This article was originally published in the IFC Review on 8 June 2022 (IFC Review)

Bermuda Enacts Innovative Legislation

Bermuda is a leading jurisdiction for numerous international business sectors and is recognised for its adherence to international standards and regulatory framework. The Government of Bermuda remains committed to enhancing the high regulatory standards and to facilitating its reputation as a leading centre for international business, cross-border investment and wealth planning. 

In this overview, we identify some of the key legislative amendments that have been enacted and provide an update of the judicial trends.

Investment Business Act Amendments

Previously Bermuda-formed or incorporated persons were only required to be licensed where they are carrying on investment business activities from a place of business in Bermuda. However, as a result of the legislative amendments to the Investment Business Act 2003, and associated rules and codes of practice (the IBA), all Bermuda-formed or incorporated persons who are carrying on investment business will be required to be licensed, and subject to full regulatory and supervisory oversight by the Bermuda Monetary Authority (the BMA) or registered if they qualify for differing treatment under any other section of the modified framework.

Entities which carry on “investment business” (as defined in the IBA) in Bermuda are able to avail of a number of exemptions from licensing requirement, which involves a one-time notification to the BMA Pursuant to IBA Amendment Act. 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). 

As a result, all persons who carry on investment business in Bermuda will be required to make a filing with the BMA. Class A and Class B Registered Persons are likely to eventually have other reporting and regulatory requirements.


Corporate mergers & acquisitions are forecast to maintain the levels reached in 2021. Reported global deals exceeded 62,000 last year and market conditions indicate that this trend is set to continue in 2022.

While digital and data-driven assets were in demand in 2021, industry leaders anticipate that distressed assets from banking and insurance sectors will be much sought after in 2022.  New business models continue to emerge, especially among FinTech and Insurtechs.

Factors which indicate that deal levels will continue at the previous levels include:

  • a need for diversification into new asset classes among asset and wealth managers;
  • the push for modernisation of traditional banking services through the implementation of new digital solutions; and
  • the desire of insurance companies to refocus on core competencies rather than maintaining non-core assets.

Segregated Cell Company Amendments

The Segregated Accounts Companies Amendment Act 2021 was introduced on the 8 November 2021 and introduced changes to the Segregated Accounts Companies Act 2000 (as amended) (the SAC Act).  Protection and Segregation of Assets SACs have proven to be flexible and cost-effective structures for the segregation of assets and liabilities and protection from creditors. Each 'segregated account' is a separate and distinct account pertaining to an identified pool of assets and liabilities which are legally separated from the general account of the SAC and other segregated accounts. Functionally, this provides certainty that any asset that is linked to a particular segregated account may not be used to satisfy any liabilities of the general account of the company or of other segregated accounts.

Following the amendments, the provisions of the SAC Act have now been expanded to include limited liability companies (an LLC) formed under the Limited Liability Company Act 2016 (the LLC Act). The ability to segregate accounts within the Bermuda LLC structure offers increased flexibility and asset protection.

The SAC Act also introduced the requirement to appoint a segregated account representative (SAC Rep). The SAC Rep is required to be a “regulated person”.  A "regulated person" means a person over whom a supervisory authority has regulatory authority.  In the case of (i) an SAC company that is engaged in insurance business; (ii) an SAC company that is an anti-money laundering and anti-terrorist financing (AML/AFT) regulated financial institution or is otherwise required to comply with applicable AML/ATF regulations; or (iii) any other category of SAC company as Bermuda's Minister of Finance (the Minister) may determine, the SAC Rep must be a regulated person or a person approved by the Minister as an SAC Rep.

Investment Funds Amendment Act 2021

The Investment Funds Amendment Act 2021 (IFA Amendment Act 2021) became operative on 27 January 2021 (Operative Date).

The IFA Amendment Act 2021 introduces, amongst other things, requirements for registered funds to ensure consistency across the different classes of funds. Private funds will now be required to appoint a local registrar for registered funds; amendments to filing requirements for all registered funds and overseas funds; and a widening of the definition of “company fund” to include incorporated segregated accounts and incorporated segregated accounts companies.

