to act and give particulars of the
fund administrator’s rights under subsection (4).

(3) Where the ground for a proposed revocation is that it
appears to the Authority that the criterion in paragraph 1 of the
minimum criteria is not or has not been fulfilled, or may not be or may
not have been fulfilled, in the case of any person, the Authority shall give
that person a copy of the notice mentioned in subsection (1), together
with a statement of his rights under subsection (4).

(4) A licensed fund administrator or the person referred to in
subsection (3), which is given notice under subsection (1) may make
representations in writing to the Authority within the period of twenty-
eight days beginning with the day on which the notice was given (or such
other longer period as the Authority may allow).

(5) After giving a notice under subsection (1) and taking into
account any representations made under subsection (4), the Authority
shall decide whether ⎯

(a) to proceed with the action proposed in the notice; or

(b) to take no further action.

(6) The Authority shall give the fund administrator written
notice of its decision and, except where the decision is to take no further
action, the notice shall state the reasons for the decision and give
particulars of the rights conferred by section 55.

(7) A notice under subsection (6) shall be given within the
period of twenty-eight days beginning with the day on which the
Authority shall have received from the licensed fund administrator
representations in writing under subsection (4), or if no such
representations are received by the Authority, within the period of fifty-
six days beginning with the day on which the notice under subsection (1)
was given; and if no notice under subsection (6) is given within that
period, the Authority shall be treated as having at the end of that period

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given a notice under that subsection to the effect that no further action
is to be taken.

(8) The Authority shall publish in the Gazette, in such form as
it thinks fit, notice of every revocation of a licence under this Act.

Winding up on petition from the Authority
54. (1) The Authority may present a petition to the Supreme Court
for the winding up of a fund administrator which ⎯

(a) having been licensed under this Part has had its license
revoked; or

(b) is carrying on, or has carried on, the business of a fund
administrator in contravention of any provisions of this
Part.

(2) On such a petition, the Court may wind up the fund
administrator if it is of the opinion that it is just and equitable that the
company be wound up.

(3) Part XIII (Winding Up) of the Companies Act 1981 shall
apply to the winding up of a company under this section.

PART IV
APPEAL TRIBUNALS

Rights of appeal
55. (1) An operator of an authorised fund which is aggrieved by a
decision of the Authority ⎯

(a) to revoke an authorisation of the fund under section 27;

(b) under section 29 (3) refusing a request to revoke an
authorisation of the fund;

(c) giving a direction under section 30(4);

(d) varying a direction on its own initiative under section
30(5); or

(e) refusing to revoke or vary a direction under section 32;

may appeal against the decision to a Tribunal constituted in accordance
with section 56.

(2) Where the ground or a ground for a decision within
subsection (1) (a) or (c) is that mentioned in section 27(b), the service
provider to whom the ground relates may appeal to the Tribunal
constituted as aforesaid against the finding that there is such a ground
for the decision.

(3) A licensed fund administrator which is aggrieved ⎯

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(a) by a direction of the Authority given under section 51;

(b) by a decision of the Authority revoking its licence under
section 52;

may appeal against the direction or decision, as the case may be, to a
Tribunal constituted as aforesaid.

(4) Where the effect of a decision within subsection (3)(a) is to
require the removal of a person as a controller or officer of a licensed
fund administrator, the controller or officer whose removal is required
may appeal to a Tribunal constituted as aforesaid against the finding
that there is such a ground for the decision or, as the case may be,
against the decision to require his removal.

(5) The Tribunal may suspend the operation of a direction or a
variation of a direction pending the determination of an appeal in respect
of the direction.

(6) The revocation of an authorisation or a fund administrator’s
licence pursuant to a decision against which there is a right of appeal
under this section shall not have effect ⎯

(a) until the end of the period within which the appeal can
be brought; and

(b) if such an appeal is brought, until it is determined or
withdrawn.

Constitution of Tribunal
56. (1) A Tribunal shall consist of a chairman, or, in his absence, a
deputy chairman and two other members.

(2) The Chairman and the deputy chairman shall be appointed
by the Minister for a term not exceeding three years, and shall be
barristers and attorneys of at least seven years' standing.

