|
No. 20 of 2003 |
AN ACT TO PROVIDE FOR THE
REGULATION OF |
INVESTMENT FUNDS IN THE BAHAMAS |
AND FOR MATTERS CONNECTED THERETO |
(Date of Assent – 11th
July, 2003) |
Enacted by the Parliament of The
Bahamas. |
Part I |
Preliminary. |
1.(1) This Act may be cited as the
Investment Funds Act, 2003. | Short title. |
(2) This Act shall come into
operation on such day as the Minister may, by notice published in the Gazette,
appoint. |
| Interpretation. |
"auditor" means a person who is - |
(a) a professionally qualified
accountant; or |
(b) an accountant licensed to
practice as such under the Public Accountants Act; | Ch. 364. |
"Commission" means the Securities
Commission of The Bahamas established by section 3 of the Securities Industry
Act; | Ch. 363. |
"company" means a body corporate
incorporated or registered under the laws of The Bahamas or of any other
jurisdiction; |
"constitutive documents" means the
principal documents governing the formation of the investment fund, and
includes the trust deed in the case of a unit trust, the memorandum and
articles of association in the case of a company and the partnership agreement
in the case of a partnership and all material agreements; |
"counsel and attorney" has the same
meaning as in section 2 of the Legal Profession Act; | Ch. 64. |
"court" means the Supreme Court of The
Bahamas; |
"dormant fund" means an investment fund
to which section 22 of this Act applies; |
"equity interest" means a share, a trust
unit or a partnership interest that carries an entitlement to participate in
the profits or gains of the issuer thereof and that is redeemable or
re-purchasable at the option of the investor; |
"Executive Director" means the person
appointed as such under section 16 of the Securities Industry Act; | Ch. 363. |
"general partner" means - |
(a) in respect of a partnership
constituted under the laws of The Bahamas, a general partner as defined under
such law; or |
(b) in respect of a partnership
constituted under the laws of a jurisdiction other than The Bahamas, a person
equivalent to a general partner under the laws of The Bahamas; |
"investment advisor" means a person not
being an officer or an employee of an investment fund who, for valuable
consideration, provides or is entitled to provide an investment fund with
investment advice only, and who does not provide any investment management
services to such investment fund; |
"investment fund or fund" means - |
(a) a unit trust, that issues or has
equity interests the purpose or effect of which is the pooling of investor
funds with the aim of spreading investment risks and achieving profits or gains
arising from the acquisition, holding, management or disposal of investments - |
(i) of which the trustee, the
administrator, the investment advisor or the investment manager is either a
company incorporated or registered in The Bahamas or a person who has a place
of business in The Bahamas or uses an address in The Bahamas; or |
(ii) the trust instrument of which
is governed by the laws of The Bahamas; or |
(b) a company (including a limited duration
company) that issues or has equity interests the purpose or effect of which is
the pooling of investor funds with the aim of spreading investment risks and
achieving profits and gains arising from the acquisition, holding, management
or disposal of investments - |
(i) which is incorporated or
registered in The Bahamas; or |
(ii) of which the administrator,
the investment advisor or the investment manager is either a company or
companies incorporated or registered in The Bahamas or one or more companies or
individuals any one of whom has a place of business in The Bahamas or which
uses an address in The Bahamas; or |
(iii) the administration or management, of
which (including the control of substantially all of its assets) is carried on
in or from The Bahamas; |
(c) a partnership that issues or has
equity interests the purpose or effect of which is the pooling of investor
funds with the aim of spreading investment risks and achieving profits and
gains arising from the acquisition, holding, management or disposal of
investments - |
(i) of which one or more of the
general partners is incorporated or registered in The Bahamas or is a person
residing in The Bahamas or uses an address in The Bahamas; or |
(ii) whose partnership articles are
governed by the laws of The Bahamas; or |
(iii) of which the administrator,
the investment advisor or the investment manager is either a company
incorporated or registered in The Bahamas or a person who has a place of
business in The Bahamas or uses an address in The Bahamas, |
and in this Act a reference to investment fund
means a "Bahamas based investment fund" but does not include - |
(aa) a person enrolled under the
Friendly Societies Act; or |
(bb) a company, unit trust or
partnership, where the holder of an equity interest does not have the option to
redeem his equity interest or require the issuer to repurchase his equity
interest; |
"investment fund administration" means - |
(a) to administer the operations and
administrative affairs of an investment fund; |
(b) to provide the administrative
services for an investment fund including the accounting, valuation or
reporting services; or |
(c) to provide the principal office
of an investment fund; |
but does not include - |
(d) the provision of a registered
office to an investment fund where the usual corporate secretarial and related
services are provided; |
(e) in relation to an investment
fund, the maintenance of any register of equity interests or the registration
and payment of fees; |
(f) the provision of investment
advice or investment management or trading execution services; |
"investment fund administrator or
administrator " means a person licensed under section 34 or authorized
under section 32(2)(b) to provide investment fund administration in or from The
Bahamas or a person exempted under section 32(3) from obtaining an investment
fund administrators's licence; |
"investment fund administrator's
licence" means a licence granted under section 34; |
'investment fund licence" means a licence
granted under subsection (1) of section 3; |
"investment manager" means a person, not
being an officer or an employee of an investment fund who for valuable
consideration, provides or is entitled to provide an investment fund with
investment management services, and may include providing investment
advice; |
"investor" means a person who holds or
owns an equity interest issued by an investment fund; |
"licensed investment fund" means an
investment fund licensed pursuant to section 3 or section 7; |
"licensee" means a person to whom a
licence is granted under this Act; |
"licensor" means the Commission or an
investment fund administrator licensed under section 34(1); |
"material change" means any change that
is reasonably expected to have a significant effect on an investment fund or
its investors; |
"Minister" means the Minister of
Finance; |
"non-Bahamas based investment fund"
means a unit trust, company or partnership that issues or has equity interest
the purpose or effect of which is the pooling of investor funds with the aim of
spreading investment risks and achieving profits and gains arising from the
acquisitions, holding, management or disposal of investments which - |
(i) does not satisfy, any of the
requirements of (a)(i) - (ii), (b)(i) - (iii) or (c)(i) - (iii) of an
investment fund as defined in this Act; and |
(ii) which has some form of nexus to
