Investment Funds (Specified Jurisdiction Fund) (Japan) Rules 2012
FA E R
N
AT F
TQUO U
BERMUDA
INVESTMENT FUNDS (SPECIFIED JURISDICTION FUND)
(JAPAN) RULES 2012
BR 43 / 2012
TABLE OF CONTENTS
Citation
Application
Interpretation
Constitution of a fund
Publication of unit prices
Annual and periodical reports
Submission of activity reports
Functions of fund administrator
Functions of custodian
Custodian to supervise sub-custodian
Functions of investment manager
Investment manager may delegate
Standards and principles of financial reports
Minimum information for inclusion in financial statements
Functions of auditor
Concurrence with auditing standards by auditor
Additional audit adherence
Audited financial statements
Consent of auditor to publish report
The Bermuda Monetary Authority, in exercise of the power conferred by section
37 of the Investment Funds Act 2006, as read with paragraph 6 of the Investment Funds
(Specified Jurisdiction Fund) (Japan) Order 2012, makes the following Rules:
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INVESTMENT FUNDS (SPECIFIED JURISDICTION FUND) (JAPAN) RULES
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Citation
These Rules may be cited as the Investment Funds (Specified Jurisdiction Fund)
(Japan) Rules 2012.
Application
These Rules apply to a fund authorised and classified in accordance with paragraph
5 of the Investment Funds (Specified Jurisdiction Fund) (Japan) Order 2012 as a specified
jurisdiction fund for Japan.
Interpretation
In these Rules, unless the context otherwise requires—
“accounting principles” or “GAAP” means generally accepted accounting principles;
“the Act” means the Investment Funds Act 2006;
“fund” means specified jurisdiction fund for Japan;
“registered or principal office” means the registered or principal office of the fund
in Bermuda;
“reporting standards” or “IFRS” means International Financial Reporting
Standards.
Constitution of a fund
The constitution of a fund shall provide for the following matters—
the terms upon which units are issued, including the terms and
circumstances, if any, upon which the rights and restrictions attaching to
the units may be changed; and
the appointment of an auditor.
The constitution of a fund shall be made available for inspection by a
participant or prospective participant of the fund at the fund’s registered or principal office,
or if the fund has a service provider in Bermuda, at the office of the service provider.
Copies of the constitution shall be made available to a participant or
prospective participant on payment of any reasonable costs associated with the making and
forwarding of such copies.
Publication of unit prices
A fund shall ensure that the issue and redemption or repurchase prices for its units
at the most recent issue and redemption or repurchase date is made available on request
without charge at the fund’s registered or principal office, or if the fund has a service
provider in Bermuda, at the office of the service provider.
Annual and periodical reports
A fund shall, within six months of the end of its financial year or within such
other period as may be specified in the fund’s prospectus, prepare and distribute, or cause
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3
4 (1)
(a)
(b)
(2)
(3)
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6 (1)
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INVESTMENT FUNDS (SPECIFIED JURISDICTION FUND) (JAPAN) RULES
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to be prepared and distributed, an annual report to participants of the fund without charge,
which shall include the audited financial statements of the fund.
The operator of a fund may prepare periodical reports in accordance with the
fund’s prospectus and distribute such reports, including interim financial statements, to
participants of the fund.
Submission of activity reports
The operator of a fund shall submit to the Authority, no later than twenty
business days from the last day of each month, a written report on the activities of the fund
for the reporting period.
A report shall contain the following information—
the name of the fund together with all previous names;
the net asset value of each unit held by participants of the fund;
the percentage change in the net asset value of the fund and each unit from
the previous reporting period;
the value of the net assets of the fund;
the number and value of new subscriptions for the reporting period;
the number and value of redemptions or repurchases in the reporting
period; and
the total number of units in issue at the end of the reporting period.
In this Rule, “reporting period” means reporting on a monthly basis.
Functions of fund administrator
The fund administrator shall administer the fund in accordance with—
the Act and these Rules;
the fund’s constitution;
the fund’s prospectus;
the specific contractual arrangements; and
any proper directions given from time to time by the operator—
pursuant to a power conferred on the operator by the fund’s
constitution; and
which is consistent with the provisions of the documents referred to in
subparagraphs (a), (b), (c) and (d).
