|
MINISTRY OF FINANCE |
S.I. No. 94 of 2003 |
THE INVESTMENT FUNDS ACT |
(No. 20 of 2003) |
THE INVESTMENT FUNDS REGULATIONS,
2003 |
The Minister in exercise of the powers
conferred by section 62 of the Investment Funds Act, 2003 hereby makes the
following regulations - |
PART 1 |
PRELIMINARY |
1. These Regulations may be
cited as the Investment Funds Regulations, 2003. | Citation. Interpretation. |
|
“Act” means the Investment Funds Act, 2003; | No. 20 of 2003. |
“connected person” means - |
(a) any individual or company
beneficially owning, directly or indirectly, ten per cent or more of the
ordinary share capital of an investment fund or able to exercise, directly or
indirectly, ten per cent or more of the total votes in that fund; |
(b) any individual or company
controlled by an individual or company referred to in paragraph (a); |
(c) any member of a group of which
the fund or a person referred to in (a) or (b) forms a part; |
(d) any director or officer of the
fund or any director or officer of a company referred to in paragraph (a), (b)
or (c); or |
(e) any person being a promoter,
broker, underwriter, hanker, investment banker or professional advisor who has
a special relationship with any person described in paragraph (a), (b) or
(c); |
“custodian” means a person appointed under
regulation 13; |
“directors” means in relation to an investment
fund that is a company, the operator of the fund; |
“financial institution” means a bank or trust
company, an investment fund administrator, a broker-dealer or securities
investment advisor regulated by a regulatory authority in The Bahamas or such
other foreign financial institution located in a prescribed jurisdiction which
is regulated by a foreign regulatory authority having similar regulatory and
supervisory responsibilities to those of the Commission or the Central Bank of
The Bahamas; |
“partner” or “general partner” means in relation
to an investment fund that is a partnership, the operator of the fund; |
“prescribed jurisdiction” means any jurisdiction that
is prescribed by the Commission by notice in the Gazette; |
“prescribed market” or “prescribed securities
exchange” means any stock exchange, over the counter market or other organized
securities market that is prescribed by the Commission by notice in the
Gazette; |
“representative” means a person appointed under
section 17 of the Act; |
“trustee” in relation to an investment fund that
is a unit trust means the operator of the fund. |
PART II |
INDEPENDENCE OF INVESTMENT FUND
CUSTODIAN, ETC. |
3.(1) An investment fund that is a
unit trust shall have - | Independence of investment fund
custodian, operator and administrator. |
(a) an operator which is independent
of the investment fund administrator unless - |
(i) the fund is specifically
exempted by the Commission; or |
(ii) the operator and the
administrator are deemed to be independent of each other under regulation
4; and |
(b) a custodian which is independent
of the investment fund administrator unless - |
(i) the fund is specifically
exempted by the commission; or |
(ii) the custodian and the
administrator are deemed to be independent of each other under regulation 4. |
(2) An investment fund that is a
company or a partnership shall have a custodian which is independent of the
investment fund administrator and of the operator of the investment fund unless
- |
(a) the fund is specifically exempted
by the licensor; or |
(b) the custodian is deemed to be
independent of the administrator and operator under regulation 4. |
(3) Paragraphs (1) and (2) do not
apply to an investment fund that is a self-administered fund. |
4. Where the custodian and the
administrator of the investment fund are bodies corporate with the same parent
company, the custodian and the administrator of the investment fund shall be
deemed to be independent of each other if - | Custodian operator and
administrator, deemed independent. |
(a) (i) they
are subsidiaries of balls a financial institution; |
(ii) neither the custodian nor the
administrator of the investment fund is a subsidiary of the other; |
(iii) at least one director of the
custodian is not also a director of the administrator or operator of the
investment fund or both; and |
(iv) the custodian and the
administrator and the operator of the investment fund sign an undertaking with
the Commission that they will act independently of each other in their dealings
with the investment fund; or |
(b) the investment fund is established
in a jurisdiction which applies similar rules to those provided in these
Regulations with respect to the independence of persons carrying out the
functions of custodians, operators and administrators. |
PART III |
SELF-ADMINISTERED FUNDS |
5. Where the principal office of
a self-administered fund is outside of The Bahamas the fund shall at all times
have a place in The Bahamas where duplicate corporate and accounting records
are available. | Self-administered funds. |
6. A self-administered fund
shall pay the fees specified in relation to that fund in accordance with
Schedule 12. | Fees for self administered funds. |
PART IV |
INVESTMENT FUND OPERATORS |
7.(1) An investment fund that is a
unit trust shall appoint as its operator - | Operators of Unit Trusts. |
(a) a bank or trust company with an
unrestricted licence granted pursuant to section 4 of the Banks and Trust Companies
Regulation Act: or | Ch. 316. |
(b) such other bank or trust company
or financial institution having - |
(i) a licence in a prescribed
jurisdiction; and |
(ii) a minimum net worth of two
million United States dollars or equivalent inclusive of paid up capital and
non-distributable contributed surplus; or |
(iii) a minimum net worth of less than two
million United States dollars or equivalent inclusive of paid up capital and
non distributable contributed surplus, if the trustee is the wholly owned
subsidiary of a parent company which - |
(aa) qualifies under subparagraph
(b)(i) and (ii) and issues a standing commitment to the Commission to subscribe
additional capital to its subsidiary up to two million United States dollars or
equivalent if so required; or |
(bb) undertakes to the Commission that
it shall not let its wholly owned subsidiary default; and (cc) agrees to
comply with any other condition stipulated by the Commission; or |
(c) such other person as approved by
the Commission. |
|