The Bahamas including but not limited to it being sold in or from The Bahamas
or having appointed a custodian in The Bahamas; |
"offering document" in respect of an
investment fund, means a document or series of documents on the basis of which
- |
(a) equity interests in the
investment fund are offered for sale; or |
(b) persons are invited to subscribe
for or purchase equity interests in the investment fund, but does not include
any other notice, advertisement, letter or other communication used in
connection with the offer for sale of any equity interest in the investment
fund or the invitation to any person to subscribe for or purchase any equity
interest in the investment fund if before the offer or invitation is accepted
or taken up the prospective investor is given the opportunity to consider an
offering document containing the information prescribed by section 9; |
"operator" in respect of the investment
fund, means - |
(a) where the investment fund is a
unit trust, a trustee of that trust; |
(b) where the investment fund is a
partnership, a general partner in that partnership; or |
(c) where the investment fund is a
company, a director of that company; |
"parties related to an investment fund"
means an administrator, operator, promoter, custodian, investment manager or
investment advisor; |
"partnership" means a partnership,
general or otherwise constituted, under the laws of The Bahamas or any other
jurisdiction; |
"principal office" means the place of
business of an investment fund which has ultimate responsibility for the office
from which the principal administration for the investment fund; |
"professional advisor" means - |
(a) an investment advisor or
investment manager; |
(b) a counsel and attorney; or |
|
"professional fund" means an investment
fund that is offered to any person who comes within any of the following
categories at the time of issue of the equity interest - |
(a) any bank or trust company
licensed under Bank and Trust Companies Regulation Act or licensed in a
prescribed jurisdiction, whether acting in its individual or fiduciary
capacity; | Ch. 361. |
(b) any registered broker-dealer or
firm registered as a securities investment advisor under the Securities
Industry Act which maintains a minimum of one hundred and twenty thousand
dollars ($120,000) of regulatory capital or is a Broker-dealer or firm of
Securities Investment Advisors registered in a prescribed jurisdiction; | Ch. 363. |
(c) any insurance company licensed
under the Insurance Act or licensed in a prescribed jurisdiction; |
(d) any investment fund licensed or
registered under this Act or regulated in a prescribed jurisdiction; |
(e) any natural person whose
individual net worth, or joint net worth with the person's spouse exceeds one
million dollars ($1,000,000); |
(f) any natural person who had an
individual income in excess of two hundred thousand dollars ($200,000) in each
of the two most recent years or joint income with that person's spouse in
excess of three hundred thousand dollars ($300,000) in each of those years and
has a reasonable expectation of reaching the same income level in the current
year; |
(g) any trust with total assets in
excess of five million dollars ($5,000,000); |
(h) any entity in which all the
equity owners satisfies one of the requirements in paragraph (a) to (h); |
"promoter" in respect of an investment
fund or proposed investment fund, means any person whether within or outside
The Bahamas who directly or indirectly is responsible for the formation of an
investment fund and who causes the preparation or distribution of an offering
document in respect of the investment fund or proposed investment fund but does
not include a professional advisor or underwriter acting for or on behalf of
such a person; |
"recognized foreign fund" means an
investment fund where - |
(a) the equity interests are listed
on a securities exchange (including an over-the-counter market) prescribed by
the Commission by notice in the Gazette and the fund is not licensed in The
Bahamas; or |
(b) it is licensed or registered, in
a jurisdiction prescribed by the Commission by notice in the Gazette and not
suspended from operation; |
"record" means any means by which
information may be stored; |
"registered office" means - |
(a) in respect of a company
incorporated under the Companies Act, an office registered in accordance with
section 17 of that Act; | Ch. 308. |
(b) in the case of a foreign company
registered under section 183 of the Companies Act, an office registered in
accordance with section 190 of that Act; | Ch. 308. |
(c) in the case of a company
incorporated under the International Business Companies Act, an office
registered in accordance with section 37 of that Act; | Ch. 309. |
(d) in the case of a partnership
registered under the Exempted Limited Partnership Act , the registered office
of that partnership for the purposes of that Act; or | Ch. 312. |
(e) in the case of a unit trust the
registered office of the trustee in The Bahamas or the place of business of an
individual trustee; |
"regulated investment fund" means an
investment fund that is carrying on or attempting to carry on business in
compliance with section 3; |
"restricted investment fund administrator's
licence" means an investment fund administrator's licence issued under
section 34(2); |
"self-administered investment fund"
means an investment fund administered by its own operators who are responsible
for the functions of the investment fund administrator; |
"share" in the case of a company limited
by guarantee, includes an interest of a member of that company; |
"SMART fund" means an investment fund
established by the Commission as a Specific Mandate Alternative Regulatory Test
Fund that satisfies certain prescribed parameters and requirements of a
category, class or type of investment fund previously approved by the
Commission; |
"standard fund" means an investment fund
that does not satisfy the requirements of a professional fund, a SMART fund or
a recognized foreign fund; |
"unit" means a unit of participation in
a unit trust; |
"unit trust" means a trust which, for
valuable consideration, issues units in the undertaking of the trust entitling
the holder thereof to a share in the profits or gains arising from the
acquisition, holding, management or disposal of investments; |
"unregulated investment fund" means an
investment fund that is carrying on or attempting to carry on business in or
from The Bahamas and is doing so without complying with section 3; |
"unrestricted investment fund
administrator" means an investment fund administrator licensed under
section 34(1). |
PART II |
Investment Fund Regulation |
3. An investment fund shall not
carry on or attempt to carry on business unless - | Regulated Investment Funds. |
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(b) it is registered as a recognized
foreign fund. |
4.(1) Notwithstanding section 3, a
professional or standard investment fund shall not carry on or attempt to carry
on business unless - | Professional and standard Fund. |
(a) it has appointed an investment
fund administrator to provide its principal office; |
(b) if it is a unit trust, it has as
its trustee - |
(i) a trust company licensed under
the Banks and Trust Companies Regulation Act, with an unrestricted
license; | Ch. 316. |
(ii) a bank licensed under the Banks
and Trust Companies Regulation Act, with an unrestricted licence; | Ch. 316. |
(iii) such other bank or trust company as
shall have a minium paid-up capital and non-distributable reserves of two