(3) During any period of time when the chairman or deputy
chairman is absent from Bermuda or is for any other reason unable to
act, the Minister may appoint another person to act in his place for the
period of his absence or inability to act.

(4) The Minister shall appoint a panel of not less than six
persons three of whom shall have experience of investment fund
business and three of whom shall have experience of fund
administration, to serve as members of appeal Tribunals.

(5) A person shall not be eligible for appointment as chairman,
deputy chairman or member of a Tribunal if he is or has at any time
during the period of two years ending with the date of his appointment
been an officer, servant or agent of the Authority.

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Determination of appeals
57. (1) Where an appeal is brought under the provisions of this Act
the chairman or as the case may be the deputy chairman shall nominate
two other members from the panel of members, who together with him
shall constitute the Tribunal which shall determine the appeal.

(2) On an appeal under sections 55(1) or (3) the question for
the determination of the Tribunal shall be whether, for the reasons
adduced by the appellant, the decision was unlawful or not justified by
the evidence on which it was based.

(3) On any such appeal the Tribunal may confirm or reverse
the decision which is the subject of the appeal but shall not have power
to vary it except that ⎯

(a) where the decision was to impose or vary any direction
the Tribunal may direct the Authority to impose different
directions or to vary them in a different way; or

(b) where the decision was to revoke an authorisation or a
licence the Tribunal may direct the Authority to issue
directions instead.

(4) Notice of a Tribunal's determination, together with a
statement of its reasons, shall be given to the appellant and to the
Authority; and, unless the Tribunal otherwise directs, the determination
shall come into operation when the notice is given to the appellant and to
the Authority.

Costs, procedure and evidence
58. (1) A Tribunal may give such directions as it thinks fit for the
payment of costs or expenses by any party to the appeal.

(2) The Minister may make regulations with respect to appeals
and those regulations may in particular make provision ⎯

(a) as to the period within which and the manner in which
such appeals are to be brought;

(b) as to the manner in which such appeals are to be
conducted, including provision for any hearing to be
held in private and as to the persons entitled to appear
on behalf of the parties;

(c) as to the procedure to be adopted where appeals are
brought both by an operator of an investment fund and
a service provider, or by a licensed fund administrator
and by a person who is to be a controller or officer of a
licensed fund administrator, including provision for the
hearing of the appeals together and for the mutual
disclosure of information;

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(d) for requiring an appellant or the Authority to disclose or
allow the inspection of documents in his or its custody
or under his or its control;

(e) for requiring any person, on tender of the necessary
expenses of his attendance, to attend and give evidence
or produce documents in his custody or under his
control and for authorising the administration of oaths
to witnesses;

(f) for enabling an appellant to withdraw an appeal or the
Authority to withdraw its opposition to an appeal and for
the consequences of any such withdrawal;

(g) for taxing or otherwise settling any costs or expenses
which the Tribunal directs to be paid and for the
enforcement of any such direction;

(h) for enabling any preliminary or incidental functions in
relation to an appeal to be discharged by the chairman
or, as the case may be, the deputy chairman of the
Tribunal; and

(i) as to any other matter connected with such appeals.

(3) Regulations made under subsection (2) shall be subject to
negative resolution procedure.

(4) A person who, having been required in accordance with
regulations made under this section to attend and give evidence, fails
without reasonable excuse to attend or give evidence, shall be guilty of
an offence and liable on summary conviction to a fine of $10,000.

(5) A person who without reasonable excuse alters, suppresses,
conceals, destroys or refuses to produce any document which he has
been required to produce in accordance with regulations under this
section, or which he is liable to be so required to produce, shall be guilty
of an offence and liable ⎯

(a) on summary conviction to a fine of $25,000 or to
imprisonment for six months or to both;

(b) on conviction on indictment to a fine of $50,000 or to
imprisonment for two years or to both.

Further appeals on a point of law
59. (1) An authorised fund, licensed fund administrator or other
person who has appealed to a Tribunal may appeal to the Supreme Court
on any question of law arising from the decision of the appeal by the
Tribunal and an appeal on any such question shall also lie at the
instance of the Authority; and if the Court is of the opinion that the
decision was erroneous in point of law it shall remit the matter to the
Tribunal for re-hearing and determination by it.