(a) ensure that the sale, issue,
repurchase, redemption, and cancellation of equity interest of the investment
fund are carried out in accordance with the provisions of these Regulations and
the trust deed; |
(b) ensure that the value of the
equity interest is calculated in accordance with the provisions of the trust
deed; |
(c) carry out the proper instructions
of the investment manager or investment fund administrator; |
(d) ensure that the investment and
borrowing limitations set out in the trust deed are complied with; |
(e) ensure that the investment fund
is audited annually or as required and cooperate with the auditors; and |
(f) not issue equity interest or
evidence of such equity interest unless subscription moneys have been paid. |
8.(1) Unless otherwise provided by
rules of the Commission an investment fund that is a company shall have a
minimum of two operators. | Operator of companies. |
(2) The operators shall provide
for the matters specified in regulation 7(2)(a) to (f) substituting “Memorandum
and Articles of Association” for “Trust Deed", and “shares” for
“units". |
9. In the case of an investment
fund that is a partnership, the operator shall provide for the matters
specified in regulation 7(2)(a) to (f) substituting “Articles of Partnership”
for “Trust Deed", and “interests” for “units". | Operator of Partnerships. |
10.(1) An investment fund shall - | Appointment of operator. |
(a) appoint as its operator a person
that is fit and proper for the performance of its duties; and |
(b) upon application for licensing
submit to the licensor sufficient information so as to enable the licensor to
assess the fit and proper status of the operators. |
(2) The Commission may require at
any time evidence from the fund that an operator is appropriately qualified for
the performance of its function. |
PART V |
INVESTMENT FUND CUSTODIAN, INVESTMENT MANAGER |
& INVESTMENT ADVISOR |
11.(1) A custodian of an investment
fund shall be - | Custodian of an Investment Fund. |
(a) a bank or trust company with an
unrestricted licence granted pursuant to section 4 of the Banks and Trust
Companies Regulation Act; or | Ch. 316. |
(b) such other bank or trust company
or financial institution having - |
(i) a licence in a prescribed
jurisdiction; and |
(ii) a minimum net worth of two
million United States dollars or equivalent inclusive of paid up capital and
non-distributable contributed surplus; or |
(iii) a minimum net worth of less than two
million United States dollars or equivalent inclusive of paid up capital and
non-distributable contributed surplus if the custodian is the wholly owned
subsidiary of a parent company which - |
(aa) qualifies under subparagraph (b)
(i) and (ii) and issues a standing commitment to the Commission to subscribe
additional capital to its subsidiary up to two million United States dollars or
equivalent if so required; or |
(bb) undertakes to the Commission that
it shall not let its wholly owned subsidiary default; and |
(cc) agrees to comply with any other
condition stipulated by the Commission; |
(c) such other person as approved by
the Commission. |
(2) The investment fund shall
deposit with its custodian property of the investment fund and the custodian
shall take the property into its custody or under its control and hold it in
trust for the investment fund in accordance with the constitutive documents of
the investment fund. |
12. The Commission may require at
any time evidence, from an investment that a custodian, investment fund manager
or investment fund advisor of the fund is appropriately qualified for the
performance of its functions. | Qualifications. |
13.(1) An investment fund shall appoint
one or more persons as custodians of the assets of the investment fund unless
the operators of the fund certify in writing that the structure of the
investment fund or the nature of the assets of the investment fund are such
that they do not require that a custodian be appointed to hold the assets of
the investment and. | Appointment of a custodian. |
(2) Notwithstanding paragraph (1)
the Commission may determine that an investment fund is required to appoint a
custodian. |
PART VI |
INVESTMENT FUND ADMINISTRATORS |
14.(1) Subject to paragraph (2), every
investment fund shall appoint an investment fund administrator. | Investment fund administrator. |
(2) Paragraph (1) does not apply
to an investment fund that is - |
(a) a self-administered fund; |
(b) a Recognized Foreign Fund; |
(c) an investment fund administered
by a company that is exempt from obtaining an investment fund administrator's
licence under the Act; or |
(d) an investment fund exempted from
this requirement in writing by the Commission. |
(3) An investment fund
administrator shall maintain unless otherwise permitted by the
Commission: |
(a) where it is the holder of an
unrestricted investment fund administrator's licence - |
(i) net worth, inclusive of its
paid up capital and non-distributable reserves, of not less than five hundred
thousand United States dollars (US$500,000) or the equivalent in a currency
acceptable to the Commission; or |
(ii) net worth, inclusive of its
paid up capital and non-distributable reserves, of not less than one hundred
and fifty thousand United States dollars (US$150,000) or the equivalent in a
currency acceptable to the Commission and indemnity insurance coverage of not
less than one million United States dollars (US$1,000,000) or the equivalent in
a currency acceptable to the Commission; |
(b) where it is the holder of a
restricted investment fund administrator's licence; |
(i) net worth, inclusive of its
paid up capital and non-distributable reserves, of not less than two hundred
and fifty thousand United States dollars (US$250,000) or the equivalent in a
currency acceptable to the Commission; or |
(ii) net worth, inclusive of its
paid up capital and non- distributable reserves, of not less than one hundred
thousand United States dollars (US$100,000) or the equivalent in a currency
acceptable to the Commission and indemnity insurance coverage of not less than
five hundred thousand United States dollars (US$500,000) or the equivalent in a
currency acceptable to the Commission; or |
(c) where it is exempted from
obtaining an investment fund administrator's licence, |
(i) net worth, inclusive of its
paid up capital and non-distributable reserves, of not less than one hundred
