Bermuda Passes Legislation for Faster Hedge Fund Registration

Bermuda has made adjustments to its Investment Funds Act to create a new class of funds, Exempt Class A Funds, that allows for an expedited registration process for hedge funds.

As a result of the legislative changes, hedge funds qualify as Exempt Class A Funds if they are regulated by a recognized authority, such as the SEC or the U.K.’s Prudential Regulatory Authority, or if the fund has at least $100 million in assets under management. Such funds can register through an online system called ERICA and launch after the successful filing of an exemption notification and offering memorandum, which is priced at $1,500.

“The new Exempt Class A Fund in particular represents a very cost effective and quick to market product…it is this kind of progressive thinking and development that ensures Bermuda remains an attractive location for our clients to structure their funds,” says David Brown, managing director of fund administrator Apex Fund Services.

In addition to creating the new class, Bermuda made adjustments to Exempt Class B Funds. Now, fund administrators for this class no longer have to be recognized by authorities, and the territory also got rid of the requirement to file changes to any of the fund’s service providers. For these Exempt Class B Funds, the government did add a minimum level of investment requirement of $100,000 by qualified investors.

The changes came as a result of consultation between Bermuda’s legislative government, the Bermuda Monetary Authority and the Bermuda Business Development Corporation (BBDC), a public-private partnership.

“This is a very positive step for Bermuda and is as a direct result of the government, regulator and private sector collaborating with the fund industry, both locally and internationally, and working together to implement practical changes to legislation,” says Brown.