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(2) No appeal to the Court of Appeal shall be brought from a
decision of the court under subsection (1) except with leave of the Court
of Appeal.

PART V
INFORMATION GATHERING AND INVESTIGATION

Information Gathering

Power to obtain information
60. The Authority may by notice in writing served on —

(a) the operator of an authorised fund;

(b) any of its service providers; or

(c) any licensed fund administrator;

require such person to provide the Authority (or such person acting on
behalf of the Authority as may be specified in the notice), at such time or
times or at such intervals or in respect of such period or periods as may
be so specified, with such information as the Authority may reasonably
require for the performance of its functions under this Act.

Power to require production of documents
61. (1) The Authority may ⎯

(a) by notice in writing served on the operator of an
authorised fund or as the case maybe, a licensed fund
administrator require it to produce, within such time
and at such place as may be specified in the notice, such
document or documents of such description as may be
so specified;

(b) authorise an officer, servant or agent of the Authority on
producing such evidence of his authority, to require
such person to provide him forthwith with such
information, or to produce to him such documents, as
he may specify;

being such information or documents as the Authority may reasonably
require for the performance of its functions under this Act.

(2) Where, by virtue of subsection (1), the Authority or any
officer, servant or agent of the Authority has power to require the
production of any documents from the operator of an authorised
investment fund or as the case may be, a licensed fund administrator,
the Authority or that officer, servant or agent shall have the like power to
require the production of those documents from any person who appears
to be in possession of them and, in the case of a fund, from any of its
service providers; but where any person from whom such production is

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required claims a lien on documents produced by him, the production
shall be without prejudice to the lien.

(3) The power under this section to require the operator of an
authorised investment fund or a licensed fund administrator or other
person to produce any documents includes power —

(a) if the documents are produced, to take copies of them or
extracts from them and to require the operator of that
authorised investment fund, licensed fund
administrator or person, or any other person who is a
present or past controller or officer of, or is or was at
any time employed by or acting as an employee of, the
operator of the authorised investment fund or licensed
fund administrator in question, to provide an
explanation of any of them; and

(b) if the documents are not produced, to require the person
who was required to produce them to state, to the best
of his knowledge and belief, where they are.

(4) If it appears to the Authority to be desirable in the interests
of participants or potential participants of an authorised investment
fund or, as the case may be, the clients or potential clients of a licensed
fund administrator ("A") to do so, it may also exercise the powers
conferred by section 60 and subsection (1) of this section in relation to
an undertaking which is or has at any relevant time been —

(a) a member of A's group;

(b) a controller of A; or

(c) any other member of a partnership of which A is a
member.

(5) The Authority may, by notice in writing, served on any
person who is or is to be a controller or officer of an operator of an
authorised investment fund or, as the case may be, a licensed fund
administrator require him to provide the Authority, within such time as
may be specified in the notice, with such information or documents as
the Authority may reasonably require for determining whether he is a fit
and proper person to hold the particular position which he holds or is to
hold.

(6) Any person who without reasonable excuse fails to comply
with a requirement imposed on him under this section shall be guilty of
an offence and liable on summary conviction to a fine of $10,000 or to
imprisonment for six months or to both.

(7) Nothing in this section shall require the disclosure or
production by a person of information or documents which he would be
entitled to refuse to disclose or produce on the grounds of legal
professional privilege in proceedings in Bermuda.

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Right of entry to obtain documents
62. (1) Any officer, servant or agent of the Authority may, on
producing if required evidence of his authority, enter any premises
occupied by a person on whom a notice has been served under sections
60 and 61(1) for the purpose of obtaining there the information or
documents required by that notice and of exercising the powers
conferred by section 61(3).

(2) Any officer, servant or agent of the Authority may, on
producing if required evidence of his authority, enter any premises
occupied by any person on whom a notice could be served under
sections 60 and 61(1) for the purpose of obtaining there such
information or documents as are specified in the authority, but the
Authority shall not authorise any person to act under this subsection
unless it has reasonable cause to believe that if such a notice were
served it would not be complied with or that any documents to which it
would relate would be removed, tampered with or destroyed.

