Valsen Fiduciaries Funds

Bermuda Standard Fund

The Investment Funds Act (IFA) 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 Standard Fund

A fund will qualify for classification as a standard fund if it does not fall within any other class of fund. The Minister of Finance has the power to amend the current qualifications for any class of fund, and may add additional classes of funds.
Such funds are not restricted to sophisticated investors and may include a more significant retail element among their investors. Consequently they are subject to more comprehensive regulation and supervision.​

The Fund Rules only apply to authorized investment funds classified as standard funds and require the custodian of such funds to be licensed by the Authority, except where the administrator of that fund is carrying on fund administration business in Bermuda.

The IFA provides a supervisory and regulatory environment for Standard funds, and mandates certain prospectus disclosure and financial reporting requirements.   
The IFA requires a Standard fund to appoint an investment adviser or manager, an administrator, a custodian, a registrar and an auditor, all of whom must be approved by the BMA.

Each of the investment adviser or manager, administrator and custodian may delegate their respective functions and duties but will remain responsible for the performance of any sub‐investment adviser or sub‐manager, sub‐administrator, sub‐ custodian as the case may be.

Bermuda Standard 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

None

  • 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

  1. 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.

  1. 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

  1. Fund administrator

  • Fund administrator required

Yes

  • Local fund administrator required

Yes

  • Eligible fund administrator

Any other person as the authority may approve who is independent of the manager or administrator

  1. External auditor

  • External aOffice Requireduditor required

Yes

  • Local external auditor required

No

  • Eligible external auditor

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

  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 1,250

  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
Standard 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 mutual funds in its entirety.
Stamp duty Act
Standard funds are exempt from payment of stamp duty Tax.
Trades Tax Act
Standard funds are exempt.
Immovable Property Transfer Restriction Act
Standard funds are exempt.
Immigration Decree
Standard funds are exempt.
Exchange Control Act
The provisions of the Exchange Control Act do not apply to Standard funds.
Foreign Earnings Act
The Foreign Earnings Act is not applicable to Standard funds in its entirety.

Benefits of a Bermuda Standard 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.