Where relevant, the fund administrator shall ensure—
that the issue, transfer, conversion and redemption or repurchase of units
of the fund are carried out in accordance with the fund’s constitution,
(2)
7 (1)
(2)
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(3)
8 (1)
(a)
(b)
(c)
(d)
(e)
(i)
(ii)
(2)
(a)
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INVESTMENT FUNDS (SPECIFIED JURISDICTION FUND) (JAPAN) RULES
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prospectus, subscription agreement, and all applicable laws and these
Rules;
that the net asset value of the units and their issue, conversion and
redemption or repurchase prices, are calculated in accordance with the
fund’s constitution, prospectus, and subscription agreement, and that
such prices are made available to participants or potential participants of
the fund;
that the following are available—
the necessary office facilities, equipment, and personnel required to
enable the fund administrator to carry out its functions; and
the general administrative services required by the fund to carry out its
business affairs and to ensure compliance with all applicable laws and
these Rules;
that subject to the Act, these Rules, and the Companies Act 1981,
periodical reports are prepared for participants of the fund in such form as
the operator of a fund may determine;
that the accounts of the fund and financial books and records are
maintained in good order where such accounts, books and records are
required—
by the Act and these Rules;
by the Companies Act 1981;
by any other law; and
by the fund’s constitution, prospectus, and subscription agreement;
except where a separate registrar is appointed, that the register required
by the fund’s constitution is maintained;
except where the fund administrator maintains the register, that the
procedures of the registrar and the directions given to the registrar relating
to the maintenance of the register are effectively monitored; and
that the distribution to the participants of the fund of all dividends, or other
distributions which may from time to time be declared, are paid by the fund
on its units.
A fund administrator shall—
keep a copy of the register at its offices for inspection by participants of the
fund during normal office hours;
prepare, or where a registrar has been appointed, ensure that the registrar
prepares and, if required, seals new certificates and balance certificates on
behalf of the fund;
(b)
(c)
(i)
(ii)
(d)
(e)
(i)
(ii)
(iii)
(iv)
(f)
(g)
(h)
(3)
(a)
(b)
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INVESTMENT FUNDS (SPECIFIED JURISDICTION FUND) (JAPAN) RULES
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ensure that certificates for units in the fund are issued or cancelled in
accordance with the provisions, if any, of the fund’s constitution; and
provide, or where a separate registrar is appointed, ensure that the
registrar provides, such facilities as may from time to time be necessary
with respect to the replacement of certificates or transfer of units of the
fund.
Functions of custodian
A custodian shall, where relevant—
provide for the safekeeping of the certificates and documents of title to
investments of the fund; and
carry out or cause to be carried out such directions of the fund
administrator, investment manager, and the operator in relation to any
investments as may be provided by contract, unless those directions
conflict with the fund’s constitution, prospectus, the subscription
agreement, or applicable laws and these Rules.
A custodian shall be entitled to request from the fund administrator or from
the fund, and the fund administrator or the fund shall provide upon such request, copies
of records and information relating to the following—
the receipt and application of subscription monies for units of the fund;
the issue, conversion, and redemption or repurchase of units of the fund;
the transfer of the net proceeds received on the sale of investments of the
fund;
the application of all capital and income of the fund; and
the calculation in accordance with the fund’s constitution, prospectus, and
subscription agreement, of the net asset value of the units thereof and their
issue, conversion, and redemption or repurchase prices.
Custodian to supervise sub-custodian
A custodian shall maintain an appropriate level of supervision over each sub-
custodian and make necessary periodic enquiries to confirm that each sub-custodian
continues to competently discharge its obligations.