(3) Any person who intentionally obstructs a person exercising
rights conferred by this section shall be guilty of an offence and liable on
summary conviction to a fine of $10,000 or to imprisonment for six
months or to both.

Communication with Authority
63. (1) No duty to which an auditor of an authorised fund may be
subject shall be regarded as contravened by reason of his
communicating in good faith to the Authority, whether or not in response
to a request made by the Authority, any information or opinion on a
matter to which this section applies and which is relevant to any
function of the Authority under this Act.

(2) In relation to an auditor of an authorised fund this section
applies to any matter of which he becomes aware in his capacity as
auditor and which relates to the business or affairs of the investment
fund or any connected person.

(3) In this section "connected person”, in relation to an
authorised fund ("A"), means any such person as is mentioned in
sections 61(4)(a) to (c).

Investigations

Investigations on behalf of the Authority
64. (1) If it appears to the Authority desirable to do so in the
interests of participants or potential participants of an authorised fund
or as the case may be, clients of a licensed fund administrator, the
Authority may appoint one or more competent persons to investigate and
report to the Authority on —

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(a) the nature, conduct or state of the authorised fund or
licensed fund administrator’s business or any particular
aspect of it; or

(b) the ownership or control of the operator of an authorised
fund or, as the case may be, of the licensed fund
administrator;

and the Authority shall give written notice of any such appointment to
the authorised fund or licensed fund administrator concerned.

(2) If a person appointed under subsection (1) thinks it
necessary for the purposes of his investigation, he may also investigate
the business of a person who is or has at any relevant time been a
member of the group of which the person under investigation ("A") is
part; or a partnership of which A is a member, or of a person who is or
has at any relevant time been a service provider of the fund under
investigation.

(3) Where a person appointed under subsection (1) decides to
investigate the business of any person referred to in subsection (2) he
shall give that person written notice to that effect.

(4) It shall be the duty of every person who is or was a
controller, officer, employee, agent, banker, auditor, accountant or
barrister and attorney of an operator of an authorised fund or licensed
fund administrator which is under investigation by virtue of subsection
(1) or a person who is under investigation under subsection (2) —

(a) to produce to the persons appointed under subsection
(1), within such time and at such place as they may
require, all documents relating to the person concerned
which are in his custody or power;

(b) to attend before the persons so appointed at such time
and place as they may require; and

(c) otherwise to give those persons all assistance in
connection with the investigation which he is reasonably
able to give;

and those persons may take copies of or extracts from any documents
produced to them under paragraph (a).

(5) For the purpose of exercising his powers under this section,
a person appointed under subsection (1) may enter any premises
occupied by an operator of an authorised fund or a licensed fund
administrator which is being investigated by him under this section; but
he shall not do so without prior notice in writing.

(6) A person exercising powers by virtue of an appointment
under this section shall, if so required, produce evidence of his authority.

(7) Any person who —

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(a) without reasonable excuse fails to produce any
documents which it is his duty to produce under
subsection (4);

(b) without reasonable excuse fails to attend before the
persons appointed under subsection (1) when required
to do so;

(c) without reasonable excuse fails to answer any question
which is put to him by persons so appointed with
respect to an authorised fund or licensed fund
administrator which is under investigation or a person
who is being investigated by virtue of subsection (2); or

(d) intentionally obstructs a person in the exercise of the
rights conferred by subsection (5);

shall be guilty of an offence and liable on summary conviction to a fine of
$10,000 or to imprisonment for six months or to both.

(8) A statement made by a person in compliance with a
requirement imposed by virtue of this section shall not be used in
evidence against him in criminal proceedings.

(9) Nothing in this section shall require the disclosure or
production by a person of information or documents which he would be
entitled to refuse to disclose or produce on the grounds of legal
professional privilege in proceedings in Bermuda.

