Investment Business Law changes come into force – The Royal Gazette

Created: Jul 27, 2022 07:42

Amendments to the Investment Business Act 2003 come into force today.

Julie McLean, director of international law firm Conyers, said the Bermuda Monetary Authority had confirmed the effective date of the Investment Firms (Amendment) Act 2022, which was passed in april.

Ms. McLean’s update in the company’s Conyers Alert is the second such notice of the changes.

Earlier, she explained the reason for the changes to the law.

She wrote: “After consultation, the BMA has decided that the IBA needs to be amended to reflect the global trend towards increasingly decentralized and geographically mobile operating models.

“The BMA’s stated intention is that the changes will enable more effective oversight of the regulatory perimeter and enable the BMA to better meet international expectations for regulatory cooperation.”

In her last missive, the seasoned lawyer explained the practical details of the entry into force of the amended legislation.

Ms McLean said existing Bermuda entities that have a physical office on the island but previously qualified and filed an exemption notification will have 12 months to be licensed under the IBA or registered under as a registered Class B person.

Existing entities incorporated in Bermuda that do not have a physical presence on the island, but carry out “investment activities” elsewhere, will also have a 12-month transition period to obtain a license under IBA or be registered as a Class A Registered Business. Class B Person or Registrant.

Ms McLean said Class A registrants will include entities that do not maintain an establishment in Bermuda and are already licensed, licensed or registered by a “recognized regulatory body” in another jurisdiction.

She added that Class B registrants will include entities that qualify for what was previously a ground for exemption. A Class B registered person will be required to maintain a “principal establishment” in Bermuda.

Ms McLean said clients considering setting up a new entity in Bermuda will need to consider whether the entity will be engaged in “investment business”.

Newly incorporated or formed entities that engage in investment business will need to be licensed or registered as a Class A registrant or Class B registrant before they can engage in investment business.

Ms McLean said: “Clients should contact their legal counsel before incorporating or forming a new Bermuda entity to ensure compliance with the Amended IBA.”

She added that certain people and public bodies have been classified as “unregistrable persons” and will be considered outside the scope of the IBA.

These include investment funds authorized or registered under the Investment Funds Act 2006, certain persons registered under the Insurance Act 1978 and certain persons authorized under the Digital Assets Act 2018.

Julie McLean, of the Conyers law firm (file photo)

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