and fifty thousand United States dollars (US$150,000), or the equivalent in a
currency acceptable to the Commission; or |
(ii) net worth, inclusive of its
paid up capital and non-distributable reserves, of not less than fifty thousand
United States dollars (US$50,000) or the equivalent in a currency acceptable to
the Commission and indemnity insurance coverage of not less than one hundred
and fifty thousand United States dollars (US$150,000), or the equivalent in a
currency acceptable to the Commission. |
15. Where an investment fund
administrator owes a debt to its parent company and wants the debt to be
considered as a part of capital the debt shall be considered as part of capital
for the purposes of regulation 14(3) and shall - | Inter-company indebtedness. |
(a) be subordinate to all other
liabilities of the investment fund administrator, both in terms of its
entitlement to income and its rights in a liquidation; and |
(b) not be settled without the prior
written consent of the Commission. |
16.(1) Every director of an investment
fund administrator shall be fit and proper. | Qualifications of directors. |
(2) Upon application to the
Commission for licensing the investment fund administrator shall - |
(a) in respect of any Director that
is an individual, submit biographical details and an account of the
professional qualifications and experience of each of its directors; |
(b) in respect of any Director that is
a company, submit its documents of incorporation as well as the biographical
details and an account of the professional qualifications and experience of
each director of the company. |
(3) Where an investment fund
administrator after being licensed desires to appoint a Director it shall
submit the information required in paragraph (2) to the Commission for its
approval, prior to the appointment of that director. |
17.(1) An investment fund administrator
shall - | General powers and duties of
administrator. |
(a) take all reasonable steps to
ensure that the operations of an investment fund are carried out in accordance
with the investment fund's offering memorandum and constitutive documents and
these Regulations to the exclusive interest of the investors; |
(b) take all reasonable steps to
ensure that the investment fund maintains proper books and records; |
(c) take all reasonable steps to
ensure that audited financial statements for the financial year are available
for each investor within four months of the end of the investment fund's
financial year or within such extension of that period as approved by the
Commission; |
(d) make the constitutive documents of
each fund it administers available free of charge in The Bahamas at all times
for inspection by the investors, during normal office hours at its place of
business or at the place of business where duplicate records of the investment
fund are available, and make copies of such documents available upon the
payment of a reasonable fee; |
(e) take all reasonable steps to
ensure that the investment fund is not carrying on its business in a manner which
is or is likely to be prejudicial to investors or creditors of the investment
fund; |
(f) make such reports to the
Commission regarding investment funds for which it is the administrator as the
Commission ma: require; |
(g) take all reasonable steps to
ensure that operators are meeting their obligations and are complying with the
Act and these Regulations. |
(2) It shall be a defence to any
claim made against the investment fund administrator for breach of paragraph
(1) that the administrator has taken all reasonable steps to properly fulfill
its duty thereunder. |
18.(1) An investment fund may dismiss
its administrator by notice in writing from the operators of the fund - | Retirement or removal of
administrator. |
(a) if the investment fund administrator
goes into liquidation, becomes bankrupt or has a receiver appointed over its
assets; |
(b) if investors whose equity
interests carry voting rights representing at least fifty percent in value of
the equity interests outstanding, deliver to the operators of the investment
fund a written request to dismiss the investment fund administrator, setting
out good and sufficient reason for the requested dismissal; or |
(c) for any other good and sufficient
reason, that the operators of the investment fund thinks fit. |
(2) Where the operators of an
investment fund have knowledge of the retirement or dismissal of the investment
fund administrator they shall - |
(a) notify the Commission of the
retirement or dismissal of the investment fund administrator; and |
(b) notify the Commission of the
particulars in Schedule 7 regarding the prescribed appointment of the successor
administrator no later than fourteen (14) days after the effective date of the
appointment. | Schedule 7. |
(3) Where for any reason the
dismissal or retirement of the administrator may result in an investment fund
being without a properly appointed administrator, the operators of the fund
shall apply to the Commission for authorization to carry on business as an
investment fund administrator under section 32(2)(b) of the Act. |
PART VII |
APPROVED AUDITORS |
19.(1) An auditor of an investment fund
or investment fund administrator seeking the approval of the Commission under
section 45 of the Act shall satisfy the Commission that - | Approval of Auditors. No. 20 of 2003. |
(a) in the case of an individual, he
is a member in good standing of The Bahamas Institute of Chartered Accountants
or of any other international accounting body prescribed by the Commission by
notice in the Gazette; |
(b) in the case of a firm of
accountants, the partners of the firm are all members of The Bahamas Institute
of Chartered Accountants in good standing, or are members in good standing of
any other international accounting body prescribed by the Commission by notice
in the Gazette. |
(2) An individual or accounting
firm referred to in paragraph (1) shall supply the Commission with such other
information as the Commission may require. |
PART VIII |
OPERATION OF INVESTMENT FUNDS |
20. No person shall supply a subscription
form for the purchase of equity interest to any other person who has not
previously invested in that fund unless the subscription form is accompanied by
the offering document related to that fund. | Subscription forms. |
21.(1) The offering document of a