Investigation of suspected contraventions
65. (1) Where the Authority has reasonable grounds for suspecting
that a person has contravened section 5 or 41 the Authority or any duly
authorised officer, servant or agent of the Authority may by notice in
writing require that or any other person —

(a) to provide, at such place as may be specified in the
notice and either forthwith or at such time as may be so
specified, such information as the Authority may
reasonably require for the purpose of investigating the
suspected contravention;

(b) to produce, at such place as may be specified in the
notice and either forthwith or at such time as may be so
specified, such documents, or documents of such
description, as may be specified, being documents the
production of which may be reasonably required by the
Authority for that purpose;

(c) to attend at such place and time as may be specified in
the notice and answer questions relevant for determining
whether such a contravention has occurred.

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(2) The Authority or a duly authorised officer, servant or agent
of the Authority may take copies of or extracts from any documents
produced under this section.

(3) Any officer, servant or agent of the Authority may, on
producing if required evidence of his authority, enter any premises
occupied by a person on whom a notice has been served under
subsection (1) for the purpose of obtaining there the information or
documents required by the notice, putting the questions referred to in
paragraph (c) of that subsection or exercising the powers conferred by
subsection (2).

(4) Any person who without reasonable excuse fails to comply
with a requirement imposed on him under this section or intentionally
obstructs a person in the exercise of the rights conferred by subsection
(3) shall be guilty of an offence and liable on summary conviction to a
fine of $10,000 or to imprisonment for six months or to both.

(5) A statement made by a person in compliance with a
requirement imposed by virtue of this section shall not be used in
evidence against him in criminal proceedings.

(6) Nothing in this section shall require the disclosure or
production by a person of information or documents which he would be
entitled to refuse to disclose or produce on the grounds of legal
professional privilege in proceedings in Bermuda.

Powers of entry
66. (1) A magistrate may issue a warrant under this section if
satisfied on information on oath laid by an officer of the Authority or laid
under the Authority's authority that there are reasonable grounds for
suspecting that a person is guilty of such a contravention as is
mentioned in section 65(1) and ⎯

(a) that that person has failed to comply with a notice
served on him under that section;

(b) that there are reasonable grounds for suspecting the
completeness of any information provided or documents
produced by him in response to such a notice; or

(c) that there are reasonable grounds for suspecting that if
a notice were served on him under that section it would
not be complied with or that any documents to which it
would relate would be removed, tampered with or
destroyed.

(2) A warrant under this section shall authorise any police
officer not below the rank of inspector, together with any other person
named in the warrant and any other police officers —

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(a) to enter any premises occupied by the person mentioned
in subsection (1) which are specified in the warrant,
using such force as is reasonably necessary for the
purpose;

(b) to search the premises and take possession of any
documents appearing to be such documents as are
mentioned in subsection (1)(c) or to take, in relation to
any such documents, any other steps which may appear
to be necessary for preserving them or preventing
interference with them;

(c) to take copies of or extracts from any such documents;

(d) to require any person named in the warrant to answer
questions relevant for determining whether that person
is guilty of any such contravention as is mentioned in
section 65(1).

(3) A warrant under this section shall continue in force until
the end of the period of one month beginning with the day on which it is
issued.

(4) Any documents of which possession is taken under this
section may be retained —

(a) for a period of three months; or

(b) if within that period proceedings to which the documents
are relevant are commenced against any person for any
such contravention as is mentioned in section 65(1),
until the conclusion of those proceedings.

(5) Any person who intentionally obstructs the exercise of any
right conferred by a warrant issued under this section or fails without
reasonable excuse to comply with any requirement imposed in
accordance with subsection (2)(d) shall be guilty of an offence and
liable —

(a) on summary conviction, to a fine of $25,000 or to
imprisonment for six months or to both;

(b) on conviction on indictment, to a fine of $50,000 or to
imprisonment for two years or to both.

Obstruction of investigations
67. (1) A person who knows or suspects that an investigation is
being or is likely to be carried out —

(a) into a suspected contravention of section 5 or 41 ; or

(b) under section 64;

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shall be guilty of an offence if he falsifies, conceals, destroys or otherwise
disposes of, or causes or permits the falsification, concealment,
destruction or disposal of, documents which he knows or suspects are or
would be relevant to such an investigation unless he proves that he had
no intention of concealing facts disclosed by the documents from persons
carrying out such an investigation.