million dollars and is otherwise acceptable to the Commission; or |
(iv) a person approved by the
Commission; and |
(c) a current offering document of
the investment fund has been filed with the Commission which complies with
section 9; and |
(d) the prescribed fees have been paid
in respect of the investment fund. |
5.(1) Notwithstanding section 3, a
SMART fund shall not carry on or attempt to carry on business unless - | Smart Fund. |
(a) it complies with any written rule
of the Commission establishing the parameters or requirements in respect of the
category, class or type of investment fund; and |
(b) the prescribed fees have been paid
in respect of the investment fund. |
(2) The Commission may establish
such parameters and requirements as to the administration of a SMART Fund or
the contents of the constitutive documents and offering documents of the SMART
fund as it deems fit. |
(3) The Commission shall make
rules establishing parameters and requirements in respect to each category,
class or type of investment fund that it approves as a SMART Fund. |
6. A recognized foreign fund
shall not carry on or attempt to carry on business unless it has been
registered with the Commission and it - | Recognized Foreign Fund. |
(a) is licenced or registered in a
prescribed jurisdiction; or |
(b) has submitted evidence of its
listing on a prescribed securities exchange; and |
(c) has submitted to the Commission,
within thirty days of the beginning of its operations as a Bahamas-based
investment fund the prescribed details of the investment fund; and |
(d) the prescribed fees have been paid
in respect of the investment fund. |
7.(1) A company, unit trust or
partnership, where the holder of an equity interest does not have the option to
redeem his equity interest or require the issuer to repurchase his equity
interest may elect to be licensed by the Commission as an investment fund and
if it so elects shall from the date of licensing be deemed an investment fund
for the purposes of this Act. | Certain Funds may elect to be
standard fund |
(2) An investment fund which
qualifies to be licensed as a professional or SMART fund or registered as a
recognized foreign investment fund may elect to be licensed as a standard fund. |
8.(1) Notwithstanding section 4(1)(a)
an investment fund may operate and conduct business as a self-administered
investment fund and in such case a reference to an investment fund
administrator shall be deemed to be a reference to the operator of the
self-administered investment fund who is performing the function of an
administrator. | Self Administered Fund. |
(2) An operator of a
self-administered fund shall not deal with the fund as a principal. |
(3) A self-administered fund shall
be licensed by the Commission only. |
9.(1) An offering document of an
investment fund shall | Offering document. |
(a) describe the equity interests in
all material respects; |
(b) contain the prescribed
details; and |
(c) contain such other information as
is necessary to enable the prospective investor in the investment fund to make
an informed decision as to whether or not to subscribe for or purchase such
equity interests. |
(2) Subsection (1) shall be
without prejudice to any duty of •disclosure under the common law or any other
law. |
(3) Unless exempted from this
provision, every investment fund other than a recognized foreign fund shall be
required at all times to have filed with the Commission a current offering
document of the investment fund and shall not have satisfied this requirement where
there is a continuing offering of equity interests and any promoter, operator
or the administrator of the investment fund - |
(a) is aware of any material
information that affects the offering document of the investment fund filed
with the Commission; and |
(b) has not, within twenty-one days of
becoming so aware, filed with the Commission an amended offering document of
the investment fund, incorporating the amendment, which may be in the form of a
sticker or a supplement. |
(4) An investment fund is not in
compliance with subsection (3) if it has - |
(a) changed its registered or its
principal office; |
(b) changed its operators; or |
(c) amended its constitutive or
offering documents and it has failed to inform the Commission. |
10. The Commission shall prescribe
the minimum number of directors required by an investment fund which is a
company. | Directors of Fund. |
11.(1) An application for an investment
fund licence as a standard fund, professional fund or SMART fund shall be made
to the licensor in the prescribed form and shall be accompanied by - | Applications for licensing and
registration. |
(a) in the case of a standard or
professional investment fund, the current offering document, or if one has not
been finally settled, the latest draft of the offering document; |
(b) in the case of a SMART fund, such
document as required by the Commission for the relevant approved
structure; |
(c) a certified copy of the
constitutive documents of the investment fund; |
(d) details necessary to satisfy the licensor
that the applicant is a fund as provided for in sections 4 or 5; |
(e) the prescribed fees; and |
(f) such other information and
documentation as the licensor may reasonably require for the purpose of
determining the application. |
(2) An application for
registration with the Commission as a recognized foreign fund shall be in the
prescribed form and shall be accompanied by - |
(a) the prescribed details; |
(b) a copy of its licence from a
prescribed jurisdiction or evidence of its listing on a recognized securities
exchange, as applicable; |
(c) such other information and
documentation as may be required for the purpose of satisfying the Commission
that the investment fund meets the conditions for being classified as a
recognized foreign fund; and |
(d) the prescribed application fee. |
12.(1) A person who applies for an
investment fund licence or registration shall not supply the licensor with
information that he knows or should reasonably know is false or misleading. | Misrepresentation. |
(2) Where an unrestricted
investment fund administrator acting in its capacity as a licensor becomes
aware that an applicant has provided it with false or misleading information,
it shall immediately notify the Commission in writing. |
13.(1) An unrestricted investment fund
administrator shall, in respect of any investment fund that it licenses, within
thirty days of the licensing file with the Commission - | Licensing by unrestricted investment
fund administrator. |
(a) the offering document of the
investment fund as applicable accompanied by written certification from the
administrator of the investment fund or a counsel and attorney that the
offering document is in compliance with this Act; |
(b) a certified copy of the
constitutive documents of the investment fund accompanied by written
certification from the administrator of the fund or a counsel and attorney that
the constitutive documents are in compliance with this Act; |
(c) documentation establishing the
identity and fitness and properness of the promoter, operator, investment
advisor or investment manager or both, the custodian and auditor of the
investment fund; |
(d) a copy of the licence issued by
the licensor; and |
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(2) An unrestricted investment
fund administrator may license professional and SMART funds only. |
(3) An unrestricted investment
fund administrator may only license investment funds for which it is the
