New York (HedgeCo.net) – The Investment Funds Amendment Act 2010 was brought into force on December 22, 2010, making new provisions for the regulation of hedge funds in Bermuda. The changes are designed to strike a balance between securing appropriate protection for investors in Bermuda funds, while not imposing an undue regulatory burden on the hedge fund industry.
Key Changes: Summary
* Definition of Service Provider: The definition of “service provider” has been extended to include auditors appointed to a fund. Auditors are now required to comply with the “fit and proper” tests set out in sections 7 and 14 of the Act.
* Service Provider Disclosure for Exempted Funds: The operator of an exempted fund and its service providers are required to be “fit and proper persons to act as such”. Funds are now required to have a recognized fund administrator, an auditor and a Bermuda resident officer or trustee or resident representative who has access to the books and records of the investment fund. Exempted funds are also required to appoint an investment manager, registrar, custodian and/or prime broker.
* Changes in control for Fund Administrators: Fund administrators are now required to notify the Bermuda Monetary Authority in advance when there is a prospective change of control. The Authority now has power to object to a change in control to prevent it happening or to object to existing controllers where they are no longer deemed to be fit and proper to be controllers.
* Rights of Appeal: The Act provides a right of appeal in circumstances where the Authority has exercised its power to object. The person who is the subject of the Authority’s objection may appeal to a Tribunal.
* The ‘Four-Eyes’ Criterion for Fund Administrators: Fund administration businesses in Bermuda are required to be directed by at least two individuals to ensure that no one individual exercises excessive control over the management of a licensed entity.
* Fund Officers to be “fit and proper”: Any officers of a fund should be “fit and proper” at the time of authorization to ensure that the business of the fund is being conducted in a prudent manner.
193 10-12-30 Bermuda Investment Funds Amendment Act (450KB)
Editing by Alex Akesson
For HedgeCo.net
alex@hedgeco.net
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