Deposit Insurance Act 2011
FA E R
N
AT F
TQUO U
BERMUDA
DEPOSIT INSURANCE ACT 2011
2011 : 36
TABLE OF CONTENTS
PART 1
PRELIMINARY
Citation
Interpretation
Meaning of “insured deposit base” and “relevant insured deposits”
PART 2
BERMUDA DEPOSIT INSURANCE CORPORATION
Establishment of the Bermuda Deposit Insurance Corporation
Objects, functions and powers of BDIC
Appointment of board of directors
Salaries, fees and allowances payable to Chairman and directors
Appointment of Chief Executive Officer, officers and employees, etc.
Rules by BDIC
PART 3
DEPOSIT INSURANCE SCHEME
Establishment of Deposit Insurance Scheme
Membership of Scheme
PART 4
DEPOSIT INSURANCE FUND
Establishment of Deposit Insurance Fund
Expenditure of moneys of Fund
Investment
PART 5
PREMIUMS
1
2
3
4
5
6
7
8
9
10
11
12
13
14
1
DEPOSIT INSURANCE ACT 2011
Premium contributions payable by Scheme members
Determination of premium rates and premium contributions
Notice of payment of premium contribution
Additional premium contributions where Fund insufficient to pay compensation
Payment of premium contributions and late payment fees
Refund of premium contributions paid in excess
Re-computation of premium contributions
Disclosure of information relating to premium contributions
PART 6
COMPENSATION
Occurrence of events precipitating payment of compensation
Entitlement to compensation
Deposits in own right and joint accounts
Restrictions on entitlement to compensation
Computation and method of payment of compensation
Subrogation
Recovery of compensation paid in excess or wrongly paid
PART 7
OFFENCES
Offences committed by bodies corporate
False statements regarding membership and insured deposits
Offence by officer
Duty not to furnish false information to BDIC
PART 8
FINANCIAL AND AUDIT PROVISIONS
Financial provisions with respect to BDIC
Annual report of BDIC
Annual estimates
Reporting to Minister
PART 9
MISCELLANEOUS
Protection from personal liability
Restricted information
Disclosure for facilitating the discharge of functions of the BDIC
Disclosure for facilitating the discharge of functions by other authorities
Power to require production of documents
Insurance Act not to apply
Commencement
SCHEDULE 1
Board of Directors
SCHEDULE 2
Financial Provisions with Respect to BDIC
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
2
DEPOSIT INSURANCE ACT 2011
WHEREAS it is expedient to make provision to promote stability in Bermuda’s
financial system and economy by protecting insured depositors through prompt payment
of compensation in the event of bank failure;
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:
PART 1
PRELIMINARY
Citation
This Act may be cited as the Deposit Insurance Act 2011.
Interpretation
In this Act, unless the context otherwise requires—
“appointed day” means the date or dates of the coming into operation of the provisions of
this Act as provided in section 44;
“appointed director” means a director appointed by the Minister under section 6(2);
“Authority” means the Bermuda Monetary Authority established under section 2 of the
Bermuda Monetary Authority Act 1969;
“bank” means an institution that holds a banking licence or a deposit company licence issued
under section 14 of the Banks and Deposit Companies Act 1999 ;
“BDIC” means the Bermuda Deposit Insurance Corporation established under section 4;
“books” includes any record, register, document or other record of information, and any
account or accounting record, however compiled, recorded or stored, whether in written
or printed form or on microfilm or in electronic form or otherwise;
“Chief Executive Officer” means the Chief Executive Officer of the BDIC appointed under
section 8 and includes any person acting in that capacity;
“Chairman” means the Chairman of the board of directors of the BDIC appointed by the
Minister under section 6;
“client account” in relation to a depositor, means an account maintained by the depositor
with a Scheme member for the purpose of holding moneys held by the depositor for a
client of the depositor, whether or not other moneys may be held in the account;
“credit union” means a body corporate licensed as a credit unions under section 9 of the
Credit Union Act 2010;
“deposit” has the meaning given in section 3 of the Banks and Deposit Companies Act 1999;
“depositor” means any person who is entitled to repayment of a deposit, whether or not the
deposit is made by him;
1
2 (1)
3
DEPOSIT INSURANCE ACT 2011
“effective date” means the date appointed by the Minister under section 15(3);
“Fund” means the Deposit Insurance Fund established under section 12;
“insured deposit” has the meaning as specified in subsection (2);
“insured deposit base” has the meaning given in section 3;
“insured depositor” means any of the following depositors—
an individual;
an individual who places a deposit in an account with a Scheme member in the
name of a partnership, an unincorporated association or sole proprietorship;
a charitable organisation as defined in section 1 of the Charities Act 1978, which is
registered under section 4 of that Act;
a company that is registered in the Register of Small Businesses maintained by the
Bermuda Economic Development Corporation under the Bermuda Economic
Development Corporation Act 1980; and
such other person or class of persons as may be prescribed;
“investment” has the meaning given in section 3(1)(a) of the Investment Business Act 2003;
“liquidator” means a liquidator appointed under section 170 of the Companies Act 1981;
“Minister” means the Minister of Finance;
“officer” in relation to a body corporate, means any director, senior executive, secretary or
other similar officer of the body corporate and includes any person purporting to act in
any such capacity;
“premium year”, in relation to the determination and payment of premium contributions,
means such period as may be prescribed as a premium year under section 16(3);
“prescribed” means prescribed in rules made by the BDIC under section 9;
“quantification date” means—
the date on which a Scheme member is wound up; or
where a Scheme member is not wound up, the date on which the notice of payment
of compensation is published in the Gazette under section 23(2);
“relevant insured deposits” has the meaning given in section 3(2);
“Scheme” means the Deposit Insurance Scheme established under section 10;
“Scheme member” means a member of the Scheme.