administrator and for which it provides the principal office. |
(4) An unrestricted investment
fund administrator may not license an investment fund until it has been
satisfied by the applicant that - |
(a) each promoter, operator,
investment advisor or investment manager or both, the auditor and custodian is
"fit and proper"; and |
(b) the business of the investment
fund and any offer of equity interests in it will be carried out in a proper
manner. |
(5) An unrestricted investment
fund administrator who fails to file the prescribed documents of an investment
fund which it has licensed on or before the thirtieth day following the date of
the licence shall pay to the Commission a fine equal to double the amount of
the annual registration fee payable by the fund. |
(6) The Commission may, for good
cause, waive the fine imposed under subsection (5). |
14.(1) The Commission may refuse to
license or register a fund if - | Refusal to license or register an
investment fund. |
(a) the investment fund has not
satisfied the provisions of this Act; |
(b) for reasons of public interest,
the Commission determines that the investment fund should not be licensed or
registered; or |
(c) the name of the investment fund
is - |
(i) identical to that of any other
investment fund that is regulated under this Act or which so nearly resembles
the name of an investment fund regulated under this Act so as to be likely to
deceive or cause confusion in the investment fund industry; |
(ii) likely to suggest, falsely, the
patronage of or connection with some person or authority, whether within The
Bahamas or elsewhere; or |
(iii) likely to suggest falsely, that the
fund has a special status in relation to or derived from the Government. |
(2) Unless exempted by the
Commission no person other than an investment fund shall carry on or attempt to
carry on business as an investment fund with the words "fund" or
"investment fund" in its name. |
(3) If, in the opinion of the
Commission, an investment fund is carrying on business in a name that the
Commission would have refused by virtue of subsection (1) (c), the Commission
may direct the investment fund to change its name to a name approved by the
Commission. |
(4) An unrestricted investment
fund Administrator may refuse to license an investment fund for any reasons
stated in subsection 1(a) or (b). |
15. The Commission shall not
license or register an investment fund until it is satisfied by the applicant
that - | Restriction on licensing or
registration. |
(a) each promoter, operator,
investment advisor, manager, auditor and custodian is fit and proper; |
(b) the administration of the
investment fund will be undertaken by persons who have sufficient expertise to
administer the investment fund; and |
(c) the business of the investment
fund and any offer of equity interests in it will be carried out in a proper
manner. |
16.(1) The Commission may license or
register an investment fund subject to such conditions as it considers
appropriate. | Conditions on licensing or
registration. |
(2) The administrator of an
investment fund shall use reasonable efforts to ensure that, when carrying on
or attempting to carry on business in or from The Bahamas, the investment fund
complies with all conditions under which it was licensed or registered. |
(3) The Commission may, waive,
vary or revoke any condition attached to an investment fund licence granted
under section 3. |
(4) An investment fund may request
in writing that the Commission waive, revoke or alter any condition attached to
its licence or registration. |
17.(1) A non-Bahamas based
investment fund which intends to sell it's equity interest in or from The
Bahamas shall not offer it's equity interest for sale unless it has appointed a
representative approved by the Commission after the applicant has applied in
the prescribed form and paid the prescribed fee. | Non-Bahamas based investment fund. |
(2) A non-Bahamas based mutual
fund which has a nexus to The Bahamas other than being sold in or from The
Bahamas shall notify the Commission in writing of the nature of its nexus to
The Bahamas within fourteen days of the start of such relationship and the fund
shall advise the Commission within fourteen days of the termination of such
relationship. |
(3) No person shall do business
with a non Bahamas based investment fund that has not appointed a
representative in The Bahamas pursuant to subsection (1) or notified the
Commission pursuant to subsection (2). |
(4) A non-Bahamas based investment
fund shall renew the appointment of its representative in The Bahamas on an
annual basis by submitting to the Commission on or before the 31st
day of January of each year - |
(a) a written declaration in the
prescribed form; and |
(b) the prescribed annual fee. |
18.(1) An investment fund shall in the
prescribed manner notify the Commission in writing of its intention to
surrender its licence or registration, at least fourteen days prior to the
effective date of the surrender and shall also surrender to the Commission any
certificate issued as evidence of its being licensed or registered. | Surrender of licence or
registration. |
(2) The Commission shall within
fourteen days of receipt of notice of the investment fund's surrender of its
licence or registration cause to be published in the Gazette a notice that the
investment fund is no longer regulated in The Bahamas. |
19.(1) A licensed investment fund may
transfer from The Bahamas to another jurisdiction and shall advise the
Commission in the prescribed form of such transfer at least fourteen days prior
to the effective date of the transfer, and at such time of notice it shall
surrender to the Commission any certificate issued as evidence of it being
licensed or registered. | Transfer to and from another
jurisdiction. |
(2) Without prejudice to
subsection (1), an investment fund shall be deemed to have transferred from The
Bahamas to another jurisdiction upon the severance of all contractual relationships
with any investment fund administrator, investment manager and investment
advisor operating in or from The Bahamas. |
(3) The Commission upon being
satisfied that the provisions of this section have been met, shall cause to be
published in the Gazette a notice that the investment fund is no longer
regulated in The Bahamas. |
(4) An investment fund that
transfers to The Bahamas from another jurisdiction shall notify the Commission
within seven days of the transfer supplying to the Commission, the following
information - |
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(b) name of the Administrator; |
(c) address of registered or
principal office in The Bahamas; |
(d) name and address of the
operators; |
(e) the current offering
memorandum; |
(f) evidence that the investment fund
has complied with the laws of the jurisdiction outside The Bahamas for transfer
of the investment fund. |
(5) An investment fund
transferring into The Bahamas shall within thirty days of the transfer obtain
an investment fund licence from a Licensor. |
(6) The investment fund
administrator of an investment fund transferring into The Bahamas which has
licensed the investment, fund is required to satisfy section 13 of this Act. |
(7) The Commission may upon the
written application of the investment fund extend the period within which the
fund must obtain an investment fund license. |
20. An investment fund which
transfers from one investment fund administrator to another shall notify the