(2) A person guilty of an offence under this section shall be
liable —

(a) on summary conviction, to a fine of $25,000 or to
imprisonment for six months or to both;

(b) on conviction on indictment, to a fine of $50,000 or to
imprisonment for two years or to both.

PART VI
RESTRICTION ON DISCLOSURE OF INFORMATION

Restricted information
68. (1) Except as provided by sections 69, 70 and 71 ⎯

(a) no person who under or for the purposes of this Act
receives information relating to the business or other
affairs of any person; and

(b) no person who obtains such information directly or
indirectly from a person who has received it as aforesaid;

shall disclose the information without the consent of the person to whom
it relates and (if different) the person from whom it was received as
aforesaid.

(2) This section does not apply to information which at the time
of the disclosure is or has already been made available to the public from
other sources or to information in the form of a summary or collection of
information so framed as not to enable information relating to any
particular person to be ascertained from it.

(3) Any person who discloses information in contravention of
this section is guilty of an offence and is liable ⎯

(a) on summary conviction to a fine of $50,000 and to
imprisonment for two years or to both;

(b) on conviction on indictment to a fine of $100,000 or to
imprisonment for five years or to both.

Disclosure for facilitating the discharge of functions of the
Authority
69. (1) Section 68 does not preclude the disclosure of information
in any case in which disclosure is for the purpose of enabling or assisting

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the Authority to discharge its functions under this Act or any other Act
or regulations.

(2) Without prejudice to the generality of subsection (1), section
68 does not preclude the disclosure of information by the Authority to
the auditor or accountant of an authorised fund, if it appears to the
Authority that disclosing the information would enable or assist the
Authority to discharge the functions mentioned in that subsection or
would otherwise be in the interests of the participants or potential
participants.

Disclosure for facilitating the discharge of functions by other
authorities
70. (1) Section 68 does not preclude the disclosure of information
to the Minister or other authority in Bermuda in any case in which the
disclosure is for the purpose of enabling or assisting him to discharge his
regulatory functions.

(2) Section 68 does not preclude the disclosure of information
for the purpose of enabling or assisting an authority in a country or
territory outside Bermuda to exercise functions corresponding to the
functions of the Authority under this Act.

(3) Subsection (2) does not apply in relation to disclosures to
an authority unless the Authority is satisfied that the authority is
subject to restrictions on further disclosure at least equivalent to those
imposed by sections 68, 69 and this section.

(4) Section 68 does not preclude the disclosure of
information ⎯

(a) with a view to the institution of, or otherwise for the
purposes of, any criminal proceedings, whether under
this Act or any other Act;

(b) in connection with any other proceedings arising out of
this Act.

(5) Section 68 does not preclude the disclosure by the
Authority to the Director of Public Prosecutions or a police officer not
below the rank of inspector of information obtained pursuant to section
64, 65 or 66 or of information in the possession of the Authority as to
any suspected contravention in relation to which the powers conferred by
those sections are exercisable.

(6) Information which is disclosed to a person in pursuance of
this section shall not be used otherwise than for the purpose mentioned
in this section.

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Information supplied to the Authority by relevant overseas
authority
71. (1) Section 68 applies to information which has been supplied
to the Authority for the purposes of any relevant functions by the
relevant supervisory authority in a country or territory outside Bermuda.

(2) Information supplied to the Authority as mentioned in
subsection (1) shall not be disclosed except as provided by section 68
or ⎯

(a) for the purpose of enabling or assisting the Authority to
discharge its functions under this Act; or

(b) with a view to the institution of, or otherwise for the
purpose of, criminal proceedings, whether under this Act
or any other Act.

(3) In this section ⎯

"relevant functions" in relation to the Authority means its
functions under this Act;

"relevant supervisory authority" means the authority
discharging in that country or territory functions
corresponding to those of the Authority under this Act.