In this Act, “insured deposit” means—
any of the following deposits in Bermuda Dollars, including any accrued interest for
each such deposits, placed with a Scheme member in any of its branches in
Bermuda—
(a)
(b)
(c)
(d)
(e)
(a)
(b)
(2)
(a)
4
DEPOSIT INSURANCE ACT 2011
a deposit in a savings account;
a deposit in a fixed deposit account;
a deposit in a current account; and
a deposit in a credit union members’s share account;
any other type of moneys placed with a Scheme member as may be prescribed,
but does not include—
any deposit which is pledged, charged or secured as collateral; and
in a case where there is a contractual set-off agreement between a Scheme
member and a depositor, any deposit or part thereof placed with the Scheme
member—
which is set aside in respect of any debt owing by the depositor to that
Scheme member; and
which, after it has been set aside, cannot be withdrawn by the depositor
unless and until the debt is fully paid up.
[“Insured depositor” definition updated in paragraph (d) after Royal Assent to refer to
“Bermuda Economic Development Corporation” made under the Attorney-General’s powers to update
the legislative database set out in the Computerization and Revision of Laws Act 1989 s. 6(2)]
Meaning of “insured deposit base” and “relevant insured deposits”
In this Act, “insured deposit base”, in relation to a Scheme member, means the
aggregate of the amount of the relevant insured deposits of all the insured depositors of the Scheme
member.
For the purposes of subsection (1), “relevant insured deposits”, in relation to an insured
depositor of a Scheme member, means the aggregate of the amount of any insured deposits placed
with the Scheme member and held by that insured depositor in his own right or in his own right jointly
with one or more persons in a joint account.
For the purposes of subsection (2)—
a reference to an insured deposit includes a reference to part of the insured
deposit; and
where an insured depositor holds an insured deposit in his own right jointly with
one or more depositors in a joint account, each of the depositors, whether or not
he is an insured depositor, shall be deemed to have an equal share in the insured
deposit unless there is an express provision to the contrary in the books of the
Scheme member.
(i)
(ii)
(iii)
(iv)
(b)
(i)
(ii)
(A)
(B)
3 (1)
(2)
(3)
(a)
(b)
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DEPOSIT INSURANCE ACT 2011
PART 2
BERMUDA DEPOSIT INSURANCE CORPORATION
Establishment of the Bermuda Deposit Insurance Corporation
There is established a body corporate to be known as the Bermuda Deposit
Insurance Corporation (‘BDIC’) .
The BDIC has perpetual succession and a common seal and may sue and be
sued in its corporate name.
[Section 4 effective 31 December 2011]
Objects, functions and powers of BDIC
Subject to the provisions of this Act, the objects of the BDIC shall be—
to administer the Scheme; and
to administer and manage the Fund.
Without prejudice to the generality of subsection (1), the functions of the BDIC shall
include the following—
to collect premium contributions levied on Scheme members;
to make prompt payments of compensation in respect of insured deposits to
insured depositors out of the Fund after the BDIC has determined the eligibility and
entitlement of the depositors;
to make interim payments of compensation out of the Fund to insured depositors
of such amounts as the BDIC considers appropriate;
to claim from a failed Scheme member for reimbursement of the amount of
compensation paid to the insured depositors concerned out of the Fund, together
with any interest accrued thereon;
to claim payment from the liquidator or provisional liquidator of a failed Scheme
member, out of the assets of the failed Scheme member, for reimbursement of the
amount of compensation paid to the insured depositors concerned out of the Fund,
together with any interest accrued thereon; and
to educate the public about the Scheme.
The BDIC shall have the power to do anything for the purpose of discharging its
functions under this Act or any other statutory provision, or which is incidental or conducive to the
discharge of those functions.
Appointment of board of directors
There shall be a board of directors of the BDIC appointed by the Minister, which
shall consist of—
a Chairman;
4 (1)
(2)
5 (1)
(a)
(b)
(2)
(a)
(b)
(c)
(d)
(e)
(f)
(3)
6 (1)
(a)
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DEPOSIT INSURANCE ACT 2011
the Chief Executive Officer;
the Chief Executive Officer of the Authority;
the officer of the Bermuda Monetary Authority responsible for the
supervision of Scheme members;
the Financial Secretary;
not less than two but not more than four other directors.
The Minister shall appoint the Chairman and the directors referred to in
subsection (1)(f) from amongst persons with proven experience in banking or financial
services.
Schedule 1 shall have effect with respect to the tenure and qualifications of
appointed directors and with respect to the procedure for meetings of the board.
[Section 6 effective 31 December 2011]
Salaries, fees and allowances payable to Chairman and directors
There shall be paid to the Chairman and appointed directors out of the Fund such
salaries, fees and allowances as the Minister may, from time to time, determine.
[Section 7 effective 31 December 2011]
Appointment of Chief Executive Officer, officers and employees, etc.
The board shall appoint a Chief Executive Officer on such terms and conditions
as the board may determine.
The Chief Executive Officer shall be responsible to the board for the proper
administration and management of the functions and affairs of the BDIC in accordance with
the policies, procedures, and directions established by the board.
The board may appoint any other person to perform the duties of the Chief
Executive Officer whenever the Chief Executive Officer is unable to perform his duties for
any period because of absence from Bermuda, illness or any other reason.
The BDIC may, from time to time, appoint and employ, on such terms and
conditions as it may determine, such other officers, employees, consultants and agents as
may be necessary for the performance of its functions.
[Section 8 effective 31 December 2011]
Rules by BDIC
The BDIC may make rules for any matter relating to its functions under this
Act or for any matter which may be prescribed under this Act.