Commission in in writing within fourteen days of the effective date of the
transfer. | Transfer of investment fund
administration. |
21.(1) An investment fund administrator
shall inform the Commission in writing of its intention to terminate its
administration agreement with an investment fund at least thirty days prior to
the date of the proposed termination. | Termination of administration
agreement. |
(2) An investment fund shall be
required to appoint a new investment fund administrator at least seven days
prior to the date of termination under subsection (1) and shall immediately
notify the Commission in writing of such appointment. |
(3) An investment fund that
receives notice of the intention of its administrator to terminate its
administration agreement, and fails to appoint a new administrator under
subsection (2), shall be liquidated and have its licence revoked by the
Commission. |
22.(1) An investment fund which ceases
trading and liquidates its assets, without formally liquidating its structure
shall be deemed to be a dormant investment fund. | Dormant investment funds. |
(2) An investment fund shall
inform the Commission in writing within fourteen days of such investment fund
becoming dormant. |
(3) Upon being notified that an
investment fund is dormant the Commission shall suspend the licence or
registration of the investment fund and cause to be published in the Gazette a
notice that the licence or registration of the fund has been suspended for
dormancy. |
(4) A dormant investment fund may
re-launch its operation within one year from the date of it becoming dormant
failing which the Commission may revoke the licence or registration of such
dormant investment fund. |
(5) A dormant investment fund
which intends to re-launch its operation within one year shall apply to the
Commission to have its licence or registration lifted, and such application
shall be made in the prescribed manner, and the investment fund shall pay the
prescribed fee. |
(6) The Commission may upon the
written application of the investment fund extend the period of dormancy to a
total period not exceeding eighteen months. |
(7) A dormant investment fund to
which subsection (6) applies that intends to re-launch its operation shall
apply to the Commission in the prescribed manner and shall pay the prescribed
re-launching fee. |
(8) Upon being satisfied that the
investment fund is in compliance with all provisions of this Act, the
Commission shall lift the suspension of the licence or registration of the
investment fund imposed thereon pursuant to subsection (3) and cause to be
published in the Gazette a notice that the investment fund has been
re-launched. |
23. An investment fund, shall - | Books and records. |
(a) keep and maintain proper books of
accounts, records and documents in such manner as to - |
(i) explain its transactions and
disclose at any point in time the financial position of the investment
fund; and |
(ii) in particular, fairly present,
in all material respects, the financial position, results of operations,
changes in owners equity and cash flows of the investment fund; |
(b) not destroy, conceal or alter
books of accounts, records and other documents relating to its operations,
required to be kept under this section for the purpose of an audit or
examination by the Commission or its staff or agents. |
24. No person other than a
regulated investment fund shall represent in any way that it is an investment
fund. | Representation as investment fund. |
25. The investment fund
administrator or operator of an investment fund shall use reasonable efforts to
ensure that the investment fund complies with any direction given to it by the
Commission in accordance with the provisions of this Act. | Compliance with directions. |
26. The administrator of an
investment fund shall use reasonable efforts to ensure that the investment fund
does not carry on or attempt to carry on business as an investment fund
contrary to provisions of this Act. | Administrator to ensure investment
fund compliance. |
27.(1) An investment fund, shall renew
its licence or registration, as applicable, on an annual basis by submitting to
the Commission on or before the 31st day of January of each year - | Renewal of licence or registration
and annual fees. |
(a) a written declaration in the
prescribed form stating that all of the information filed with the Commission
is current and applicable; and |
(b) the prescribed annual licence or
registration fee. |
(2) If the prescribed annual fee
referred to in subsection (1) is not paid on or before the 31st day
of January, the investment fund shall be required to pay an additional fee equal
to that annual fee for each month or part of a month during which the annual
fee and any additional fee imposed under this subsection remains unpaid, up to
the 1st day of April of the relevant year. |
(3) Where the investment fund has
failed to pay the required fee and any additional fee imposed pursuant to
subsection (2) on or before the 1st day of April, of the relevant
year, the Commission may revoke the licence or registration of the investment
fund. |
(4) The Commission may, for good
cause, waive any additional fee imposed under subsection (2). |
28. An investment fund that has
commenced winding up, dissolution or other termination procedures shall notify
the Commission, in writing, of such winding up dissolution or other termination
procedures within fourteen days after such commencement, and shall upon the
conclusion of the winding up, dissolution or other termination procedures
submit to the Commission within fourteen days, such evidence of winding up
dissolution or other termination as the Commission may reasonably require. | Winding up, etc. of investment fund. |
29.(1) The Commission shall keep a
register of regulated investment funds. | Register of regulated investment
funds. |
(2) It shall be the duty of the
Commission to keep the register current. |
(3) A person may, upon payment of
the prescribed fee, inspect and make copies of or take extracts from the
register. |
30.(1) An investment fund shall be
required to advise the Commission within twenty-one days of the occurrence of
any material change to the investment fund or its investors which the
investment fund considers not to require an amendment to the offering or
constitutive documents. | Material change reporting. |
(2) The Commission may require
that details of any material change be reported to the investors as stipulated
by the Commission. |
31.(1) Except where exempted by the
Commission a licensed investment fund shall have its financial statements
audited annually by an auditor approved by the Commission pursuant to Part IV
of this Act. | Annual audits of regulated
investment fund. |
(2) Except where exempted by the
Commission, a licensed investment fund shall send its audited financial
statements in respect of a financial year of the investment fund to the
licensor within four months of that financial year or within such extension of
the period as the Commission may allow. |
(3) Where the licensor is the
investment fund administra of the investment fund, and the investment fund has
failed to submit its audited financial statements within the specified time,
the administrator shall advise the Commission of such failure immediately upon
the expiration of such time. |
PART III |
Investment Fund Administration |
32.(1) An investment fund administrator
shall be either a company incorporated or registered under the Companies Act,