standard or professional fund shall contain the information prescribed in
Schedule 1. | Offering document Schedule 1. |
(2) The offering document of a
SMART Fund shall contain such information as may be prescribed by the
Commission for the relevant approved SMART Fund structure. |
22. Any person who publishes an
offering document, advertisement or any other invitation to invest in an
investment fund shall, where the performance data or estimated yield is stated
in the offering document, advertisement or other invitation, justify and
explain all calculations and representations. | Performance data in offering
document or advertisement. |
23.(1) The constitutive documents of a
standard or professional investment fund shall contain the information
prescribed in Schedule 2. | Constitutive Documents. Schedule 2. |
(2) The constitutive documents of
a SMART Fund shall contain such information as maybe prescribed by the
Commission for the relevant approved SMART fund structure. |
(3) Where there is willful default
by the custodian, administrator, investment manager, investment advisor or
operator of the investment fund in the performance of their duties, nothing in
the constitutive documents of the fund shall exempt the aforementioned persons
from any liability to investors. |
(4) Subject to paragraph (5) no
alteration of the constitutive documents of an investment fund may be made
except by a special or extraordinary resolution of holders whose equity
interests carry general voting rights. |
(5) An operator of an investment
fund may alter the constitutive documents of the fund without consulting
investors whose equity interests in that fund carry general voting rights, if
the operators certify in writing that, in their opinion, the proposed
alteration - |
(a) is necessary to make possible
compliance with fiscal, or statutory requirement or requirements of any
overseas regulatory authority; |
(b) does not materially prejudice
investors' interests; |
(c) does not to any material extent
release the custodian, administrator, investment manager, investment advisor or
any other person from any liability to investors; or |
(d) does not materially increase the
costs and charges payable from the investment fund property. |
24. Where matters pertaining to an
investment fund are addressed in both the offering document of the fund and the
fund's constitutive document, no provision in the offering document of such
investment fund shall conflict with the relevant provisions in the constitutive
documents of the fund. | Conflict in documents. |
25.(1) Where an initial offer is made
by a fund, the fund shall not invest the subscription proceeds prior to the
closing of the initial offer without disclosing their intention to do so in the
offering document. | Offering, issue. |
(2) Offer and redemption prices
shall be calculated on the basis of the investment fund's net asset value
divided by the number of units, shares or interests outstanding or as otherwise
provided in the investment fund's offering document and such prices may be
adjusted by fees and charges that are to be clearly disclosed in the offering
document. |
(3) The offering document of an
investment fund shall specify the maximum interval between the redemption day
for the equity interest in the investment fund and payment of redemption
proceeds to the investor. |
(4) The offering document of an
investment fund shall stipulate in what circumstances, if any, redemption
requests of the fund may be deferred to the next redemption day. |
26.(1) A change in the method of
dealing in an investment fund, whether temporary or permanent may be made with
the approval of the operators of the fund - | Change in investment fund. |
(a) where the possibility of a change
and the circumstances in which a change can be made have been fully disclosed
in the offering document; or |
(b) where there is no disclosure under
paragraph (a) but there are exceptional circumstances, which make it in the
best interest of the fund to change the dealing in the fund. |
(2) An investment fund shall give
notice in writing of the change in the method of dealing in the fund to
investors of the fund and shall provide a copy of the notice to the Commission
no later than seven days after the change. |
(3) In the case of a temporary
change. the notice to the investor under paragraph (2) shall also specify the
time period for which the temporary change has been made. |
(4) In the case of a permanent
change in the method of dealing in the investment fund the investment fund,
shall submit a copy of its amended offering document and constitutive documents,
where applicable, to the Commission not later than twenty one days after the
effective date. |
(5) Dealing in an investment fund
may be suspended where - |
(a) the possibility of suspension in
dealing and the circumstances in which suspension may occur are disclosed in
the offering document of the fund; or |
(b) there is no disclosure under
sub-paragraph (a) but there are exceptional circumstances, which make it in the
best interest of the fund to suspend dealing. |
(6) The administrator of an
investment fund shall immediately give notice in writing to the investors if
dealing in the investment fund ceases or is suspended, and shall simultaneously
provide a copy of the notice to the Commission. |
(7) Where dealing in the
investment fund is suspended the fund shall publish notice of the suspension
during the period of suspension, in a newspaper, if any, in which the
investment fund's prices are normally published, and in such other media as the
Commission may specify. |
27.(1) No person shall be allowed to
enter into underwriting or sub-underwriting contracts on behalf of an
investment fund - | Transactions with connected persons. |
(a) without the prior consent of the
operators; and |
(b) unless the investment fund or the
investment fund administrator provides in writing to the operators that all
commissions and fees payable to the administrator or. connected person under
such contracts and all investments acquired pursuant to such contracts shall
form part of the investment fund's assets. |
(2) Where cash forming part of the
investment fund's assets is deposited with the custodian, the investment fund
administrator, the investment manager, the investment advisor or with any bank
which is a connected person thereof, interest thereon shall be paid at a rate not