Without prejudice to the generality of subsection (1), such rules may provide
for—
the manner and method of collection of premium contributions and late
payment fees;
(b)
(c)
(d)
(e)
(f)
(2)
(3)
7
8 (1)
(2)
(3)
(4)
9 (1)
(2)
(a)
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DEPOSIT INSURANCE ACT 2011
the disclosure by Scheme members as to whether their financial products
are insured deposits and the manner of such disclosure;
the particulars to be recorded in, or in respect of, books kept by Scheme
members for the purpose of computing the amount of insured deposits
placed with the Scheme members;
the manner in which compensation is to be paid to insured depositors from
the Fund; and in particular –
the person to whom, or the account into which, payment of
compensation is to be made for the benefit of an insured depositor who
is entitled to compensation under this Act;
the payment of compensation in respect of a depositor holding insured
deposits in different accounts; and
the payment of compensation into an equivalent account with another
Scheme member and for such compensation to be held in that account
in a manner equivalent to the manner of holding of the original insured
deposit;
the collection from any Scheme member by the BDIC of any information in
relation to its insured deposits and insured depositors for the purpose of
computing the premium which is to be paid by Scheme members and the
amount of compensation which is to be paid to the insured depositors.
The BDIC may at any time, amend or revoke the rules in whole or part made
under this section.
Sections 6, 7 and 8 of the Statutory Instruments Act 1977 shall not apply to
Rules made under this section.
The BDIC shall publish the rules in such manner as it considers appropriate
to bring them to the attention of Scheme members and the public.
If the BDIC proposes to make a Rule under this section, it shall publish a draft
of the Rule in such manner as it considers most appropriate for the purpose of bringing it
to the attention of the public.
The draft must be accompanied by—
an explanation of the purpose of the proposed Rule; and
a notice that representation about the proposals may be made to the BDIC
within a specified time being not more than 28 days from the date of
publication.
Before making the proposed Rule the BDIC must have regard to any
representations made to it in accordance with subsection (7).
[Section 9 effective 31 December 2011]
(b)
(c)
(d)
(i)
(ii)
(iii)
(e)
(3)
(4)
(5)
(6)
(7)
(a)
(b)
(8)
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DEPOSIT INSURANCE ACT 2011
PART 3
DEPOSIT INSURANCE SCHEME
Establishment of Deposit Insurance Scheme
There shall be established a scheme to be called the Deposit Insurance Scheme for the
benefit of insured depositors in respect of their insured deposits placed with Scheme members.
The object of the Scheme is to provide for compensation payable from the Fund to
insured depositors, in accordance with this Act and Rules, in respect of their insured deposits placed
with Scheme members.
The Scheme shall be administered by the BDIC in accordance with this Act.
Membership of Scheme
Every bank and every credit union shall be a Scheme member as from the date as
provided in subsection (2) with respect to a bank, and as from the date as provided in subsection (3)
with respect to a credit union.
Every bank that is licensed by the Authority—
immediately before the appointed day, shall be deemed to be a Scheme member
from the appointed day; or
on or after the appointed day, shall be a Scheme member from the date on which
its licence is granted.
Every credit union that is licensed by the Authority—
immediately before the appointed day shall be deemed to be a Scheme Member
from the date on which its licence is granted; or
on or after the appointed day, shall be a Scheme member from the date on which
its licence is granted.
PART 4
DEPOSIT INSURANCE FUND
Establishment of Deposit Insurance Fund
There shall be a fund, to be called the Deposit Insurance Fund (the Fund), which shall
be controlled and administered by the BDIC.
The Fund shall consist of—
all premium contributions and late payment fees paid by Scheme members;
all moneys borrowed by the BDIC for the purpose of performing its functions under
this Act;
all moneys recovered by the BDIC from, or out of the assets of, failed Scheme
members;
10 (1)
(2)
(3)
11 (1)
(2)
(a)
(b)
(3)
(a)
(b)
12 (1)
(2)
(a)
(b)
(c)
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DEPOSIT INSURANCE ACT 2011
any interest, dividend and other income derived from the investment of the moneys
in the Fund;
all such sums as may be appropriated by the Legislature for the purposes of the
BDIC; and
all other moneys lawfully paid into the Fund.
The Fund shall be used for the objects and purposes of the Scheme set out in this Act.
Expenditure of moneys of Fund
In carrying out the objects of the Scheme, the BDIC shall pay out of the Fund as required
and at such time as the BDIC considers proper—
compensation to insured depositors in accordance with the provisions of this Act;
all expenses incurred in or incidental to—
the establishment and maintenance of the Scheme;
the administration and management of the Fund;
the administration and management of the BDIC and the performance of the
duties and functions of the BDIC under this Act; and
the conduct of any investigations by the BDIC for the purpose of determining
the eligibility and entitlement of insured depositors to compensation;
any fees payable to consultants or agents appointed by the BDIC for the purposes
of this Act; and
all other moneys payable out of the Fund in accordance with this Act.
Investment
The BDIC may invest any moneys in the Fund in one or more of the following—
securities issued or guaranteed by the government of the country of issue being a
country whose currency is freely convertible;
securities issued or guaranteed by the International Bank for Reconstruction and
Development or any other international organisation recognised as such by the
Minister by Order;
securities denominated in a freely convertible currency issued by a government
sponsored enterprise recognised by the Minister by Order ;
US dollar deposits with overseas commercial banks;
securities issued by the Government of Bermuda denominated in a freely
convertible currency to an amount not exceeding 5% of the value of the Fund;
such other investments as it considers appropriate, with the objects of capital
preservation and maintenance of liquidity.