or incorporated under the International Business Companies Act. | Investment fund administrator. Ch. 308 Ch. 309. |
(2) A company shall not carry on
or attempt to carry on business as an investment fund administrator unless it
is - |
(a) the holder of an investment fund
administrator's licence; or |
(b) acting with and in accordance with
the authorization of the Commission in extraordinary circumstances. |
(3) Notwithstanding subsection (2)
the Commission may exempt an investment fund administrator from obtaining an
investment fund administrator's licence if, upon application made to it in the
prescribed form accompanied by the prescribed fee, it is satisfied that the
applicant - |
(a) would otherwise be granted a
restricted investment fund administrator's licence; |
(b) will not be administering more
than one specified investment fund; and |
(c) complies with the prescribed
financial requirements. |
(4) An exemption granted under
subsection (3) may be revoked in the same circumstances as an investment fund
administrator's licence. |
(5) An investment fund
administrator exempted by virtue of subsection (3) of this section shall pay
the prescribed annual exemption fee. |
(6) The Commission may in its
discretion withdraw the authorization for any investment fund administrator to
operate under extraordinary circumstances granted pursuant to subsection
(2)(b). |
33. (1) An application for an investment
fund administrator's licence shall be made to the Commission in the prescribed
form and shall be accompanied by - | Applications for licensing. |
(a) such information as the
Commission requires to determine the application; and |
|
(2) The Commission may grant an
investment fund administrator's licence if it is satisfied that the applicant - |
(a) is a company incorporated or
registered under the Companies Act, or incorporated under the International
Business Companies Act; | Ch. 308. Ch. 309. |
(b) has sufficient expertise to
administer investment funds; |
(c) is of sound reputation; |
(d) will administer investment funds
in a proper manner; |
(e) has directors, officers, and
senior management who meet the fit and proper requirements of the
Commission; and |
(f) complies with prescribed
financial requirements. |
(3) An investment fund
administrator shall notify the Commission within fourteen days of any change of
its principal office, registered office and any individuals acting as its
agents. |
(4) A person shall not, in
connection with an application for an investment fund administrator's licence,
supply to the Commission information which he knows or should reasonably know
is false or misleading. |
(5) An investment fund
administrator shall comply when carrying on or attempting to carry on business
as an investment fund administrator, with any conditions contained in its
investment fund administrator's licence. |
34.(1) The Commission may grant,
subject to such conditions as it deems fit, an unrestricted investment fund
administrator's licence which authorizes the holder thereof to act or carry on
business as an investment fund administrator in respect of an unlimited number
of investment funds. | Unrestricted and restricted
licences. |
(2) The Commission may grant,
subject to such conditions as it deems fit, a restricted investment fund
administrator's licence that authorizes the holder thereof to act or carry on
business as an investment fund administrator solely in respect of the
investment funds specified by the Commission from time to time. |
(3) An applicant for an unrestricted
investment fund administrator's licence shall have- |
(a) a place which will be its
principal office in The Bahamas; and |
(b) two persons residing in The
Bahamas to be its agents in The Bahamas. |
(4) An applicant for a restricted
investment fund administrator's licence shall have - |
(a) a registered office in The
Bahamas; and |
(b) a place in The Bahamas where
administration records of the investment funds under its administration are
available unless the applicant has a physical place of business in The Bahamas. |
(5) Where, in accordance with
subsection (3)(b), an investment fund administrator has appointed two
individuals resident in The Bahamas to act as its agents, the administrator may
appoint them to act either separately or jointly. |
35.(1) The Commission may refuse to
grant an investment fund administrator's licence authorizing a person to carry
on business as a investment fund administrator in a name that is- | Refusal to grant licence. |
(a) identical to that of any licensed
investment fund administrator or which so nearly resembles the name of a
licensed investment fund administrator as to be likely to deceive or cause
confusion in the investment fund industry; |
(b) likely to suggest, falsely, the
patronage of or connection with some person or authority, whether within The
Bahamas or elsewhere; or |
(c) likely to suggest, falsely, that
the investment fund administrator has a special status in relation to or
derived from the Government. |
(2) If subsequent to granting an
investment fund administrator's licence, the Commission discovers that the
licensed investment fund administrator is authorized to carry on business as an
investment fund administrator in or from The Bahamas in a name which, in the
opinion of the Commission, it would have refused by virtue of subsection (1),
the Commission may direct the licensed investment fund administrator to change
its name to a name approved by the Commission. |
(3) An investment fund
administrator shall comply with a direction given to it in accordance with
subsection (2). |
36.(1) An investment fund administrator
shall immediately upon starting to provide the principal office to a licensed
investment fund pay the prescribed principal office fee and thereafter on or
before the 31st day of January in each year. | Principal office and annual fees. |
(2) An investment fund
administrator shall be deemed to be providing the principal office of the
investment fund immediately upon the licensing of such investment fund. |
(3) Where an investment fund is
licensed by an unrestricted investment fund administrator, the principal office
fee may be paid at the time that the investment fund documents are filed under
section 13. |
(4) A licensed investment fund
administrator shall on or before the 31st day of January in each
year pay the prescribed annual licence fee for its own licence, and submit to
the Commission, in writing, a declaration that all information filed with the
Commission is current and applicable. |
(5) If an annual fee referred to
in subsection (1) or (4) is not paid on or before the 31st day of
January, there is payable an additional fee equal to that annual fee for each
month or part of a month during which the annual fee and any additional fee
imposed by virtue of this subsection remains unpaid, up to the 1st
day of April of the relevant year. |
(6) Where the investment fund
administrator has failed to pay the fee required by subsection (1) and (4) and
the additional fee imposed pursuant to subsection (5) on or before the 1st
day of April, of the relevant year, the Commission may revoke the licence of
the investment fund administrator. |
(7) The Commission may, for good
cause, waive any additional fee imposed under subsection (5). |
37.(1) If the Commission is satisfied
that there is reasonable cause to do so or if the shareholders' equity of an
investment fund administrator is less than any amount prescribed by the
Commission, it may direct the investment fund administrator to - | Requirements for paid up capital. |