lower than the prevailing commercial rate for a deposit of a similar kind, size
and term, as is in accordance with normal banking practice. |
(3) An investment fund may borrow
money from its custodian, investment manager, investment advisor, investment fund
administrator or from any bank which is a connected person to any of those
parties, if the rate of interest and any fee for arranging or terminating the
loan is not greater than the prevailing commercial rate or fee for a loan of a
similar kind, size and term, granted in accordance with normal banking
practice. |
(4) Any material transaction
between the investment fund and its administrator, investment manager,
investment advisor, or any connected persons thereof shall be disclosed in the
investment fund's annual audited financial statement. |
28.(1) At any meeting of the investors
who own voting shares, units or interests that are also equity interests - | Meetings. |
(a) investors may appoint
proxies; |
(b) votes shall be proportionate to
the equity interests held; |
(c) the quorum for meetings at which
an extraordinary resolution is to be considered shall be the investors holding
twenty-five percent of the equity interest in issue; |
(d) the quorum for meetings at which
an ordinary resolution is to be considered shall be the investors of ten
percent of the equity interest in issue; |
(e) an ordinary resolution may be
passed by a simple majority of the votes of those present and voting and an
extraordinary resolution may be passed by seventy-five percent or more of those
present and voting; |
(f) if within half an hour from the
time appointed for the meeting a quorum is not present, the meeting shall stand
adjourned for not less than fifteen days and the quorum at an adjourned meeting
shall be those persons present in person or by proxy. |
(2) The constitutive document of
an investment fund shall provide for class meetings, where conflicts of
interests exists between different classes of investors. |
(3) The operators of an investment
fund, the custodian, the investment fund administrator, investment manager,
investment advisor and their connected persons shall be permitted to vote their
beneficially owned equity interests at, a meeting in which they have a material
interest in the business to be contracted, if - |
(a) full disclosure of the existence
of such a relationship is made in the offering document of the investment
fund; and |
(b) the possibility exists of a
decision being made to the detriment of the investors of the investment fund,
and that the investors had been notified of such conflict prior to the meeting
and were afforded the opportunity to redeem their shares, units or interests in
an investment fund prior to a meeting being held. |
(4) An extraordinary general
meeting shall be called for the following purposes - |
(a) to modify, alter or add to the
constitutive documents, except as provided in paragraph 23(5); |
(b) to increase the rate for maximum
fees to be paid to the investment fund administrator, operators of the
investment fund, investment manager, investment advisor or custodian, or |
(c) to impose fees, other than those
specified in sub-paragraph (b). |
29.(1) An investment fund shall
maintain a register of investors and a current copy of the register of investors
shall be kept at the principal office of the investment fund. | Investors' register. |
(2) In the case of a restricted
investment fund administrator whose place of business is outside of The
Bahamas, a current copy of the register of investors shall be available at a
place in The Bahamas where corporate and accounting records are available. |
30. An investment fund shall make
its annual audited financial statements available to investors within four
months of the end of the investment fund's financial year or within such
extension of that period as the Commission may allow. | Reporting of annual financial
statements to Investors. |
31.(1) An investment fund shall produce
at least one report in respect of each financial year, unless exempted from
doing so by the Commission in writing. | Production of report. |
(2) The report required pursuant
to paragraph (1) shall contain an analysis of the investment fund's performance
and such other information as the Commission may from time to time deem
necessary. |
32. Where the Commission has
stipulated that material change information be reported to investors pursuant
to section 30(2) of the Act, the operators of an investment fund shall take
reasonable steps to advise its investors of such material change. | Notification of material change. |
33. No person shall publish, make
or issue an advertisement or other invitation, including a public announcement,
for persons to invest in an investment fund, unless the advertisement or other
invitation - | Advertising and public
announcements. |
(a) contains sufficient relevant
information so that it is not misleading; and |
(b) where it is made, issued or
published outside The Bahamas, complies with any laws in the jurisdiction where
the advertisement or other invitation is made, issued or published; or |
(c) where it is made, issued or
published in The Bahamas it is approved by the Commission prior to publication
upon application containing the information prescribed in Schedule 5 and
payment of the prescribed fee. | Schedule 5. |
34.(1) All documents submitted to the
Commission or required by the Commission must be in English or accompanied by a
certified translation in English. | Documents to be submitted in
English. |
(2) All documents and records of
the investment fund that are kept or maintained by the investment fund
administrator must be in English or accompanied by a certified translation in
English. |
PART IX |
NON-BAHAMAS BASED INVESTMENT FUND |
35. Where a representative is
appointed by a non-Bahamas based fund the representative shall be - | Qualifications for a representative. |
(a) a counsel and attorney-at-law or
a firm of counsel and attorneys-at-law in The Bahamas; |
(b) an accountant or firm of
accountants in The Bahamas; |
(c) a bank or trust company licensed
pursuant to section 4 of the Banks and Trust Companies Regulation Act; | Ch. 316. |
(d) an investment fund administrator
licensed under the Investment Funds Act; | No. 20 of 2003. |
(e) a broker-dealer or securities
