Applications Expected Under The Investment Business Act

• Published date: 23 January 2023
• Subject Matter: Finance and Banking, Fund Management/ REITs, Fund Finance
• Law Firm: Appleby
• Author: Mr Matthew Ebbs-Brewer

Persons who must comply with the requirements of the amended Investment Business Act 2003 should consider progressing their application and related supporting materials sooner rather than later.

The July 2022 amendments to the IBA included a year-long transitional period for those persons that were previously unlicensed - but they will soon be required to either obtain a licence or register in accordance with the Act.

Prior to the 2022 amendments, a person who wished to carry on investment business in Bermuda while maintaining a place of business on the island had to obtain a licence under the IBA.

An exception was made for persons falling within a defined category who were recognised as exempted following self-certification to the Bermuda Monetary Authority.

The maintenance of a place of business in Bermuda is no longer a prerequisite in order to come within the scope of the IBA. Now, a person carries on investment business in or from Bermuda, and is therefore within the scope of the IBA, if they are either incorporated or formed in Bermuda and carry on investment business - or are incorporated or formed outside Bermuda and carry on investment business in or from Bermuda.

Where a person was not prima facie required to obtain a licence under the IBA, they should not now find themselves in scope provided they are comfortable that they remain within one of the categories set out in what is now the Investment Business (Non-Registrable Persons) (Designation) Order 2022.

There is no definition of what is meant by a person incorporated or formed outside Bermuda and carrying on investment business "in or from" Bermuda.

As such, persons who were not formed or incorporated in Bermuda and who carry on activities that could constitute investment business with a Bermuda nexus should consider whether they now fall within the scope of the IBA.

The 2022 amendments removed the exemption regime. A person is no longer exempted under the 2004 Order; instead, anyone who intends to conduct investment business (as defined in the first schedule of the IBA) must apply to the BMA to be licensed or registered unless they are within a limited group of non-registrable persons.

Registrable persons are of two classes - Class A and Class B.

Any person that was formed or incorporated in Bermuda and carries on investment business in circumstances where they are licensed, authorised or registered by a recognised regulator but does not maintain a place of business in Bermuda, can apply to...