Functions of investment manager
The fund’s investment manager shall—
ensure that the subscription monies received by the fund are applied in
accordance with the fund’s constitution, prospectus, and subscription
agreement;
ensure that on the sale of any assets of the fund the net proceeds of the
sale are remitted to the custodian within reasonable time limits;
(c)
(d)
9 (1)
(a)
(b)
(2)
(a)
(b)
(c)
(d)
(e)
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(a)
(b)
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INVESTMENT FUNDS (SPECIFIED JURISDICTION FUND) (JAPAN) RULES
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ensure that the income of the fund is applied in accordance with the fund’s
constitution, prospectus, and subscription agreement;
ensure that the investment of the assets of the fund is in accordance with
the fund’s investment objectives and within any investment restrictions as
stated in the fund’s constitution, prospectus, and subscription agreement;
and
provide within a reasonable time such information and directions as may
be required to enable the custodian or any sub-custodian to perform its
contractual obligations in respect of the fund.
The investment manager shall deposit with or to the order of the custodian, or
any sub-custodian, all certificates or documents of title to the investments of the fund.
The investment manager shall establish or monitor procedures for the holding
of investments of the fund by the custodian or any sub-custodian.
Except as provided in paragraph (5), the investment manager of a fund shall
not on behalf of such fund—
sell any units short if, as a result of such short sale, the total value of all
units sold short on behalf of such fund would immediately following such
short sale exceed the value of its net assets;
borrow money if, as a result of such borrowing, the aggregate amount of
outstanding borrowings effected on behalf of such fund would immediately
following such borrowing exceed ten per cent of the value of its net assets,
except that—
the limitation on borrowing may be temporarily exceeded in special
situations including, without limitation, a merger of the fund with
another investment fund, or other type of collective investment scheme;
the limitation on borrowing may be exceeded if—
the objective of such fund is to invest all, or substantially all, of
the proceeds of the issue of its units in real property, including
interests in real property; and
the investment manager considers that any borrowing in excess of
such limitation is necessary to ensure the sound management of
the assets of such fund or to protect the interests of the investors
in such fund;
acquire the shares of any one company which is not a fund if, as a result
of such acquisition, the total number of shares of such company carrying
voting rights held by all investment funds managed by the investment
manager would exceed fifty per cent of the total number of all issued and
outstanding shares of such company carrying voting rights;
acquire any investment which is not listed on an appointed stock exchange
or which is not readily realizable if, as a result thereof, the total value of all
(c)
(d)
(e)
(2)
(3)
(4)
(a)
(b)
(i)
(ii)
(A)
(B)
(c)
(d)
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such investments held by such fund would immediately following such
acquisition exceed fifteen per cent of the value of its net assets, provided
that the investment manager shall not be restricted from acquiring any
investment where the method of valuation of such investment is clearly
disclosed in such fund’s prospectus; or
enter into any transactions which are detrimental to the interests of the
fund’s participants or which are contrary to the proper management of the
assets of the fund including, without limitation, transactions which are
intended to benefit the investment manager or third parties other than the
participants in the fund.
Nothing in paragraph (4) shall prevent an investment manager on behalf of a
fund from acquiring all or any shares, units, interests or other investments in any company,
unit trust, partnership or other person where such company, unit trust, partnership or
other person—
is an investment fund or other type of collective investment scheme;
forms part of a master fund or feeder fund or other similar structure or
group of companies or entities; or
is a special purpose entity which directly facilitates the investment
objective or strategy (in whole or in part) of the fund.
Investment manager may delegate
An investment manager may appoint a sub-adviser, or sub-advisers, as it thinks
fit to carry out on its behalf any and all of the obligations of the investment manager, but
the investment manager shall remain responsible to the fund for the performance by such
persons of any function so delegated.
Standards and principles of financial reports
Financial statements and other financial information distributed by or on
behalf of the fund, and financial information used in the determination of net asset value,
shall be prepared in accordance with reporting standards or accounting principles as
specified in the fund’s prospectus.
A fund shall adopt IFRS or appropriate GAAP in preparing its financial
statements, and in making such a determination, the operator of the fund shall consider—
the requirements of any securities authorities or other agencies or
supervisory or regulatory bodies to which the fund is subject;
the jurisdiction in which the majority of participants, or potential
participants, in the fund reside;
the jurisdictions in which the sponsor, promoter and investment manager
are located; and
the proposed business of the fund and the nature of its proposed
investments.
