Part I: Preliminary provisions

This section establishes the foundational definitions and scope of the Act. It defines key terms such as “investment”, “investment business”, and roles like “director”, “controller”, and “senior executive.” It also outlines the criteria for determining parent and subsidiary undertakings and participating interests. The Act applies to individuals and entities conducting investment business in or from Bermuda, whether incorporated locally or abroad.

Part II: The authority

The Bermuda Monetary Authority (BMA) is designated as the regulatory body responsible for overseeing investment business. The BMA’s duties include supervising licensed entities, issuing codes of conduct, and ensuring compliance with prudential standards. It is empowered to publish statements of principles, exempt or modify prudential requirements, and take necessary actions to protect public and client interests. The Minister of Finance may also issue policy directions to the BMA.

Part III: Regulation of investment providers

This extensive section governs the licensing, registration, and supervision of investment providers. It introduces two classes of registered persons—Class A and Class B—and outlines the requirements for obtaining licences or registrations. Class A entities are typically foreign-registered but operate without a physical presence in Bermuda, while Class B entities maintain a principal place of business locally. The Act also addresses the roles of senior representatives, material changes in operations, and the display of licences. Alternative Investment Fund Managers (AIFMs) are subject to specific licensing and compliance requirements under a dedicated chapter.

The supervision of investment providers includes provisions for restricting or revoking licences, issuing directions to safeguard client interests, and handling unsolicited calls. The Act also establishes appeal tribunals for entities aggrieved by regulatory decisions and mandates the preparation of financial statements, annual returns, and quarterly reports. Auditors play a critical role in ensuring compliance, with obligations to report significant findings to the BMA.

Part IV: Regulation of investment exchanges and clearing houses

This part focuses on recognised investment exchanges and clearing houses, exempting them from licensing requirements under certain conditions. It sets out the qualifications for recognition, application procedures, and ongoing obligations, including the preparation of audited financial statements and compliance with prudential standards. BMA retains the power to issue directions, revoke recognition, and enforce compliance through disciplinary measures.

Part V: Restriction on disclosure of information

The Act imposes strict confidentiality requirements on information obtained under its provisions. Disclosure is permitted only under specific circumstances, such as facilitating the functions of the BMA or other regulatory bodies, or in connection with legal proceedings. Unauthorised disclosure is a criminal offence, carrying significant penalties.

Part VI: Miscellaneous and supplemental provisions

This final section addresses offences related to false documentation, corporate liability, and the imposition of civil penalties. It also outlines procedures for serving notices, making regulations, and transitioning from the repealed Investment Business Act 1998. The Act includes schedules detailing the types of investments and activities covered, as well as the minimum criteria for licensing and registration.

In essence, the Bermuda Investment Business Act 2003 establishes a robust regulatory framework to ensure the integrity, transparency, and prudence of investment business activities in Bermuda. It balances the need for regulatory oversight with provisions that support the growth and stability of the financial sector.

Further reading

• Investment Business Act