(a) provide such guarantees or insurance
coverage or other financial support as the Commission shall think fit; or |
(b) increase its shareholders' equity
to such amount as the Commission shall consider appropriate. |
(2) An investment fund
administrator shall comply with a direction given under subsection (1). |
38. An investment fund
administrator shall not provide a principal office to a licensed investment
fund unless it is satisfied that - | Requirements for provisions of
principal office. |
(a) each operator and promoter of the
investment fund is of sound reputation; |
(b) if applicable, the administration
of the investment fund will be undertaken by persons who - |
(i) have sufficient expertise to
administer the investment fund; and |
(ii) are fit and proper; and |
(c) that the business of the
investment fund and any offer of equity interest in it will be carried out in a
proper manner. |
39. If an investment fund
administrator knows or has reason to believe that an investment fund for which
it provides a principal office, or a promoter or operator of such an investment
fund - | Requirements to report certain
matters. |
(a) is or is likely to become unable
to meet any of its obligations as they fall due; |
(b) is carrying on business otherwise
than in accordance with this Act or any other applicable legislation; or |
(c) is carrying on business in a
manner that is or is likely to be prejudicial to investors or creditors of the
investment fund, |
the investment fund administrator shall
immediately give the Commission written notice of its knowledge or belief
giving its reason for such knowledge or belief. |
40. An investment fund
administrator shall not issue shares and no person owning or having an interest
in shares in the investment fund administrator shall transfer or otherwise
dispose of such shares or deal in such shares or such interest unless - | Transfer or disposal of shares. |
(a) the Commission has given its
approval to the issue, transfer, disposal or dealing as the case may be;
or |
(b) the Commission has waived the
obligation to obtain that approval, and any conditions of the approval or
waiver are complied with; and |
(c) the prescribed fee has been paid. |
41. No person other than a
licensed investment fund administrator shall carry on or attempt to carry on
investment fund business in or from The Bahamas with the words "fund
administrator" in its name or title and shall not represent in any way
that it is carrying on or attempting to carry on business in or from The Bahamas
as an investment fund administrator unless exempted or otherwise authorized to
do so by the Commission. | Name of investment fund
administrator restricted. |
42.(1) An investment fund administrator
shall have its financial statements audited annually by an auditor approved by
the Commission. | Annual audits of investment fund
administrator. |
(2) An investment fund
administrator shall submit its audited financial statements in respect of the
financial year of the administrator to the Commission within four months of the
end of that financial year or within such extension of that period as the
Commission may reasonably allow. |
43. The Commission shall prescribe
the minimum number of directors required by an investment fund administrator. | Minimum number of Directors. |
44.(1) An investment fund administrator
shall not appoint or change a director or chief executive officer (or the
equivalent position) as the case may be, unless - | Approval to change Directors etc.
required. |
(a) the prior written approval of the
Commission to the appointment has been obtained; or |
(b) the Commission has exempted the
investment fund administrator from the obligation to obtain the Commission's
approval; and |
(c) the prescribed fee has been paid. |
(2) An investment fund administrator
shall notify the Commission immediately of any material change in the
information furnished to the Commission in support of its application. |
PART IV |
Approved Auditors |
45.(1) The auditors of an investment
fund or an investment fund administrator shall be approved by the Commission. | Auditors to be approved and report. |
(2) The approved auditor of an
investment fund or a investment fund administrator shall prepare - |
(a) a report on the financial
statements prepared in respect of each year of the investment fund or
investment fund administrator pursuant to subsection (3)(a); |
(b) a report on the results of the
procedures performed by the auditors pursuant to subsection (3)(b). |
(3) The auditor shall issue - |
(a) a report on the audit of the
financial statements stating whether or not the financial statements present
fairly, in all material respects, the financial position of the investment fund
or investment fund administrator and the results of its operation, changes in
it owners' equity and its cash flow in accordance with standards accepted by
The Bahamas Institute of Chartered Accountants or any other international
accounting body recognized by the Commission; and |
(b) a report on whether or not the
business of the investment fund or investment fund administrator has been
conducted in accordance with the provisions of this Act relating to the record
keeping, filing requirements, and the financial affairs of the investment fund
or investment fund administrator. |
(4) Where in the course of
performing the duties required by subsection (3) the auditor comes to the view
that a matter could give rise to a qualification in the audit report on the
financial statements or that a major deficiency, weakness or non-compliance
should be reported to the Commission, the auditor shall request the investment
fund or the investment fund administrator, as the case may be, to notify the
Commission accordingly and, if the investment fund or investment fund
administrator fails or refuses to do so, the auditor shall notify the
Commission immediately in writing and shall supply a copy of the notification
to the investment fund or investment fund administrator. |
PART V |
Regulatory Authority of the
Commission |
46.(1) It shall be the duty of the
Commission - | Commission to review operations of
investment funds. |
(a) to maintain a general review of
the operations of investment funds and parties related to investment funds in
The Bahamas; |
(b) to monitor, by way of receipt of
regular reports or in such other manner as it thinks necessary the affairs or
business of any investment fund or party related to an investment fund in The
Bahamas. |
(2) The Commission may make rules
providing for such matters as may be necessary or expedient for giving effect
to its duties. |
47.(1) The Commission shall have the
authority to regulate the investment fund industry and the operations and
duties of investment funds and parties related to the investment fund. | Authority to regulate. |
(2) Without prejudice to the generality
of the foregoing the Commission shall have the authority to establish by rules
the standards or educational criteria, if any, which govern the suitability of
a party related to an investment fund or contracted to provide any of the
services of a party related to an investment fund. |
48. In the exercise of its
functions under this Act the Commission shall satisfy itself that the
provisions of the Financial Transactions Reporting Act are being complied with. | Compliance with Financial
Transactions Reporting Act, Ch. 368. |
PART VI |
On-Site and Off-Site Examinations |
49.(1) The Commission shall on a
regular basis or whenever it thinks fit conduct on-site and off-site