(e)
(5)
(a)
(b)
(c)
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(2)
(a)
(b)
(c)
(d)
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INVESTMENT FUNDS (SPECIFIED JURISDICTION FUND) (JAPAN) RULES
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Minimum information for inclusion in financial statements
The financial statements of a fund shall disclose the following minimum
information—
in relation to the statement of net assets, balance sheet, or statement of
assets and liabilities—
cash and bank balances;
accrued investment income receivable;
amounts receivable on subscriptions for the fund’s units;
receivables in respect of sales of investments;
unamortised organisation costs;
loans and other forms of borrowing;
the amounts payable on redemption or repurchase of the fund’s units;
the amounts payable on distribution; and
net asset value of each investment;
in relation to the statement of operations, or statement of income and
expenses—
investment income by category;
other income;
such other expenses as are material, including amortisation of
organisation costs, auditors’ fees, legal fees, and other professional
fees;
taxes;
net income;
realised gains or losses on investments and foreign currencies, unless
separately disclosed in the statement of changes in net assets or in the
financial position; and
unrealised gains or losses on investments and foreign currencies,
unless separately disclosed in the statement of changes in net assets
or in the financial position;
a statement of material changes in net assets or in financial position of the
fund; and
in relation to the notes to financial statements—
unless the reporting standards have been followed, the jurisdiction
whose accounting principles has been followed in the preparation of the
financial statements;
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(a)
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
(ix)
(b)
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(c)
(d)
(i)
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significant accounting policies, including—
the basis of valuation of investments including the basis of
valuation of unquoted and unlisted investments;
the basis of recognition of investment income;
foreign currency translation policies and disposition of gains or
losses;
the basis of amortisation of organisation costs, if material; and
any other accounting policy adopted to deal with items which are
judged material;
any changes to accounting policies made during the period; and
an analysis of the material contingent liabilities not provided for in the
financial statements.
Functions of auditor
An auditor shall be responsible for determining which auditing standards shall
be applied in his audit and, in making his selection, the auditor shall consider the reporting
standards or accounting principles approved by the fund for the preparation of the financial
statements to be audited.
An auditor shall—
audit the financial statements to be included in an annual report to the
participants of the fund in accordance with the reporting standards or the
applicable accounting principles; and
make a report to the participants in accordance with the reporting
standards or accounting principles, as the case may be.
Concurrence with auditing standards by auditor
An auditor shall consider, in determining whether or not to accept the appointment
as auditor, whether or not he concurs with the choice of reporting standards or applicable
accounting principles to be applied in preparing the financial statements.
Additional audit adherence
An auditor shall, in addition to the specific requirements of these Rules, adhere to
the auditing requirements of any securities exchange or other supervisory or regulatory
bodies to which the fund is subject.
Audited financial statements
Subject to the requirements of the reporting standards or relevant accounting
principles, as the case may be, and those of any relevant securities exchanges or other
supervisory or regulatory bodies, audited financial statements of a fund shall include—
(ii)
(A)
(B)
(C)
(D)
(E)
(iii)
(iv)
15 (1)
(2)
(a)
(b)
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INVESTMENT FUNDS (SPECIFIED JURISDICTION FUND) (JAPAN) RULES
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a statement of net assets, a balance sheet, or a statement of assets and
liabilities;
a statement of operations, or a statement of income and expenses;
a statement of changes in net assets or in the financial position;
a statement of retained earnings or deficit, if appropriate; and
notes to the financial statements containing disclosure as required by—
the reporting standards or the relevant accounting principles;
any securities exchanges or other supervisory or regulatory bodies to
which the fund is subject; and
such further information as is required by the Act, these Rules, the
Companies Act 1981, and any relevant provisions of the fund’s
constitution and prospectus.
Consent of auditor to publish report
A fund shall not publish or distribute any report of the auditor in respect of the
fund without receiving the written consent of the auditor.
Made this 4th day of June 2012
Chairman
Bermuda Monetary Authority
(a)
(b)
(c)
(d)
(e)
(i)
(ii)
(iii)
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