Bermuda has a long-standing reputation as a high-quality jurisdiction in which to domicile an offshore fund, whether as a standalone vehicle or the now-familiar master/feeder structure.
What follows is an overview of some recent changes, current developments and those anticipated in the near future, all of which are intended to ensure that this reputation is preserved.
After collaboration between the Bermuda Government, Bermuda Monetary Authority (BMA) and industry stakeholders, a 2013 amendment to the Investment Funds Act 2006 introduced two new classes of exempt funds: the Class A Exempt Fund (Class A Fund) and Class B Exempt Fund (Class B Fund).
The defining features of a Class A Fund are light touch regulation and speed to market. Subject to certain eligibility requirements (broadly experienced/high value investors with a manager licensed in a recognised jurisdiction or with $100 million of assets under management) the fund can be launched immediately upon filing with the BMA.
If the Class A Fund qualifications surrounding the investment manager are not met, a Class B Fund may be appropriate. Class B Funds also benefit from a less onerous regulatory regime, although an application to the BMA is required.
Bermuda is one of the few jurisdictions where legislation permits the appointment of managing trustees. A managing trustee, who may be an investment manager, may be appointed as co-trustee with another trustee (often referred to as a custodian or administrative trustee). This enables the trust instrument to provide the managing trustee with exclusive control over management of the fund's investments with the administrative trustee not liable for the acts or omissions of the managing trustee.
Article first published in the Royal Gazette July 2016
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