The BDIC shall not invest any moneys in—
(d)
(e)
(f)
(3)
13
(a)
(b)
(i)
(ii)
(iii)
(iv)
(c)
(d)
14 (1)
(a)
(b)
(c)
(d)
(e)
(f)
(2)
10
DEPOSIT INSURANCE ACT 2011
securities denominated in Bermuda dollars;
balances and money with any Scheme member at call (other than monies held for
operational expenses of the BDIC); or
securities issued by a corporation established by statute in Bermuda.
The BDIC may delegate, on such conditions or restrictions as it thinks fit, all or any of
its powers and functions under subsection (1) to any employee or agent as it may appoint.
In this section “freely convertible” in relation to any currency means freely convertible,
in the hands of a non-resident holder of the currency, into gold or any other currency.
Sections 6, 7 and 8 of the Statutory Instruments Act 1977 shall not apply to an Order
made under subsection (1)(b).
PART 5
PREMIUMS
Premium contributions payable by Scheme members
Every Scheme member shall, from the effective date, pay a premium contribution for
any premium year or part thereof in respect of the insured deposits placed with the Scheme member.
The premium year shall be such period as may be prescribed.
For the purposes of this Act, the Minister shall by notice published in the Gazette,
appoint a date to be the effective date.
Determination of premium rates and premium contributions
The BDIC shall assess and determine the premium rates for the purposes of computing
the premium contributions payable by Scheme members.
The BDIC shall, on the basis of the premium rates determined under subsection (1) and
the insured deposit base of a Scheme member, compute the amount of premium contribution payable
by the Scheme member for any premium year or part thereof.
For the purposes of assessing and determining the premium rates and computing the
amounts of premium contributions payable, the BDIC may prescribe all or any of the following
matters—
the establishment of a system of classifying Scheme members into different
categories;
the criteria and procedure for determining the category in which a Scheme member
is to be classified;
the premium rate applicable to each category of Scheme members;
the manner in which the premium rate for each category of Scheme members is
to be determined;
flat rate premium contributions payable;
(a)
(b)
(c)
(3)
(4)
(5)
15 (1)
(2)
(3)
16 (1)
(2)
(3)
(a)
(b)
(c)
(d)
(e)
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DEPOSIT INSURANCE ACT 2011
the minimum premium contributions payable;
the manner in which the amount of premium contribution for each category of
Scheme members is to be determined;
the computation of premium contributions on a pro rata basis where a bank
becomes a Scheme member at any time during a premium year;
the size of the Fund;
such other matters as the BDIC considers necessary.
Rules made pursuant to or dealing with the matters referred to in subsection (3) (c) or
(d) may provide for different premium rates for different categories of Scheme members.
Notice of payment of premium contribution
The BDIC shall, within such time as may be prescribed in the rules, give the Scheme member
notice in writing of the—
amount of premium contribution that the Scheme member is required to pay under
the Scheme for that premium year or part thereof; and
date by which the premium contributions are to be paid.
Additional premium contributions where Fund insufficient to pay compensation
Where the Fund is insufficient to pay any compensation due to insured depositors under
this Act, the BDIC may determine—
that Scheme members shall be required to pay additional premium contributions
for any premium year or part thereof; and
the premium rate or rates for the purposes of computing the additional premium
contributions.
Where a determination is made under subsection (1)—
the BDIC shall, as soon as practicable, compute the additional premium
contributions payable by Scheme members for that premium year or part thereof;
and
the BDIC shall, give notice in writing to every Scheme member of the additional
premium contribution that the Scheme member is required to pay for that premium
year or part thereof and the date by which the additional premium contribution
shall be paid.
A Scheme member shall not be required to pay additional premium contribution for any
premium year exceeding 0.5% of the insured deposit base of the Scheme member.
For the purposes of subsection (3), the insured deposit base of a Scheme member shall
be determined on the date prescribed by the BDIC for computing the amounts of premium
contributions payable by Scheme members.
(f)
(g)
(h)
(i)
(j)
(4)
17
(a)
(b)
18 (1)
(a)
(b)
(2)
(a)
(b)
(3)
(4)
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DEPOSIT INSURANCE ACT 2011
Payment of premium contributions and late payment fees
Where a Scheme member is given notice in writing to pay a premium contribution under
section 17 or an additional premium contribution under section 18(2) for any premium year or part
thereof, the Scheme member shall pay to the BDIC—
in the case of the premium contribution, on or before the prescribed date of
payment; and
in the case of the additional premium contribution, on or before the date of
payment specified in the notice,
the amount of premium contribution or additional premium contribution, as the case may be, that
the Scheme member is required to pay for that premium year or part thereof.
Subject to subsection (3), if a Scheme member fails to pay the premium contribution
or additional premium contribution or any part thereof in contravention of subsection (1)—
the BDIC may, by notice in writing, impose on the Scheme member such late
payment fee as the BDIC may in the rules determine; and
the Scheme member shall pay to the BDIC the late payment fee together with the
unpaid premium contribution or additional premium contribution, as the case may
be, on or before the date of payment specified in the notice.
The late payment fee referred to in subsection (2) shall not exceed the amount of
premium contribution or additional premium contribution, as the case may be, owing by the Scheme
member.
The amount of premium contribution or additional premium contribution owing by the
Scheme member and the late payment fee shall be paid in such manner as may be prescribed.
Without prejudice to any other remedy, any premium contribution, additional premium
contribution or late payment fee payable under this Act shall be recoverable as a debt due to the
BDIC by the Scheme member.
Where the BDIC has commenced any legal proceedings in a court to recover a premium
contribution, an additional premium contribution or a late payment fee from a Scheme member, the
BDIC shall be entitled to claim costs on a full indemnity basis from that Scheme member.