examinations of the business of investment funds and parties related to an
investment fund under this Act for the purpose of satisfying itself that - | Duty of Commission to conduct
examinations and review. |
(a) the provisions of this Act or any
regulations made hereunder are being complied with; and |
(b) the provisions of the Financial
Transactions Reporting Act, or any regulations made thereunder are being
complied with, | Ch. 368. |
and after the conclusion of such examination to
prepare a report on its findings. |
(2) In any case where the
Commission is unable to conduct an examination described in subsection (1), it
may appoint an auditor, at the expense of the investment fund or party related
to the investment fund, to conduct such examination and to report thereon to
the Commission. |
(3) The Commission may assess
charges to recover the cost of such examination. |
(4) The Commission shall examine,
consider and make recommendations on any information or report prepared as a
result of such examination. |
(5) The Commission shall be
entitled at all reasonable times to exercise its authority under sections 51
and 52, to have access to or to request the books, records or any information
of or from the investment fund or parties related to an investment fund. |
PART VII |
Supervisory Authority of The
Commission |
50.(1) The Commission may at any time
instruct an investment fund or investment fund administrator to have its
accounts audited other than as required in section 31(1) and to submit its
audited financial statements to the Commission within such time as the
Commission shall specify. | Instructions to audit accounts. |
(2) The operator or investment
fund administrator of an investment fund shall ensure that an instruction given
to an investment fund in accordance with subsection (1) is complied with within
the specified time. |
51.(1) If requested to do so by the
Commission a party related to an investment fund shall give the Commission such
information or such explanation in respect of the investment fund as the
Commission may reasonably require to enable it to carry out its duties under
this Act. | Requirement of information or
explanation. |
(2) If requested to do so by the
Commission, an investment fund administrator shall give the Commission such
information or such explanation in respect of its investment fund
administration or its operations as the Commission may reasonably require to
enable it to carry out its duties under this Act. |
(3) A person giving information or
an explanation for the purpose of subsection (1) or (2) shall not give the
Commission information or an explanation that he knows or should reasonably
know is false or misleading. |
52.(1) If requested to do so by the
Commission, a party related to an investment fund shall give the Commission
access to or provide at any reasonable time all records relating to the
investment fund. | Access to Records. |
(2) When requested to do so by the
Commission, an investment fund administrator shall give the Commission access
to, or provide within a reasonable time - |
(a) the records of the
administrator; and |
(b) any records under the control of
the administrator, relating to the investment fund administration carried out
by the investment fund administrator. |
(3) The Commission may copy or
take an extract of a document it is given access to, or provided with in
accordance with this section. |
53.(1) Without prejudice to the
Commission's authority in section 55(1)(e) and (f) the Commission may - | Authority to revoke licence. |
(a) by order, revoke the licence or
registration of an investment fund - |
(i) where the investment fund has
ceased to carry on or attempt to carry on its business; or |
(ii) if the investment fund becomes
insolvent or goes into liquidation or is wound up or otherwise dissolved; |
(b) by order, revoke the licence of an
investment fund administrator where- |
(i) the investment fund
administrator has ceased to carry on or attempt to carry on its business;
or |
(ii) the investment fund
administrator becomes insolvent or goes into liquidation or is wound up or
otherwise dissolved; |
(c) apply to the Court for an order
compelling a person - |
(i) where that person has failed to
comply with the direction of the Commission to comply with the direction; |
(ii) where that person is
contravening this Act to cease contravening it; or |
(iii) where that person has omitted to do
anything required under this Act to rectify the omission. |
(2) Whenever the Commission is of
the opinion that any action under subsection (1) (a) or (b) should be taken, it
may attach conditions to the licence or registration of such investment fund or
investment fund administrator but before taking such action the Commission
shall give that investment fund or investment fund administrator notice in
writing of its intention so to do setting out in the notice the grounds on
which it proposes to act and shall afford such investment fund or investment
fund administrator, within such time as may be specified therein, not being
less than seven days, an opportunity to respond in writing to such action, and
thereafter the Commission shall advise the investment fund or investment fund
administrator of its decision. |
(3) Whenever the Commission
attaches conditions to a licence or registration under subsection (2) it shall
cause notice of the conditions to be published in the Gazette. |
(4) Any condition attached to a
licence or registration under subsection (2) shall be for a period of ninety
days, or until the Commission takes action under subsection (1) or until the
Commission notifies the licensee that the conditions have been removed,
whichever period is shorter. |
(5) Where the Commission deems it
necessary it may apply to the Court for an order that the investment fund or
investment fund administrator, as the case may be, shall be wound up,
dissolved, liquidated or otherwise terminated, as appropriate. |
(6) The Commission may, in the
case of an investment fund or investment fund administrator that is or has been
licensed or registered under this Act apply to the Court for directions if it
considers that the winding up is not being conducted in the best interests of
the investors or creditors of such investment fund or investment fund
administrator and the court shall make such order as it considers fit. |
PART VIII |
Investigative and Disciplinary
Authority of The Commission |
54. The Commission shall have
authority to conduct regulatory hearings to determine whether - | To conduct regulatory hearings. |
(a) there has been or there is likely
to be a failure to comply with the provisions of this Act or any regulations or
rules made hereunder; |
(b) an investment fund or investment
fund administrator is carrying on its business in a manner detrimental to the
public interest; |
(c) an investment fund or investment
fund administrator is carrying on or attempting to carry on business or is
winding up, dissolving, liquidating or terminating its investment fund or
investment fund administration business voluntarily in a manner that is
prejudicial to - |
(i) the investors in the investment
fund; or |
(ii) any investment fund being
administered by an investment fund administrator; or |
(iii) the creditors of the investment
fund; or |
(iv) the creditors of the investment
fund administrator; or |
(d) an investment fund or an
investment fund administrator is carrying on or attempting to carry on its
investment fund or investment fund administ |