All existing funds are required within six months of the Operative Date to comply with the applicable provisions brought about by the Amendment Act 2021.

The IFA Amendment Act 2021 introduces additional requirements for Private Funds requiring an operator of a Private Fund to ensure that an officer, trustee or representative resident in Bermuda is appointed who has authority to access the books and records of the fund.

Pursuant to the IFA Amendment Act all registered funds are now required to appoint a registrar in Bermuda to establish and maintain a register of the participants in the fund. Such function may be performed by a corporate service provider or any other local service provider equipped to take on the role. Registered funds that currently have overseas fund administrators performing this function will have a six-month transition period to appoint a local service provider to act as registrar and to update their offering document to demonstrate compliance with the requirement by way of a supplement, term sheet or such other form of update to the offering document. 

The register must contain:

  • the name and address of each participant;
  • the number of units (including fractions of a unit) of each type held by each participant; and
  • the date on which the participant was registered in the register in respect of the units standing in his name.

The registrar shall not be obliged to register more than four persons as the joint participants of any units. In terms of ongoing obligations, the registrar shall take all reasonable steps and exercise all due diligence to ensure that the information contained in the register is, at all times, accurate, complete and up to date.

The Amendment Act 2021 revises the filing requirements for all registered funds and overseas funds, with registered funds and overseas funds now required to make their annual filings within six months of its financial year end.

Operators of certain funds, including Overseas Funds, Professional Class B Funds, Professional Closed Funds and authorised funds (as such are defined in the IFA) are required to certify to the BMA that they have at all times in the preceding financial year been in compliance with the applicable rules and requirements of their designation. Pursuant to IFA Amendment Act, 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 BMA. 

Insolvency & Restructuring 

Multinational insolvency and restructuring matters continue to flow into Bermuda, especially those arising from Asian companies and United States ILS reinsurance funds that are domiciled in Bermuda.  Although Bermuda has no formal administration or business rescue procedure in place, the “light-touch” structure of provisional liquidation coupled with legislative provisions relating to schemes of arrangement provides a credible platform for restructuring to be effected, with the requisite support of the majority of creditors and/or shareholders.

Increasingly, globally operating Bermuda-domiciled companies have been able to utilise US Chapter 11 of the US Bankruptcy Code together with parallel Bermuda provisional liquidation proceedings as an efficient means of restructuring as an alternative to winding up.  Additionally, there is an increasing use of US Chapter 15 applications in the US Bankruptcy Court (especially in the Southern District of New York) for the recognition of Bermuda liquidations as the main proceedings for the restructuring of Bermuda incorporated companies.   

Other Bermuda companies operating globally have utilised US Chapter 11 together with parallel Bermuda proceedings as an efficient means to restructure.

There has recently been some interesting litigation regarding schemes of arrangement in respect of Bermuda-domiciled American retrocessional reinsurance funds that had experienced significant investment losses.  There can be no doubt that Bermuda sits at the cutting edge of development of this niche area of the law.

About the Authors

Janice Gutteridge

Senior Associate. Janice practices in all areas of corporate and commercial law, advising a wide range of international and local clients. Janice’s primary areas of expertise are with respect to asset financings, particularly aviation and shipping financing, shipping and aircraft registration in Bermuda, and banking and finance transactions. Janice also has extensive experience advising on mergers and acquisitions of both local and international companies, the migration of corporate entities and partnerships into and out of Bermuda, partnership structures, including global restructuring projects involving Bermuda entities, the incorporation and establishment of Bermuda special purpose vehicles and establishing private trust companies. Janice joined CHW in 2007 and was admitted to the Bermuda Bar in 2008. Janice is a member of the WISTA Bermuda Branch and the Society of Trust and Estate Practitioners, Bermuda Branch. Janice is ranked as a Rising Star by IFLR1000 and by The Legal 500 in both of the corporate & commercial and banking, finance & capital markets categories.

Warren Bank


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