Refund of premium contributions paid in excess
Where it appears to the BDIC that a Scheme member has a paid premium contribution in
excess of the amount payable under this Act, the BDIC shall refund to the Scheme member the
amount of premium contribution paid in excess.
Re-computation of premium contributions
Where it appears to the BDIC that the premium contribution for any premium year or
part thereof—
computed under section 16(2) and notified by the BDIC under section 17; or
in respect of which a Scheme member has been required to pay under section
19(1),
19 (1)
(a)
(b)
(2)
(a)
(b)
(3)
(4)
(5)
(6)
20
21 (1)
(a)
(b)
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DEPOSIT INSURANCE ACT 2011
is of an amount less than that which ought to have been computed, imposed or paid, as the case
may be, the BDIC may within the same premium year re-compute such amount of premium
contribution which ought to have been computed, imposed or paid, as the case may be, under this
Act.
Sections 19 and 20 shall apply, with the necessary modifications, to any amount of
premium contribution re-computed under subsection (1) and the recovery of any shortfall in premium
contribution upon a re-computation under that subsection—
as if the reference to premium contribution were a reference to the difference
between the amount of premium contribution as re-computed and the amount of
premium contribution that was originally computed, imposed or paid, as the case
may be, under this Act; and
the reference in section 19(1)(a) to the “prescribed date of payment” shall be read
as a reference to the date of payment specified in the notice.
Disclosure of information relating to premium contributions
Subject to subsections (2) and (3), no Scheme member or officer of any Scheme
member shall disclose to any person—
the premium rate applicable to the Scheme member;
the category in which the Scheme member is classified pursuant to section 16(3);
where the system of classifying a Scheme member incorporates a rating of the
Scheme member based on the assessment by the BDIC of the risks arising from
the activities of the Scheme member, the rating of the Scheme member; and
any information which if disclosed, would enable any of the information referred
to in paragraph (a), (b) or (c) to be identified or deduced.
Notwithstanding subsection (1), a Scheme member or an officer of a Scheme member
may disclose to—
any director or officer of the Scheme member;
the parent company or supervisory authority of the parent of the Scheme member;
an affiliated company (within the meaning of section 86(3) of the Companies Act
1981) of the Scheme member;
the Scheme members auditors, attorneys or other professional advisers; or
such other person or class of persons as the BDIC may approve,
any of the matters referred to in subsection (1) where such disclosure is necessary for the
performance of the duties of the person referred to in paragraph (a), (b) (c), (d) or (e), as the case
may be.
No person to whom the Scheme member or officer of the Scheme member has disclosed
information pursuant to subsection (2) shall disclose that information to any other person except as
approved by the BDIC.
(2)
(a)
(b)
22 (1)
(a)
(b)
(c)
(d)
(2)
(a)
(b)
(c)
(d)
(e)
(3)
14
DEPOSIT INSURANCE ACT 2011
Any person who contravenes subsection (1) or (3) shall be guilty of an offence and be
liable on summary conviction to a fine of $50,000 or to imprisonment for 12 months or to both.
PART 6
COMPENSATION
Occurrence of events precipitating payment of compensation
Where, on or after the effective date—
an order is made by a court in Bermuda or elsewhere to wind up a Scheme member;
or
the BDIC, after consulting with the Authority, is of the opinion that a Scheme
member is insolvent, or that it is unable to meet its obligations as they fall due,
the BDIC may determine that compensation shall be paid out of the Fund to the insured depositors
of the Scheme member in accordance with this Act.
The BDIC shall, as soon as practicable after making such a determination, publish a
notice in the Gazette stating that a payment of compensation shall be made out of the Fund.
Entitlement to compensation
Subject to sections 26 and 27, where an insured depositor has one or more insured
deposits placed with a failed Scheme member, which—
the insured depositor holds in his own right;
the insured depositor holds in his own right jointly with one or more other persons
in a joint account; or
a depositor holds in a client account for the insured depositor as the depositor’s
client,
the insured depositor shall be entitled to compensation from the Fund of a specified amount which
shall not exceed $25,000 regardless of the number or amount of insured deposits that the insured
depositor has placed with the failed Scheme member.
For the purposes of this section—
“specified amount” means the amount by which the aggregate amount, as at the
quantification date, of insured deposits which the insured depositor has placed with
the failed Scheme member exceeds the aggregate amount, as at the quantification
date, of liabilities of the insured depositor to that failed Scheme member in respect
of which a right of set-off would have existed had a winding-up order been made
in respect of the failed Scheme member; and
in determining the amount of liabilities of the insured depositor to the failed Scheme
member, the same rules shall apply with regard to future and contingent liabilities
as are in force for the time being under the law relating to bankruptcy in relation
(4)
23 (1)
(a)
(b)
(2)
24 (1)
(a)
(b)
(c)
(2)
(a)
(b)
15
DEPOSIT INSURANCE ACT 2011
to the estates of persons adjudged bankrupt, as if the failed Scheme member were
a person so adjudged.
Deposits in own right and joint accounts
Where an insured depositor holds an insured deposit in his own right, the insured
depositor is entitled, in respect of the insured deposit as at the quantification date, to compensation
from the Fund.
Where there are two or more insured depositors in respect of any insured deposit, each
of those insured depositors is entitled, in respect of his share in the insured deposit as at the
quantification date, to compensation from the Fund.
For the purposes of determining the share of an insured depositor in an insured deposit
under subsection (2), each depositor holding such an insured deposit, whether or not he is an insured
depositor, shall be deemed to have an equal share in the insured deposit unless there is an express
provision to the contrary in the books of the failed Scheme member.
