Leading asset managers seeking modern fund solutions and efficient fund structuring continue to choose to register their fund in Bermuda. Bermuda’s welcoming environment and risk-based approach has contributed globally to the growth of investment funds, catastrophe bond funds, hedge funds, private equity funds as well as insurance-linked securities (ILS) funds.
As one of Bermuda’s leading offshore law firms, Conyers has extensive experience, acting as counsel to several hundred significant asset management groups and investment funds, including master-feeder structures, private equity funds and ILS funds.
Legal Services to Establish your Fund in Bermuda
Working with Conyers’ fund advisers brings a level of service that goes beyond the initial set-up of your fund. With a team of fund specialists that have decades of experience between them, we provide clients with the highest quality legal advice. Our team acts as offshore legal adviser for international and Bermuda-based fund management houses; and we provide innovative solutions and advice to a variety of fund service providers including banks, administrators, custodians and managers.
Advantages of Bermuda Investment Funds
Bermuda is a premier international financial centre, largely because of the structural and operational advantages it offers, including:
- Speed-to-market and same-day regulatory approval with the Class A Exempt Fund
- Strategic proximity to serve global clients
- Tax neutrality – no taxes on income, dividends or capital gains
- Access to highly qualified professionals well-versed in investment funds
- A “Master Feeder” structure with a single entity and significant cost savings. This is made possible by the flexibility of the Segregated Accounts Companies Act, which permits one or more classes of shares to effectively invest in other classes of the same company
Bermuda Investment Funds
The Investment Funds Act governs various types of regulated and non-regulated funds operating in and from Bermuda. Our advisers are well-versed in this legislation, as well as the Companies Act and can guide you through the licensing process and preparing the requirements for establishing your fund in the appropriate category.
Institutional funds are open to sophisticated investors, i.e. a minimum investment of US$100,000 per investor. The institutional fund need only have one officer, trustee, or representative resident in Bermuda. The fund’s investment manager, fund administrator, auditor, registrar, custodian or prime broker may be based anywhere in the world.
Typically for retail investors, a standard fund has no set minimum investment amount. A fund administrator is required to be based in Bermuda while other fund officers may be based anywhere in the world.
The Investment Funds Act does not apply to the following fund categories:
Closed-ended funds, such as private equity funds, are not subject to the provisions of the Investment Funds Act.
Excluded Private Funds
Private funds (suitable for master funds) that are set up for a maximum of 20 investors with no promotion to the general public may qualify as an excluded fund, resulting in minimal reporting requirements.
Class A Exempt Funds
represent a significant innovation in the offshore fund space as these funds can essentially be established and launched within one business day and require no regulatory pre-approvals. Documentation is minimal, with the Bermuda Monetary Authority’s regulatory focus being on self-certification by the fund operator and the delivery of an offering memorandum.
Class B Exempt Funds
require only minimal regulatory involvement and may be applied for by non-licensed fund managers with less than US$100 million AUM.
Structure of Bermuda Investment Funds
With the objective of reducing periodic management and performance fees, while diligently managing the performance of investments, asset managers and investors seek innovative investment structures that align investor and fund liquidity. Bermuda investment funds may be structured and organized in several ways:
Bermuda Exempted Companies
The Bermuda exempted company can be used to form closed-end funds or open-ended investment funds with the ability to create and offer multiple classes of shares.
Bermuda Limited Liability Company (Bermuda LLC)
The Bermuda LLC, modeled closely on the Delaware equivalent, combines the characteristics of corporations and partnerships. Bermuda LLCs have a separate legal personality like traditional companies, and a capital structure familiar to sponsors of partnerships, with members contributing or agreeing to contribute capital, rather than subscribing for shares.
The flexibility and efficiency of the Bermuda LLC makes it a viable offshore investment vehicle parallel to an onshore LLC. The LLC can be a useful structure for a variety of private equity funds, hedge funds, open-ended investment funds, joint ventures, asset-holdings and other purposes.
Segregated Portfolio Company (SPC)
The SPC structure allows for segregating assets and liabilities into distinct pools or portfolios without the expense of incorporating separate companies. Segregated companies can also be used for single-investor portfolios, open-ended and close-ended portfolios, thus offering considerable flexibility for individual portfolios to pursue diverse investment strategies. In Bermuda, segregated companies may be structured to fall within exemptions, saving both on regulatory fees and ongoing compliance with applicable regulated fund requirements.
Exempted (International) Limited Partnership
The Bermuda Limited partnership, patterned after the Delaware and UK model, offers flexibility for partnership agreements.
Bermuda Investment Funds Counsel
Our lawyers have specialist expertise in advising on fund formation and structuring (including constitutional and contractual documentation), incorporation, registered office and administration services, regulation and compliance, in addition to restructuring, liquidation, insolvency and winding up of funds.
Our lawyers advise on fund formation and structuring in Bermuda, including constitutional and contractual documentation, incorporation, registered office and administration services, regulation and compliance, as well as restructuring, liquidation, insolvency and winding up of funds.
With offices in the major international financial centres of Hong Kong, London and Singapore, we are more than able to provide you with strategic and responsive service. We are also well equipped to service the Middle East North Africa market, with lawyers who have thorough expertise and understanding of the region.