PART VII
MISCELLANEOUS AND SUPPLEMENTAL

False documents or information
72. (1) Any person who, for any purposes of this Act —

(a) issues a document, or supplies information, which is
false or misleading in a material respect; or

(b) signs a document which is false or misleading in a ma-
terial respect; or

(c) takes part in the preparation or issue of a document, or
the supplying of information, which is false in a material
respect;

is guilty of an offence and is liable ⎯

(i) on summary conviction to a fine of $50,000 or to
imprisonment for two years or to both;

(ii) on conviction on indictment to a fine of $100,000 or to
imprisonment for four years or to both.

(2) It shall be a defence for a person charged with an offence
under subsection (1) to prove ⎯

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(a) if an individual, that he had no knowledge of the falsity
or misleading character of the document or information,
and took every reasonable precaution to ensure its
accuracy; and

(b) if not an individual, that every person acting on its
behalf had no such knowledge, and took every such rea-
sonable precaution, as aforesaid.

Offences by companies
73. (1) Where an offence under this Act committed by a company is
proved to have been committed with the consent or connivance of, or to
be attributable to neglect on the part of, any officer of the company, or
any person who was purporting to act in any such capacity, he, as well
as the company, shall be guilty of that offence and be liable to be
proceeded against and punished accordingly unless such person shows
that he took all reasonable steps to avoid the commission of an offence.

(2) Where the affairs of a company are managed by its
members, subsection (1) shall apply in relation to the acts and defaults
of a member in connection with his functions of management as if he
were a director of the company.

Section 452 Criminal Code not to apply
74. (1) Subject to subsection (2), section 452 of the Criminal Code
Act 1907 shall not apply to summary offences under this Act.

(2) No prosecution for a summary offence under this Act shall
be instituted more than three years after the offence was committed.

Repeals
75. The Bermuda Monetary Authority (Collective Investment Scheme
Classification) Regulations 1998 are repealed (‘repealed provisions’).

Transitionals
76. (1) Notwithstanding the requirements for authorisation under
Part II of this Act, every fund approved under the repealed provisions
shall on the commencement of this Act be authorised and classified as
follows —

Classification under repealed
provisions

Reclassification under this Act

Bermuda Standard Scheme Standard Scheme

Bermuda Institutional Scheme Institutional Scheme



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(2) Where the approval of a fund for classification under the
repealed provisions was subject to conditions imposed on its
classification, such conditions shall continue to apply to the fund.

(3) The Authority shall enter particulars of such authorisation
in the register established under section 16.

(4) Subject to this section, upon the registration of such
authorisation, the provisions of this Act shall apply to such fund as it
applies to funds authorised under section 13 pursuant to an application
made under section 12.

(5) Every fund exempted by or under regulation 3A of the
repealed provisions shall on the commencement of this Act be exempted
under this Act, and the Authority shall enter particulars of such
exemption in the register established under section 16.

(6) Upon the registration of such exemption, the provisions of
this Act shall apply to such fund as if it applies to funds exempted under
section 7 pursuant to an application made under section 8.

(7) The operator of a fund to which subsections (1) and (5)
apply may, within a period of 6 months from the date of commencement
of this Part, apply to the Authority for a change of classification.

(8) Sections 13(5) and (6) apply to an application under
subsection (7) as they apply to an application under section 13(4).

(9) Where an application is made under subsection (7) no fee
shall be payable under section 17.

(10) A company which, on the day of commencement of this
Part, is carrying on fund administration business may continue to carry
on such business without a licence under Part III of this Act ⎯

(a) for a period not exceeding twelve months beginning with
that date; and

(b) if within that period application is made for a licence,
until that application is disposed of or withdrawn.

