Valsen Fiduciaries Funds

Bermuda Institutional Fund

The Investment Funds Act governs the exclusion, exemption and authorization of investment funds and contains certain requirements for the formation of investment funds, their operation and the offering of shares, units or interests of investment funds.

The Bermuda Monetary Authority (BMA) is the principal body responsible for the regulation of investment funds.

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About Bermuda Institutional Fund

A fund will qualify for classification as an institutional fund if its administrator is
licensed under the IF Act. The institutional fund need only have one officer, trustee, or representative resident in Bermuda.

The fund’s investment manager, fund administrator, auditor, registrar, custodian or prime broker may be based anywhere in the world.

A fund qualifies for classification as an institutional fund if

  • Pursuant to its constitution and prospectus
    • It is only open to qualified participants; or
    • It requires each participant to invest a minimum amount of $100,000 in the fund; and
  • 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.

Institutional fund may not be supervised to the same degree as other funds that are authorized and regulated by the Authority. Therefore, the fund should be viewed as an investment suitable only for participants who can fully evaluate and bear the risks involved.

Bermuda Institutional Fund Legal Requirements

Requirements

Description

  1. Applicable legislation

Bermuda Monetary Authority Act 1969

Investment Funds Act 2006

  1. Supervising Authority

Bermuda Monetary Authority

  1. Corporate vehicle permitted

A Company

A unit trust scheme (the preferred choice for investors from Japan),

An investment company that is a closed ‐ ended fund

A limited partnership.

  1. Share capital or equivalent

    • Minimum subscription

USD 100,000 per investor

    • Minimum investors

1

  1. Directors / Partners / Trustees

    • Minimum number

2

    • Corporate Directors / Partners / Trustees allowed

No

    • Local Directors / Partners / Trustees required

No

  1. Fund functionaries required

    • Custodian
      • Custodian required

Yes

      • Local custodian required

Yes

      • Eligible custodian

The Custodian must be a person licensed by the Authority under the Banks and Deposit Companies Act 1999, the Trusts (Regulation of Trust Business) Act 2001 or the Investment Business Act 2003.

    • Fund manager / Investment Adviser
      • Fund manager required

Yes

      • Local fund manager required

No

      • Fund manager requires to be licensed

Yes

      • Eligible fund manager

Licensed Fund manager

    • Fund administrator
      • Fund administrator required

Yes

      • Local fund administrator required

Yes

      • Eligible fund administrator

Licensed Fund administrator

    • External auditor
      • External auditor required

Yes

      • Local external auditor required

No

      • Eligible external auditor

Foreign or local auditor satisfying conditions as may be prescribed by the Authority.

  1. Asset Requirements

 
    • Restriction on type of asset class invested

None

    • Asset diversification requirements

None

    • Limitation on size of the fund or total assets under management

None

  1. Local physical office required

No

  1. Prospectus / Offering Memorandum required to be filed

Yes

  1. Eligible for listing

No

  1. License fees

 
    • License application fee

USD 750

    • Annual license fee

USD 750

  1. Estimated license processing duration

3 months

 

Ongoing Obligations

Requirements Description
Monthly obligations
None
Quarterly obligations
None
Annual obligations
The fund must prepare annual financial statements which will be audited.
Other obligations

The fund must appoint, or will on authorization appoint, an investment manager, an auditor and an administrator;

The fund property must be entrusted to a custodian who must be licensed in Bermuda or, if incorporated elsewhere, must be subject to equivalent regulatory supervision.

The custodian must also be independent of the operator.

The operator and its proposed service providers must be fit and proper persons to act as such and the combination of their experience and expertise must be appropriate for the purposes of the fund;

The fund must comply with the requirements of the fund rules and fund prospectus rules., resignation or removal of a Director or officer

Tax Obligations and Other Exemptions
Requirements Description
Business Tax
Institutional funds are exempt from business tax.
Withholding Tax
No withholding tax is payable on dividends and/or interest payable.
Value Added Tax (VAT)
VAT is not applicable to Institutional funds in its entirety.
Stamp duty Act
Institutional funds are exempt from payment of stamp duty Tax
Trades Tax Act
Institutional funds are exempt
Immovable Property Transfer Restriction Act
Institutional funds are exempt
Immigration Decree
Institutional funds are exempt
Exchange Control Act
The provisions of the Exchange Control Act do not apply to Institutional funds.
Foreign Earnings Act
The Foreign Earnings Act is not applicable to Institutional funds in its entirety.

Benefits of a Bermuda Institutional Fund:

Bermuda is a premier international financial center, largely because of the structural and operational advantages it offers, including:

  • Speed-to-market Strategic proximity to serve global clients
  • Tax neutrality – no taxes on income, dividends or capital gains
  • Access to highly qualified professionals well-versed in investment funds
  • A “Master Feeder” structure with a single entity and significant cost savings. This is made possible by the flexibility of the Segregated Accounts Companies Act, which permits one or more classes of shares to effectively invest in other classes of the same company.