investment advisor registered pursuant to section 22 and 29(5) of the Securities
Industry Act; or | Ch. 363. |
(f) such other person as the
Commission may approve. |
36. A representative is not liable
for the acts and omissions of the investment fund administrator or an operator
of the fund but may be authorized by the fund to - | Responsibility of Representative. |
(a) receive applications and money
for equity interest; |
(b) issue receipts in respect of
application moneys received under paragraph (a); |
(c) issue contract notes to investors
in accordance with the terms of the investment fund; |
(d) receive redemption notices,
transfer instructions and conversion notices from investors for immediate
transmission to the administrator of the investment fund; |
(e) accept any notice or
correspondence which investors may wish to serve on the investment fund; |
(f) notify the Commission immediately
if subscriptions or redemptions of equity interest cease or are
suspended; |
(g) make the constitutive documents
available for inspection by investors in The Bahamas free of charge at all
times during normal office hours at its place of business and make copies of
such documents available upon the payment of a reasonable fee; |
(h) provide investors in The Bahamas
with information on the investment fund including the investment fund's
financial reports and sales literature; |
(i) deliver to the Commission, if it
so requests, all accounts and records relating to the sale and redemption of
equity interests of the investment fund in and from The Bahamas; and |
(j) represent the investment fund in
relation to matters in which any investor resident in The Bahamas has a
pecuniary interest or which relates to the equity interest sold in or from The
Bahamas. |
37. A non-Bahamas based investment
fund shall notify the Commission immediately upon the retirement or dismissal
of its representative and shall apply to the Commission for the approval of a
new representative. | Dismissal of a representative. |
38. A non-Bahamas based investment
fund shall submit details of all contracts between the representative and the
fund to the Commission and shall notify the Commission of any amendment to
these contracts. | Contracts of Non-Bahamas based fund. |
39.(1) An application by a non-Bahamas
based investment fund for approval of its representative shall contain the
information prescribed in Schedule 6 and shall be accompanied by the prescribed
non-refundable application fee. | Approval of representatives. Schedule 6. |
(2) Upon its review of an
application made pursuant to paragraph (1), the Commission shall notify the
applicant in writing of its decision. |
40. An annual declaration for the
renewal of a representative shall contain the information prescribed in Form C
of Schedule 11 and shall be accompanied by the prescribed fee. | Annual declaration for the renewal
of a representative. Schedule 11. |
PART X |
APPLICATION PROCEDURE AND FORMS |
41.(1) An application made to the
Commission for an investment fund licence under section 11(1) of the Act, shall
contain the particulars prescribed in Form A in Schedule 3 and shall be
accompanied by the prescribed non refundable application fee. | Application to fund licence. Form A, Schedule 3. |
(2) The Commission shall review
any application for licensing made under paragraph (1) and shall notify the
applicant in writing of its decision. |
(3) No person shall operate as an
investment fund until - |
(a) it has paid the prescribed annual
fee; and |
(b) has received from the Commission
such evidence of licensing as determined by the Commission. |
42.(1) Any financial institution or
professional advisor may submit written proposals for the structure of a SMART
Fund to the Commission for approval. | SMART Fund structure. |
(2) The Commission shall review
every application made under paragraph (1) and shall advise the applicant in
writing of its decision. |
43.(1) An application for registration
of a Recognised Foreign Fund made under section 11(2) of the Act, shall contain
the particulars set out in Form B in Schedule 3 and shall be accompanied by the
prescribed non-refundable application fee. | Application to file a Recognized
Foreign Fund. Form B, Schedule 3. |
(2) The Commission shall review
every application made under paragraph (1) and shall notify the applicant in
writing of its decision. |
(3) Upon approval of its
application for registration, the applicant shall pay the prescribed annual fee
and thereafter shall receive from the Commission such evidence of registration
as determined by the Commission. |
44. An investment fund
administrator or the investment fund shall notify the Commission within seven
days of any change to the information in the application form for the licensing
or registration of the investment fund. | Change of information in application
form. |
45.(1) An application for an investment
fund administrator's licence shall contain the particulars prescribed in Form A
in Schedule 4 and shall be accompanied by the prescribed non-refundable
application fee. | Application for administrator's
licence. Form A, Schedule 4. |
(2) The Commission shall review
every application made under paragraph (1) and shall notify the applicant in
writing of its decision. |
(3) No person shall operate as a
licensed investment fund administrator until it has paid the prescribed annual
fee and has received, from the Commission, such evidence of licensing as determined
by the Commission. |
46.(1) Every application for an
exemption from obtaining an investment fund administrator's licence shall
contain the particulars prescribed in Form B in Schedule 4 and shall be
accompanied by the prescribed non-refundable application fee. | Application for exemption from
licence. Form B, Schedule 4. |
(2) The Commission shall review
every application made under paragraph (1) and shall notify the applicant in
writing of its decision. |
(3) No person shall operate as an
investment fund administrator exempt from obtaining an investment fund
administrator's licence until it has paid the prescribed annual fee and has
received from the Commission such evidence of exemption from licensing as
determined by the Commission. |
47. The Commission may, in respect
of any application for licensing, registration, exemption from licensing or
authorization, waive certain of the particulars required as a part of the