Consequential amendments
77. (1) The Bermuda Monetary Act 1969 is amended —

(a) by repealing sections 1(2)(a), 1(3) and 29(1)(ca);

(b) in section 21(1)(d), by deleting “collective investment
schemes” and substituting “investment funds as defined
in section 2 of the Investment Funds Act 2006”;

(c) in the Third Schedule, by inserting the following two
entries —

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(i) “Investment funds as defined in section 2 of the
Investment Funds Act 2006”;

(ii) “Fund administrators as defined in section 2 of
the Investment Funds Act 2006”;

(d) in the Fourth Schedule —

(i) by repealing paragraphs (1) and (2) under the
heading “Bermuda Monetary Authority Act
1969”;

(ii) by inserting the following new item in its
alphabetical place —

“Investment Funds Act 2006
Application fee authorisation (all
funds)


$ 750.00

Reclassification fee (all funds) $ 750.00

Annual fee –

Standard fund $1,250.00

Administered fund $ 750.00

Institutional fund $ 750.00

Application fee exempted funds $ 500.00

Annual fee exempted funds $ 500.00

Application fee fund administrator’s
licence


$7,500.00

Annual fee (fund administrator) $7,500.00”.

(2) The Investment Business Act 2003 is amended in the First
Schedule, Part I, by deleting “unit trust scheme within the meaning of
the Stamp Duties Act 1976” and substituting “investment fund as
defined in section 2 of the Investment Funds Act 2006”;

(3) The Trusts (Regulation of Trust Business) Exemption Order
2002 is amended —

(a) in paragraph 7(2)(c), by deleting “collective investment
scheme approved by the Authority under the Bermuda
Monetary Authority (Collective Investment Scheme
Classificiation) Regulations 1998” and substituting
“investment fund authorised under the Investment
Funds Act 2006”;

(b) in paragraph 7(2)(d), by deleting “collective investment
scheme exempted under regulation 3(2) or 3A of the

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Bermuda Monetary Authority (Collective Investment
Scheme Classification) Regulations 1998” and
substituting “investment fund exempted under section 7
of the Investment Funds Act 2006”.

SCHEDULE (section 43)
MINIMUM CRITERIA FOR LICENSING

Controllers and officers to be fit and proper persons
1. (1) Every person who is, or is to be a controller or officer of the
licensed fund administrator is a fit and proper person to hold the
particular position which he holds or is to hold.

(2) In determining whether a person is a fit and proper person
to hold any particular position, regard shall be had to his probity, to his
competence and soundness of judgement for fulfilling the responsibilities
of that position, to the diligence with which he is fulfilling or likely to
fulfil those responsibilities.

(3) Without prejudice to the generality of the foregoing
provisions, regard may be had to the previous conduct and activities in
business or financial matters of the person in question and, in
particular, to any evidence that he has—

(a) committed any offence involving fraud or other
dishonesty or violence;

(b) contravened any provision made by or under any
enactment appearing to the Authority to be designed for
protecting members of the public against financial loss
due to dishonesty, incompetence or malpractice by
persons concerned in the provision of banking,
insurance, investment or other financial services or the
management of companies or against financial loss due
to the conduct of discharged or undischarged bankrupts;

(c) engaged in any business practices appearing to the
Authority to be deceitful or oppressive or otherwise
improper (whether lawful or not) or which otherwise
reflect discredit on his method of conducting business;

(d) engaged in or has been associated with any other
business practices or otherwise conducted himself in
such a way as to cast doubt on his competence and
soundness of judgement.

Business to be conducted in prudent manner
2. [1) The licensed fund administrator conducts, or, in the case of
a fund administrator which is not yet carrying on fund administration,
will conduct its business in a prudent manner.

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(2) In determining whether a licensed fund administrator is
conducting its business in a prudent manner, the Authority shall take
into account any failure by the licensed fund administrator to comply
with the provisions of this Act, other provisions of law and any code of
conduct.

(3) A licensed fund administrator shall not be regarded as
conducting its business in a prudent manner unless it maintains or, as
the case may be, will maintain minimum net assets of $50,000.

(4) A licensed fund administrator shall not be regarded as
conducting its business in a prudent manner unless it makes or, as the
case may be, will maintain adequate accounting and other records of its
business and adequate systems of control of its business and records.

(5) A licensed fund administrator shall not be regarded as
conducting its business in a prudent manner unless it has effected a
policy of insurance to cover risks inherent in the operation of its
business of an amount commensurate with the nature and scale of its
administrator’s operations.

(6) Subparagraphs (2) to (5) are without prejudice to the
generality of subparagraph (1).