For the purpose of this section—
any insured deposit of a deceased person held in an estate account shall be treated
as an insured deposit held by the deceased person in his own right; and
subsection (3) does not affect any rights as between the depositors themselves.
Restrictions on entitlement to compensation
Where the BDIC has paid an insured depositor the full amount of compensation payable to
the insured depositor in respect of his insured deposits in accordance with this Act, no other person
is entitled, in respect of the insured deposits, to compensation under this Act.
Computation and method of payment of compensation
The BDIC shall compute the amount of compensation due to an insured depositor in
respect of his insured deposits placed with a failed Scheme member in accordance with this Act.
In determining the eligibility and entitlement of an insured depositor to compensation
and computing the amount of compensation due to an insured depositor, the BDIC is entitled to rely
on the books of the failed Scheme member and any other books which, in the opinion of the BDIC,
are relevant for such computation.
The BDIC shall pay the compensation in such form and manner as may be prescribed.
Subrogation
On payment out of the Fund of any compensation under this Act to, or for the benefit
of, any insured depositor in respect of his insured deposits, the BDIC shall be subrogated to the extent
of such payment to all the rights and remedies of—
the insured depositor;
the person who received the compensation on behalf of the insured depositor; or
in the case where payment is made to an insured depositor who is a client in a
client account, the depositor who held the insured deposit in that client account,
25 (1)
(2)
(3)
(4)
(a)
(b)
26
27 (1)
(2)
(3)
28 (1)
(a)
(b)
(c)
16
DEPOSIT INSURANCE ACT 2011
as the case may be.
Such rights and remedies in respect of the insured deposit shall have priority over—
the rights and remedies of the insured depositor, the person who received the
compensation on behalf of the insured depositor or the depositor of a client
account, as the case may be, in relation to that insured deposit; and
the rights and remedies of any person who is subrogated, whether or not before
the BDIC’s subrogation, to the rights and remedies of any of the persons referred
to in paragraphs (a), (b) and (c) of subsection (1) in relation to that insured deposit,
and may maintain an action in respect of those rights and remedies in the name of the person referred
to in paragraphs (a), (b) or (c) of subsection (1), as the case may be, or in the name of the BDIC.
The persons referred to in paragraphs (a), (b) and (c) of subsection (1), or any person
who is subrogated, whether or not before the BDIC’s subrogation, to the rights and remedies of those
persons, shall not be entitled to receive any amount from, or out of, the assets of the failed Scheme
member until the BDIC has been reimbursed in full the amount of compensation paid to those
persons.
The BDIC shall be entitled—
in the case where the failed Scheme member is wound up, to be reimbursed out
of the assets of the failed Scheme member for the expenses incurred in—
the payment of any compensation to insured depositors; and
the lodging of a claim with the liquidator of the failed Scheme member for any
compensation that has been paid out to insured depositors; or
in any other case, to be reimbursed by the failed Scheme member or the provisional
liquidator of the failed Scheme member, as the case may be, for the expenses
incurred in—
the payment of any compensation to insured depositors; and
where a claim has been lodged with the provisional liquidator of the failed
Scheme member for any compensation that has been paid out to insured
depositors, the lodging of the claim.
Recovery of compensation paid in excess or wrongly paid
If—
any compensation paid to, or for the benefit of, an insured depositor out of the
Fund is in excess of what ought to have been paid to the insured depositor under
this Act; or
any compensation is wrongly paid to any person,
the BDIC may recover the amount paid in excess or wrongly paid from the person who received the
compensation paid out by the BDIC in such manner and within such period as may be specified by
the BDIC to that person.
(2)
(a)
(b)
(3)
(4)
(a)
(i)
(ii)
(b)
(i)
(ii)
29 (1)
(a)
(b)
17
DEPOSIT INSURANCE ACT 2011
Without prejudice to any other remedy, any amount paid in excess or wrongly paid to
any person shall be recoverable as a debt due to the BDIC by that person.
Upon the recovery of any amount paid in excess or wrongly paid from any person under
this section, the BDIC shall pay such amount into the Fund.
PART 7
OFFENCES
Offences committed by bodies corporate
Where an offence under this Act committed by a body corporate is proved—
to have been committed with the consent or connivance of an officer; or
to be attributable to any neglect on his part,
the officer as well as the body corporate shall be guilty of the offence and shall be liable to be
proceeded against and punished accordingly.
Where the affairs of a body corporate 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 body corporate.
False statements regarding membership and insured deposits
No person shall, knowingly or recklessly, make a false or misleading statement as to
whether or not—
any person is a Scheme member; or
any deposit, or other financial product, is an insured deposit.
Any person who contravenes subsection (1) shall, notwithstanding that a contract does
not come into being, be guilty of an offence and shall be liable on summary conviction to a fine of
$50,000 or to imprisonment for 12 months or to both and on conviction on indictment to a fine of
$200,000 or imprisonment for three years, or both.
Offence by officer
Any officer of a Scheme member who fails to take all reasonable steps to secure—
compliance by the Scheme member with any provision of this Act; or
the accuracy and correctness of any statement submitted to the BDIC or such other
person as may be required under this Act,
shall be guilty of an offence and shall be liable on summary conviction to a fine of $50,000 or to
imprisonment for 12 months or to both.
In any proceedings against a person under subsection (1), it shall be a defence for the
person to prove that he had reasonable grounds for believing that another person was charged with
the duty of securing compliance with the requirements of this Act, or with the duty of ensuring that
(2)
(3)
30 (1)
(a)
(b)
(2)
31 (1)
(a)
(b)
(2)
32 (1)
(a)
(b)
(2)
18
DEPOSIT INSURANCE ACT 2011
those statements were accurate and correct, as the case may be, and that that person was competent,
and in a position, to discharge that duty.