licensing, registration, exemption from licensing or authorization process. | Waiver of particulars. |
PART XI |
MISCELLANEOUS |
48. Notification made to the
Commission of the retirement or dismissal of an investment fund administrator
shall contain the particulars prescribed in the Schedule 7. | Notification of retirement or
dismissal of administrator. |
49. An investment fund
transferring from The Bahamas to another jurisdiction shall notify the
Commission setting out in writing the particulars prescribed in Schedule 8. | Transfer of fund to another
jurisdiction. Schedule 8. |
50. Where an investment fund is
transferring from one investment fund administrator to another it shall notify
the Commission in writing setting out the particulars prescribed in Schedule 9. | Transfer of Fund to new administrator. Schedule 9. |
51. A dormant fund which wishes to
re- launch its operation shall submit an application containing the particulars
prescribed in Schedule 10. | Relaunch of dormant fund. Schedule 10. |
52. The annual declaration made by
an investment fund under section 27(1)(a) of the Act shall be in Form A in
Schedule 11 and shall he submitted to the Commission at the time of payment of
the prescribed annual licence or registration fee. | Annual declaration of fund. Form A, Schedule 11. |
53. The annual declaration made by
an investment fund administrator pursuant to section 36(4) of the Act shall be
in Form B in Schedule 11 and shall be submitted to the Commission at the time
of payment of the prescribed annual fee for the administrator. | Annual declaration of an
administrator. Form B, Schedule 11. |
54. Where an investment fund
wishes to be exempted from any regulation the fund or the fund administrator
shall apply in writing to the Commission setting out the regulation in respect
of which an exemption is sought and shall provide reasons for the request. | Application for exemption. |
55. The fees payable to the
Commission for the various matters under the Act and these Regulations are
those prescribed in Schedule 12. | Fees. Schedule 12. |
| Offences. |
(a) distributes or possesses for
distribution, any offering document, advertisement or other invitation or offer
to subscribe for equity interest of an investment fund, which does not comply
with these Regulations; |
(b) makes any false or misleading
representation regarding the nature or performance or financial information of
an investment fund; |
(c) gives false or misleading
information regarding an investment fund's operators, investment managers,
investment advisors, investment fund administrator, custodian, professional
advisors or auditors; |
(d) fails to disclose the payment of
any fee or charge required to be disclosed by these Regulations; |
(e) breaches any of these Regulations
regarding the operation of an investment fund or a non-Bahamas based investment
fund in The Bahamas; |
commits an offence and is liable on summary
conviction to a fine of $10,000 or to imprisonment for twelve months or to both
such fine and imprisonment. |
(regulation
21) |
SCHEDULE 1 |
Information to be disclosed in the Offering
Document of the Investment Fund |
|
1. Details of Fund
|
|
(a)
|
Name, registered address and place and date
of the creation of the investment fund, with an indication of its duration if
limited ; and
|
|
(b)
|
Address of principal office of the investment
fund.
|
|
2. Investment Objectives and Restrictions
|
|
Details of investment objectives and
investment policy, including a summary of the investment and borrowing
restrictions. In the event that there are no such investment or borrowing
restrictions, include a statement to this effect.
|
|
3. Risks
|
|
A description of the risks involved in an
investment in the investment fund.
|
|
4. Operators and Principals
|
|
The names and registered addresses of the
following parties -
|
|
(a)
|
parties related to the investment fund ;
|
|
(b)
|
the auditors ;
|
|
(c)
|
the Attorney's (if applicable) ; and
|
|
(d)
|
the bankers.
|
|
5. Characteristics of Equity Interests
|
|
(a)
|
Minimum investment (if any) ;
|
|
(b)
|
A description of the different types of
equity interest in the investment fund including their currency of
denomination ;
|
|
(c)
|
Form of certification ; and
|
|
(d)
|
Frequency of valuation and dealing, including
subscription and redemption days and valuation days.
|
|
6. Application and Redemption Procedures
|
|
(a)
|
Procedure for subscribing and redeeming
equity interest in the investment fund ;
|
|
(b)
|
The maximum interval between the applicable
date of redemption and the dispatch of the redemption proceeds ; and
|
|
(c)
|
The circumstances in which redemption of
equity interest in the investment fund may be suspended.
|
|
7. Valuation of Property and Pricing
|
|
(a)
|
The method of pricing the underlying assets
of the investment fund and the circumstances under which it can change ;
|
|
(b)
|
The policy of the investment fund for valuing
unquoted securities which it holds ;
|
|
(c)
|
The method of calculating the issue and
redemption prices ; and
|
|
(d)
|
The method of determining the value of the
assets and liabilities of the investment fund and the net asset value
accordingly.
|
|
8. Distribution Policy
|
|
(a)
|
The distribution policy and the approximate
dates on which dividends will be paid (if applicable) ;
|
|
(b)
|
Name and registered addresses of paying
company.
|
|
9. Fees and Charges
|
|
(a)
|
The level of all fees and charges payable by
an- investor, including all charges levied on subscription and redemption and
switching (in the case of umbrella investment funds) ;
|
|
(b)
|
The level of all fees and charges payable by
the investment fund ; and
|
|
(c)
|
Disclosure of entitlement to brokerage or
other transaction benefits of any connected persons to the investment fund.
|
|
10. Reports and Accounts
|
|
(a)
|
The date of the investment fund's financial
year, and
|
|
(b)
|
A specified time in which the audited
financial statements will be made available to investors.
|
|
11. Warnings
|
|
Prominently display warnings reading
substantively as follows :
|
|
(a)
|
Important - if you are in doubt about the
contents of this offering document, you should consult your financial
advisor, and
|
|
(b)
|
A warning that the price of equity interests
in the investment fund and the income from them (where income is distributed)
may be subject to market fluctuations.
