Bermuda Monetary Authority Case Analysis

Investors
- What makes the jurisdiction attractive and to which types of target investors?

Increasingly, investors are shying away from secretive jurisdictions and looking for jurisdictions that have an excellent reputation for transparency and compliance with the highest international standards. Bermuda is perceived as a gold standard in this regard, included on the OECD “white list” and an early adopter of the “common reporting standard” for the automatic exchange of tax information.

The Bermuda Monetary Authority (BMA) is an independent regulatory body that works closely with industry to create an environment that is conducive for the operation of funds. Legislation is constantly under review to ensure that it is fit for purpose and
To service the needs of funds and its investors, a deep pool of experienced and qualified professionals work for a range of service providers to provide a one-stop shop if required. However, as there are relatively few requirements for Bermuda a fund’s service providers and personnel to be located on island, there is flexibility for a fund to receive Bermuda based services in combination with those based in other jurisdictions if there is a preference to do so.

Bermuda is a common law jurisdiction derived from, and familiar to those with experience of, English law. The court system is recognised for delivering sound judgments with the ultimate court of appeal being the Privy Council in the United Kingdom. This gives investors comfort that, in the event of a dispute, there is a mechanism for appropriate resolution.

Setting up a
In the context of a company and an LLC, the operator is the company or LLC itself. The operator of a limited partnership is the general partner and a unit trust’s operator is its trustee.

In terms of documentation need to establish the fund, each fund will typically have an offering document or prospectus, documentation between the fund and its service providers and subscription agreement. The constitutional documentation of the fund will depend upon the vehicle used. Typically, the documentation tends to be generic and drafted to defer and be subject to the terms of the offering document or prospectus. If more tailored drafting is preferred, that can of course be accommodated.

Whether a fund meets the definition of an “investment fund” and is therefore subject to the provisions of the IFA often comes down in practice to whether the participants have the right to redeem their units. Where no such right exists, the fund, again in a non-Bermuda specific context, would often be referred to as being “closed ended”. Where a fund does not satisfy the definition of an “investment fund”, there is no need for the fund to comply with the provisions of the