Investment business law changes take effect
Amendments to the Investment Business Act 2003 become effective today.
Julie McLean, a director of international law firm Conyers said the Bermuda Monetary Authority has confirmed the effective date of the Investment Business (Amendment) Act 2022, which was passed in April.
Ms McLean’s update in the firm’s Conyers Alert, is the second such notice about the changes.
Earlier, she set out the reason for the changes to the Act.
She wrote: “After consultation, the BMA decided that the IBA needed to be amended to reflect the global trend towards increasingly decentralised and geographically mobile operating models.
“The BMA’s stated intent is that the changes will allow for more effective monitoring of the regulatory perimeter and allow the BMA to better meet international regulatory co-operation expectations.”
In her latest missive, the veteran lawyer set out the practicalities of the amended legislation coming into effect.
Ms McLean said existing Bermuda entities that have a physical office on the island but had previously qualified for and filed an exemption notification will have 12 months to either be licensed under the IBA or be registered as a Class B Registered Person.
Existing Bermuda incorporated entities that do not have a physical presence on the island, but do carry out “investment business” elsewhere, will also have a 12-month transitional period to either be licensed under the IBA or be registered as either a Class A Registered Person or Class B Registered Person.
Ms McLean said Class A Registered Persons will consist of those entities that do not maintain a place of business in Bermuda, and are already licensed, authorised or registered by a “recognised regulator” in another jurisdiction.
She added that Class B Registered Persons will consist of those entities that qualify for what had previously been grounds for exemption. A Class B Registered Person will be required to maintain a “principal place of business” in Bermuda.
Ms McLean said clients who are considering forming a new Bermuda entity will need to determine whether the entity will be carrying out “investment business”.
Newly incorporated or formed entities that do carry out investment business will need to either be licensed or registered either as a Class A Registered Person or Class B Registered Person before they can carry out the investment business activities.
Ms McLean said: “Clients should liaise with their legal adviser before incorporating or forming a new Bermuda entity to ensure compliance with the amended IBA.”
She added that certain persons and public bodies have been classified as “non-registrable persons” and will be deemed outside the scope of the IBA.
These include investment funds authorised or registered under the Investment Funds Act 2006, certain persons who are registered under the Insurance Act 1978 and certain persons licensed under the Digital Asset Business Act 2018.