As we look ahead in 2022, there are several regulatory changes expected during the year which will impact Bermuda entities. With the landscape constantly evolving, we know that organisations will want to stay up to date with their regulatory requirements, and ahead of any filing, compliance or administrative obligations.
Investment Business Act
Entities which carry on "investment business" (as defined in the Investment Business Act 2003, the "Investment Business Act") should be aware of expected changes to the Investment Business Act involving licensing and registration. Currently, entities which carry on investment business outside of Bermuda are of out scope of the Investment Business Act completely, and other entities which do carry on investment business in Bermuda are able to avail themselves of a number of exemptions from licensing requirement, which involves a one time notification to the Bermuda Monetary Authority (the "Authority"). Pursuant to a bill currently being debated in the House of Assembly, we expect that previously out of scope or exempt entities will be required to either be:
- licensed under the Investment Business Act; or
- registered as a Class A Registered Person (an entity which does not maintain a place of business in Bermuda) or as a Class B Registered Person (persons who are exempt from the Investment Business Act).
These changes mean that all persons who carry on investment business in Bermuda will be required to make a filing with the Authority. Class A and Class B Registered Persons are likely to eventually have other reporting and regulatory requirements. We expect the amendment bill to be enacted in Q2, following which the Authority has indicated there will be a 12 month transition period following which entities will have to be either licensed or registered.
Once the legislation is finalised Conyers will be publishing a more fulsome alert on these upcoming changes to assist our clients with planning.
Economic Substance Act - Fund Managers
Amendments to the Economic Substance Act 2019 (the "Economic Substance Act") were enacted pursuant to The Economic Substance Amendment (No.2) Regulations 2021 (the "Amendment Regulations") which will affect the relevant activity of "fund management". The Amendment Regulations mean that an entity will be carrying on the relevant activity of "fund management" simply by managing investments for an investment fund. Fund managers may recall that when the original regulations supporting the Economic Substance first came out it was only fund managers required to be licensed under the Investment Business Act which were required to meet the economic substance requirements. The new changes mean that all fund managers are now required to satisfy such requirements.
A change in the guidance issued by the Registrar of Companies in 2021 should also be noted for 2022. Initially if an entity carried out a relevant activity caught by the Economic Substance Act but earned nil gross revenue from such activity, it was not required to make a filing. However revisions to the Guidance Notes now means that if an entity carries on a relevant activity such entity is required to file an economic substance declaration, regardless of whether or not it earned gross revenue from such activity. Such entities must complete the shorter 'Nil' Declaration, and submit it within six months of their financial year. It should be noted that although required to make a filing, entities with no gross revenue do not have to have to economic substance in Bermuda.
Please click here to read more about the impact on fund managers by the Amendment Regulations.
Investment Funds Act
This is a reminder that operators of certain funds, including Overseas Funds, Professional Class B Funds, Professional Closed Funds and authorised funds (as such are defined in the Investment Funds Act 2006) are required to certify to the Authority that they have at all times in the preceding financial year been in compliance with the applicable rules and requirements of their designation. Such certifications must be provided to the Authority annually within six months of the financial year end of the fund. Pursuant to amendments which were effective on 1 January 2022, operators of funds which fail to comply with the certificates and statement requirements imposed on them will now be liable to pay a fee for every month (whether in whole or in part) that such certification or statement is not submitted to the Authority.
Personal Information Protection Act
Although the Personal Information Protection Act 2016 ("PIPA") has not yet become fully enacted, it is expected that guidance and regulations will be forthcoming in 2022. PIPA, when fully in force, will impose specific obligations on the processing of personal information including the requirement for organisations to adopt suitable measures and policies to give effect to the rights of individuals as set out in PIPA. Organisations will also be required to appoint a 'privacy officers' for the purposes of compliance with PIPA who have the responsibility for communicating with the Privacy Commissioner. Organisations should begin planning to ensure they are prepared when PIPA does become fully operative. The Conyers Privacy Team can assist with such planning as well as preparation of privacy policies and notices.
To read more about the requirements of PIPA, please click here:
Common Reporting Standard
Bermuda Reporting Financial Institutions (RFIs) and Trustee-Documented Trusts (TDTs) are reminded they must now annually file a certification that they are in compliance with their Common Reporting Standard ("CRC") obligations. The Ministry of Finance has added an Annual CRS Compliance Certification Form (the "Certification Form") to the Bermuda Tax Information Reporting Portal, to be completed by all RFIs and TDTs. The first filings for the period ending 31 December 2020 were due on 15 January 2022, and all future filings must be submitted no later than 30 September following the end of the reporting period. As such, RFIs and TDTs should be aware that they must complete the Certification Form for the period ending 31 December 2021 by 30 September 2022.
Another development to note is that the Ministry of Finance will soon begin issuing notices requiring certain Bermuda RFIs to undertake a CRS Independent Compliance Review so as to provide further assurance that Bermuda RFIs are applying the CRS rules correctly. Using a risk-based approach, the Ministry will identify a subset of Bermuda RFIs that are required to engage an approved independent reviewer to perform a CRS Review.
KEY DATES TO NOTE
|Q1||Funds - 31 March||
|Economic Substance - 31 March||Deadline for entities with a 30/09 FYE that carry out a "relevant activity" to make economic substance filing with the Registrar of Companies|
|Q2||Funds - 30 June||Deadline for Professional Class A funds and Professional Class B funds which have a 31/12 FYE to submit to BMA (i) annual certification (ii) audited financial statements and (ii) statement of any material changes to their offering document|
|Economic Substance - 30 June||Deadline for entities with a 31/12 FYE that carry out a "relevant activity" to make economic substance filing on the Registrar of Companies|
|Q3||Economic Substance - 30 September||Deadline for entities with a 31/03 FYE that carry out a "relevant activity" to make economic substance filing with the Registrar of Companies|
|CRS - 30 September||Deadline for Bermuda Reporting Financial Institutions and Trustee-Documented Trusts to complete and submit the CRS Certification Form for the period ending 31 December 2021|
|Q4||Economic Substance - 31 December||Deadline for entities with a 30/06 FYE that carry out a "relevant activity" to make economic substance filing with Registrar of Companies|
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.