Duty not to furnish false information to BDIC
Any person who furnishes the BDIC with any information under or for the purposes of
any provision of this Act shall use due care to ensure that the information is not false or misleading
in any material particular.
Subsection (1) applies only to a requirement in relation to which no other provision of
this Act creates an offence in connection with the furnishing of information.
Any person who contravenes subsection (1) shall be guilty of an offence and shall be
liable on summary conviction to a fine of $50,000 or to imprisonment for 12 months or to both.
PART 8
FINANCIAL AND AUDIT PROVISIONS
Financial provisions with respect to BDIC
The financial provisions set out in the Schedule 2 shall have effect with respect to the BDIC.
Annual report of BDIC
The BDIC shall, as soon as practicable but no later than four months after the end of
each financial year, cause to be prepared and transmitted to the Minister a report dealing generally
with the activities of the BDIC during the preceding financial year.
The BDIC shall cause such report to be published in such manner as it considers
appropriate.
The Minister shall as soon as practicable after receipt of the report and annual statement
of accounts cause a copy to be laid before both Houses of the Legislature.
Annual estimates
The BDIC shall, in every financial year, prepare or cause to be prepared annual
estimates of income and expenditure of the BDIC for the ensuing financial year.
All annual estimates shall be presented to the Minister for his approval.
Reporting to Minister
If the auditor in the course of the performance of his duties as an auditor of the BDIC is
satisfied that—
there has been a serious contravention of any provisions of this Act or that an
offence involving fraud or dishonesty has been committed; or
serious irregularities have occurred, including irregularities that jeopardise the
interests of insured depositors,
the auditor shall immediately report the matter in writing to the Minister.
33 (1)
(2)
(3)
34
35 (1)
(2)
(3)
36 (1)
(2)
37
(a)
(b)
19
DEPOSIT INSURANCE ACT 2011
PART 9
MISCELLANEOUS
Protection from personal liability
No suit or other legal proceedings shall lie against—
the BDIC;
any director, officer, employee or agent of the BDIC; or
any person acting under the direction of the BDIC,
for anything done (including any statement made) or omitted to be done in good faith in—
the exercise or purported exercise of any power under this Act;
the performance or purported performance of any function or duty under this
Act; or
the execution or purported execution of this Act.
Restricted information
Except as provided by sections 40 and 41—
no person who under or for the purposes of this Act receives information relating
to the business or other affairs of any person; and
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.
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.
Any person who discloses information in contravention of this section commits an
offence and is liable—
on summary conviction to a fine of $50,000 and to imprisonment for 12 months or
to both;
on conviction on indictment to a fine of $100,000 or to imprisonment for three years
or to both.
Disclosure for facilitating the discharge of functions of the BDIC
Section 39 does not preclude the disclosure of information in any case in which
disclosure is for the purpose of enabling or assisting the BDIC to discharge its functions under this
Act.
38
(a)
(b)
(c)
(i)
(ii)
(iii)
39 (1)
(a)
(b)
(2)
(3)
(a)
(b)
40 (1)
20
DEPOSIT INSURANCE ACT 2011
Without prejudice to the generality of subsection (1), section 39 does not preclude the
disclosure of information by the BDIC to the auditor of a Scheme member if it appears to the BDIC
that disclosing the information would enable or assist the BDIC to discharge the functions mentioned
in that subsection or would otherwise be in the interests of the depositors.
Disclosure for facilitating the discharge of functions by other authorities
Section 39 does not preclude the disclosure of information to the Minister or the
Authority in any case in which the disclosure is for the purpose of enabling or assisting the Minister
or the Authority as the case may be, to discharge their regulatory functions.
Section 39 does not preclude the disclosure of information—
with a view to the institution of, or otherwise for the purposes of , any criminal
proceedings, whether under this Act or otherwise;
in connection with any other proceedings arising out of this Act.
Power to require production of documents
The BDIC may—
by notice in writing served on a Scheme member 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;
authorise an officer, servant or agent of the BDIC, on producing evidence of his
authority, to require any such Scheme member to provide him forthwith with such
information, or to produce to him forthwith such documents, as he may specify,
being such information or documents as the BDIC may reasonably require for the performance of its
functions under this Act.
Where, by virtue of subsection (1), the BDIC or any officer, servant or agent of the BDIC
has the power to require the production of any documents from a Scheme member, the BDIC 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.
The power under this section to require a Scheme member or other person to produce
any documents includes the power—
if the documents are produced, to take copies of them or extracts from them and
to require that Scheme member or person, or any other person who is a present
or past director, controller or senior executive of, or is or was at any time employed
by or acting as an employee of, the Scheme member in question, to provide an
explanation of any of them; and
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.
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
$20,000 or to imprisonment for six months or to both.
(2)
41 (1)
(2)
(a)
(b)
42 (1)
(a)
(b)
(2)
(3)
(a)
(b)
(4)
21
DEPOSIT INSURANCE ACT 2011
Insurance Act not to apply
The Insurance Act 1978 shall not apply to the BDIC and the Scheme.
Commencement
The appointed day on which the provisions of this Act shall come into operation shall be
such date as the Minister may appoint by notice published in the Gazette, and the Minister may
appoint different days for the coming into operation of different provisions.
43
44
22
DEPOSIT INSURANCE ACT 2011
SCHEDULE 1
(section 6(3))
BOARD OF DIRECTORS
Part 1: Tenure and qualifications for appointment of directors of the board
Terms of Office
1. A director shall hold office for a term of not less than three years and not more than five
years, and shall be eligible for reappointment.
2. The first appointments may be for shorter and different periods of time so as to secure that
appointments expire at different times.
