Private Funds
Private funds in Bermuda are subject to specific requirements, as outlined in the Bermuda Investment Funds Act. The key requirements include:
- Limited Number of Participants: Private funds are defined as funds with no more than 20 participants. This limitation helps to maintain the private nature of the fund, distinguishing it from funds that cater to a broader investor base.
- No Public Promotion: Private funds in Bermuda are not permitted to promote themselves by communicating invitations or inducements to the general public. This restriction aligns with the fund’s private nature, targeting a more exclusive group of investors rather than the general public.
- Local Service Provider Requirement: A private fund is required to appoint a local service provider that is authorized and regulated by the Bermuda Monetary Authority (BMA). This ensures that the fund is managed in compliance with local regulations and standards.
- Custodian Appointment: A custodian must be appointed to ensure the safekeeping of the fund’s assets. This requirement is crucial for the protection of the fund’s assets and the interests of its investors.
- Registration and Approval: New private funds must apply to the BMA for registration and approval before commencing trading. This regulatory step is crucial to ensure that the fund meets all legal and regulatory standards set by Bermuda authorities.
- Annual Certification and Filings: Private funds are required to file an annual certification with the BMA. This certification should confirm that the fund meets the minimum criteria and the requirements for registration and will continue to do so. Additionally, the fund must file information on its net asset value, underlying assets, management accounts or audited financial statements, and any material changes that occurred during the year.
These requirements reflect Bermuda’s regulatory framework for private funds, focusing on investor protection, transparency, and compliance with financial standards.