|
|
12. General Information
|
|
(a)
|
A list of constitutive documents and an
address in The Bahamas where they may be inspected free of charge or
purchased ;
|
|
(b)
|
The date of publication of the offering
document ;
|
|
(c)
|
A statement that the operators of the investment
fund accept responsibility for the information contained in the offering
document as being accurate as at the date of publication ;
|
|
(d)
|
Where details of an investment fund not
regulated by the Commission is disclosed in the offering document, there must
be a statement that such an investment fund is not regulated by the
Commission ; and
|
|
(e)
|
A statement that in licensing, registering or
filing the investment fund the Commission does not take responsibility for
the financial soundness of the investment fund or for the correctness of any
statements made or opinions expressed in this regard.
|
|
(regulation
23 (1)) |
SCHEDULE
2 |
Contents of the Constitutive Documents |
Information to be Disclosed in |
the Memorandum and Articles of Association, |
the Trust Deed or Partnership Articles, as
Applicable |
PART A |
|
1. Name of Investment Fund
|
|
2. Governing Law
|
|
3. For Unit Trust Schemes only -
|
|
(a)
|
A statement that the deed is binding on each
investor as if he had been a party to it and so to be bound by its provisions
and authorizes and requires the trustee and the administrator to do as
required of them by the terms of the deed ;
|
|
(b)
|
A provision that an investor is not liable to
make any further payment after he had paid the purchase price of his units
and that no further liability can be imposed on him in respect of the units
which he holds or owns ; and
|
|
(c)
|
A declaration that the property of the
investment fund is held by the trustee on trust for the investors of the
units pari passu according to the number of units held or owned by each
investor.
|
|
4. Investment and Borrowing Restrictions
|
|
List the investment and borrowing
restrictions of the investment fund. In the event that there are no such
investment or borrowing restrictions, include a provision to this effect.
|
|
5. Suspension and Deferral of Dealing
|
|
Provisions for :
|
|
(a)
|
the circumstances under which the dealing of
equity interests in an investment fund can be deferred or suspended ;
|
|
(b)
|
the maximum interval allowed between the
applicable redemption date and the payment of redemption proceeds.
|
|
6. Meetings
|
|
There shall be provisions regarding the
manner in which investors' meetings shall be conducted in accordance with
regulation 28, if applicable.
|
|
7. Distribution Policy and Date
|
|
Provision for the payment of annual income,
if any, and when any such distribution can be made.
|
|
8. Annual Accounting Period
|
|
Provision establishing the date in the
calendar year on which the annual accounting period shall end.
|
|
9. Base Currency
|
|
A statement of the base currency of the investment
fund.
|
|
10. Modification of the Constitutive
Documents
|
|
Provision that alterations to the
constitutive documents shall be made in the manner set out in regulation 23
(5).
|
|
11. Termination of Investment Fund
|
|
A statement of the circumstances in which the
investment fund may be terminated.
|
|
12. Exemption Standard
|
|
Provisions that nothing in the constitutive
documents may provide that the operator, custodian, investment fund
administrator, investment manager or investment advisor of the investment
fund shall be exempted from any liability to investors imposed under Bahamian
law in the case of wilful default.
|
|
Information to be included in the Memorandum |
and Articles of Association, the Trust Deed or
Partnership Articles, |
as Applicable or in the Material Agreements
of the Investment Fund |
PART B |
|
13. Role of Custodian
|
|
A statement to list the duties of the
custodian as set out in regulation 11 (2).
|
|
14. Role of Investment Fund Administrator
|
|
(a)
|
a statement to list the duties of the
investment fund administrator as set out in regulation 17 ; and
|
|
(b)
|
a statement that the investment administrator
should retire in the manner as set out in regulation 18.
|
|
15. Fees and Charges
|
|
The following shall be stated -
|
|
(a)
|
the level of all fees and charges payable by
an investor, including all charges levied on subscription and redemption and
switching (in the case of umbrella investment funds) ; and
|
|
(b)
|
the level of all fees and charges payable by
the investment fund.
|
|
(regulation
41) |
SCHEDULE 3 |
Form A |
Information to be Contained in the Application Form |
for an Investment Fund Licence |
|
1. Details of the Investment Fund
|
|
(a)
|
Name of the invest :lent fund.
|
|
(b)
|
Fund vehicle :
|
|
|
•
|
Company
|
|
|
•
|
Partnership
|
|
|
•
|
Trust
|
|
(c)
|
Evidence of approval of SMART fund structure,
if applicable
|
|
(d)
|
Applicable law, date and country of
incorporation.
|
|
(e)
|
Quotation on any stock exchange and
authorization granted by other regulatory bodies.
|
|
(f)
|
Details of registration with any other
regulatory authority
|
|
|
Launch :
|
date and place
|
|
|
Dealing :
|
daily/weekly/other
|
|
(g)
|
Minimum initial subscription :
|
|
(h)
|
Valuation of assets : daily/weekly/other
|
|
(i)
|
Pricing :
|
forward/historic/other
|
|
(j)
|
Currency :
|
|
(k)
|
Distribution of offering document :
Distributor/Place
|
|
(l)
|
Fund type :
|
|
|
•
|
Equity
|
|
|
•
|
Bond
|
|
|
•
|
| |