Professional Closed Funds
Professional closed-ended funds in Bermuda must comply with specific requirements as outlined in the Bermuda Investment Funds Act (IFA). The key requirements for these funds are:
- Closed-Ended Structure: The fund must be a closed-ended investment fund, meaning participants are not entitled to redeem their units at their election.
- Qualified Participants: The fund is open only to qualified participants, indicating a focus on sophisticated investors who meet certain criteria.
- Investment Warning: Qualified participants must be provided with an investment warning before purchasing units.
- Local Service Provider or Representative: The fund operator must appoint either a licensed local service provider or an officer, trustee, or representative resident in Bermuda who has access to the fund’s books and records.
- Auditor Appointment and Financial Standards: The fund’s operator must appoint an auditor, and the fund’s financial statements must be prepared in accordance with recognized standards such as International Financial Reporting Standards (IFRS) or Generally Accepted Accounting Principles (GAAP).
These requirements were introduced following amendments to the IFA in January 2020, which brought professional closed-ended funds under the scope of the Act. This change was part of a broader effort to align Bermuda’s fund industry with global regulatory standards and ensure proper management and oversight of investment funds.