The Hedge Fund Law Report

The definitive source of actionable intelligence on hedge fund law and regulation

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By Topic: Bermuda

  • From Vol. 6 No.44 (Nov. 14, 2013)

    Bermuda Investment Funds Amendment Act 2013 Facilitates the Organisation and Operation of Hedge Funds in Bermuda

    An energetic collaboration of the Government of Bermuda, the Bermuda Monetary Authority (BMA) and the private sector in Bermuda has yielded exciting results – the passage of the Bermuda Investment Funds Amendment Act 2013 (Act).  The Act creates a new asset class known as the “Class A Exempt Fund,” which is exempt from authorisation and supervision.  The exempted product is not new to Bermuda.  However, the fact that it can be launched immediately upon filing of an exemption notification with the BMA, with no additional regulatory approval, makes it a user friendly and cost efficient alternative to competing products in the marketplace.  Once the exemption notification is filed, the exemption automatically takes effect.  In a guest article, Sarah Demerling, a partner at Appleby in Bermuda, describes the new classes of exempt funds created by the Act, the requirements that must be fulfilled to rely on the exemptions and the opportunities for hedge fund managers created by the new exemptions.

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  • From Vol. 6 No.3 (Jan. 17, 2013)

    How Can Hedge Fund Managers Use Reinsurance Businesses to Raise and Retain Assets and Achieve Uncorrelated Returns? (Part Two of Two)

    Some well-known hedge fund managers have launched reinsurance businesses to address the twin challenges of raising capital and obtaining uncorrelated returns.  If properly structured and operated, reinsurance businesses offer hedge fund managers a steady stream of investable capital in the form of reinsurance premiums, which in turn can be invested in the manager’s other strategies.  However, few hedge fund managers start with the expertise or infrastructure necessary to launch and operate a reinsurance business effectively, and reinsurance businesses present unique challenges relating to people, risk management, structuring and regulation.  Moreover, running a reinsurance business alongside a hedge fund management business raises various compliance issues.  In short, launching a reinsurance business can help tackle some of the more elusive challenges facing hedge fund managers, but such launches entail risks to which managers typically are not accustomed.  To assist managers in capturing some of that upside while mitigating the risks, we are publishing this second article in a two-part series on the primary legal, business and risk considerations for hedge fund managers in launching reinsurance businesses.  In particular, this article discusses how hedge fund managers generally approach starting a reinsurance business; the best domiciles for reinsurers; a checklist of steps required to launch a reinsurance business; how hedge fund managers invest the “float” generated by such a business; conflicts of interest raised by a hedge fund manager’s side-by-side management of a reinsurance business and an investment management business, and how managers should address such conflicts; and policies and procedures that hedge fund managers should implement to accommodate the operation of a reinsurance business.  The first article in this series provided background on the reinsurance business; explained how reinsurers generate revenue; discussed how hedge fund managers can participate in the reinsurance business; and described some principal benefits and drawbacks of launching a reinsurance business.  See “How Can Hedge Fund Managers Use Reinsurance Businesses to Raise and Retain Assets and Achieve Uncorrelated Returns? (Part One of Two),” The Hedge Fund Law Report, Vol. 6, No. 2 (Jan. 10, 2013).

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  • From Vol. 5 No.31 (Aug. 9, 2012)

    New Bermuda Regulations Facilitate the Marketing of Bermuda-Domiciled Funds to Japanese Retail Investors

    On 18 December 2011, Bermuda’s Investment Funds Act, 2006 (Act), the legislation which provides the regulatory framework for the creation and operation of investment funds in Bermuda, was amended to create a new class of investment fund to be known as the “Specified Jurisdiction Fund.”  The purpose of the Specified Jurisdiction Fund classification is to permit the Ministry of Business Development and Tourism, in conjunction with the Bermuda Monetary Authority (BMA), and industry, to develop and issue, from time to time, “orders” which specifically recognize and compliment the regulatory requirements of foreign financial markets in which securities of a Bermuda-domiciled fund will be marketed.  On 8 June 2012, the Ministry of Business Development and Tourism, acting on the advice of the BMA, issued its first order under the amended Act targeting the Japanese retail market.  The order and related rules are designed to permit Bermuda-domiciled funds established pursuant to the order to be marketed to the Japanese public.  In this article, Elizabeth Denman, a counsel in the corporate department of the Bermuda office of Conyers Dill & Pearman, explains how hedge fund managers can use the order to market funds to the Japanese public.

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  • From Vol. 4 No.2 (Jan. 14, 2011)

    The Investment Funds Amendment Act 2010: Key Changes for Hedge Funds Established in Bermuda, and Their Managers

    The Bermuda Investment Funds Amendment Act 2010 (Amendment Act), which received the assent of the Governor General on December 22, 2010, amends the Investment Funds Act 2006 (Act) in making new provisions for the regulation of investment funds in Bermuda.  In a guest article, Neil Henderson, an Associate in the corporate department in the Bermuda office of Conyers Dill & Pearman, describes the changes introduced by the Amendment Act which have particular relevance for hedge funds established in Bermuda, and their managers.

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