3. A person appointed as a director of the BDIC in place of a person who ceased to hold office
before the end of the term for which he was appointed shall be appointed for the remainder of that
person’s term of office.
4. A person appointed as a director of the BDIC may resign his office by notice in writing to
the Chairman and to the Minister.
5. The BDIC shall cause to be published in the Gazette the name of every person appointed as
a director of the BDIC.
Qualification for appointment
6. (1) A person is disqualified for appointment as a director if—
(a) he is a shareholder controller, a director or an employee of—
(i) any Scheme member; or
(ii) a related company of any Scheme member;
(b) he is a member of either House of the Legislature or a person serving in a
government department in employment in respect of which remuneration is
payable out of money provided from the Consolidated Fund.
(2) In this paragraph—
"related company" has the meaning given in section 6 of the Banks and Deposit
Companies Act 1999;
"shareholder controller" has the meaning given in section 7(5) of the Banks and Deposit
Companies Act 1999;
Removal from office
7. A person appointed as a director shall vacate office if he becomes a person to whom paragraph
6 applies.
23
DEPOSIT INSURANCE ACT 2011
8. The Minister, acting after consultation with the board of directors, may remove a person
from office as a director of the BDIC—
(a) if he is satisfied that such person—
(i) has been absent from three consecutive meetings of the board without the consent
of the Chairman;
(ii) has become bankrupt, that his estate has been sequestered or that he has made an
arrangement with or granted a trust deed for his creditors; or
(iii) is unable or unfit to discharge his functions as a member; or
(b) by giving such person notice of termination of appointment.
Part 2: Procedure for meetings of the board of directors
Powers
9. The board of directors may act notwithstanding the existence of one or more vacancies in
its members or a defect in the appointment of a member.
10. The board of directors may appoint such committees, as it thinks fit.
Meetings
11. (1) The board of directors shall meet as often as necessary or expedient for the due
performance of its functions.
(2) The Chairman may summon a meeting of the board of directors at any time on giving such
notice as in his judgment the circumstances may require.
12. (1) At a meeting of the board of directors, the proceedings shall be regulated as follows—
(a) the quorum shall be four members;
(b) the Chairman shall chair meetings of the board of directors;
(c) if the Chairman is absent from a meeting of the board of directors, the members
present at the meeting shall nominate one of their number to chair the meeting.
(2) If a member of the board of directors has any direct or indirect interest in any dealing or
business with the BDIC—
(a) he shall disclose his interest to the board of directors at the time of the dealing or
business being negotiated or transacted; and
(b) he shall have no vote in relation to the dealing or business, unless the board of
directors has resolved that the interest does not give rise to a conflict of interest.
(3) A member of the board of directors shall have no vote in relation to any question arising
which touches or concerns him.
(4) Subject to subparagraphs (1) to (3), the board of directors shall determine its own procedure.
24
DEPOSIT INSURANCE ACT 2011
SCHEDULE 2
(section 34)
FINANCIAL PROVISIONS WITH RESPECT TO BDIC
Financial year
1. The financial year of the BDIC shall begin on 1 April of every year and end on 31 March of
the following year, except that the first financial year of the BDIC shall begin on the appointed day
and end on 31 March of the following year.
Accounts of BDIC
2. The BDIC shall keep proper accounts and records of its transactions and affairs and shall do
all things necessary to ensure that all payments out of its moneys are properly authorised and
correctly made and that adequate control is maintained over the assets of, or in the custody of, the
BDIC and over the expenditure incurred by the BDIC.
Auditor
3. The accounts of the BDIC shall be audited by the Auditor-General or such other auditor as
may be appointed annually by the Auditor General.
Appointment of auditor
4. A person shall not be qualified for appointment as an auditor under paragraph 3 unless he
is a public accountant who is registered or deemed to be registered under the Institute of Chartered
Accountants of Bermuda Act 1973.
Remuneration of auditor
5. The remuneration of the auditor shall be paid out of the Fund.
Annual financial statements
6. The BDIC shall, as soon as practicable but not later than four months after the close of each
financial year, prepare and submit financial statements in respect of that year to the auditor of the
BDIC.
Duties of auditor
7. The auditor shall in his report state—
(a) whether the financial statements show fairly the financial transactions and the state
of affairs of the BDIC;
(b) whether proper accounting and other records have been kept, including records of
all assets of the BDIC, whether purchased, donated or otherwise;
(c) whether the receipts, expenditure and investment of moneys and the acquisition and
disposal of assets by the BDIC during the financial year were in accordance with the
provisions of this Act; and
(d) such other matters arising from the audit as he considers necessary.
Auditor’s report
8. The auditor shall, as soon as practicable after the accounts have been submitted for audit,
send a report of his audit to the BDIC. He shall also submit such periodical and special reports to the
Minister and to the BDIC as may appear to him to be necessary or as the Minister or the BDIC may
require.
25
DEPOSIT INSURANCE ACT 2011
Powers of auditor
9. (1) The auditor or any person authorised by him shall be entitled at all reasonable times to full
and free access to all accounting and other records relating, directly or indirectly, to the financial
transactions of the BDIC and may make copies of or extracts from any such accounting and other
records.
(2) The auditor or any person authorised by him may require any person to furnish him with
such information in the possession of that person or to which that person has access as the auditor
considers necessary for the purposes of his functions under this Act.
Presentation of audited financial statements and auditor’s report
10. The BDIC shall, as soon as the financial statements have been audited in accordance with the
provisions of this Act, but not later than four months from such audit, cause to be published in such
manner as it considers appropriate the audited financial statements together with the auditor’s
report.
[Assent Date: 10 August 2011]
26
