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Bahamas Numbered Acts |
No. 20 of 2003 |
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AN ACT TO PROVIDE FOR THE REGULATION OF |
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INVESTMENT FUNDS IN THE BAHAMAS |
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AND FOR MATTERS CONNECTED THERETO |
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(Date of Assent - 11th July, 2003) |
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Enacted by the Parliament of The Bahamas. |
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Part I |
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Preliminary. |
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1.(1)
This Act may be cited as the
Investment Funds Act, 2003.
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Short title. |
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(2)
This Act shall come into
operation on such day as the Minister may, by notice published in
the Gazette, appoint.
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2.
In this Act -
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Interpretation. |
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"auditor" means a person who is - |
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(a)
a professionally qualified
accountant; or
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(b)
an accountant licensed to
practice as such under the Public Accountants Act;
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Ch. 364. |
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"Commission" means the Securities Commission of The Bahamas established by section 3 of the Securities Industry Act; |
Ch. 363. |
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"company" means a body corporate incorporated or registered under the laws of The Bahamas or of any other jurisdiction; |
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"constitutive documents" means the principal documents governing the formation of the investment fund, and includes the trust deed in the case of a unit trust, the memorandum and articles of association in the case of a company and the partnership agreement in the case of a partnership and all material agreements; |
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"counsel and attorney" has the same meaning as in section 2 of the Legal Profession Act; |
Ch. 64. |
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"court" means the Supreme Court of The Bahamas; |
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"dormant fund" means an investment fund to which section 22 of this Act applies; |
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"equity interest" means a share, a trust unit or a partnership interest that carries an entitlement to participate in the profits or gains of the issuer thereof and that is redeemable or re-purchasable at the option of the investor; |
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"Executive Director" means the person appointed as such under section 16 of the Securities Industry Act; |
Ch. 363. |
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"general partner" means - |
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(a)
in respect of a partnership
constituted under the laws of The Bahamas, a general partner as
defined under such law; or
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(b)
in respect of a partnership
constituted under the laws of a jurisdiction other than The
Bahamas, a person equivalent to a general
partner under the laws of
The Bahamas;
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"investment advisor" means a person not being an officer or an employee of an investment fund who, for valuable consideration, provides or is entitled to provide an investment fund with investment advice only, and who does not provide any investment management services to such investment fund; |
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"investment fund or fund" means - |
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(a)
a unit trust, that issues or has
equity interests the purpose or effect of which is the pooling of
investor funds with the aim of
spreading investment risks and
achieving profits or gains arising from the acquisition, holding,
management or disposal of investments
-
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(i)
of which the trustee, the
administrator, the investment advisor or the investment manager is
either a company incorporated or registered
in The Bahamas or a
person who has a place of business in The Bahamas or uses an
address in The Bahamas; or
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(ii)
the trust instrument of which
is governed by the laws of The Bahamas; or
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(b)
a company (including a limited
duration company) that issues or has equity interests the purpose
or effect of which is the pooling
of investor funds with the aim of
spreading investment risks and achieving profits and gains arising
from the acquisition, holding,
management or disposal of
investments -
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(i)
which is incorporated or
registered in The Bahamas; or
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(ii)
of which the administrator, the
investment advisor or the investment manager is either a company or
companies incorporated or registered
in The Bahamas or one or more
companies or individuals any one of whom has a place of business in
The Bahamas or which uses an address
in The Bahamas; or
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(iii)
the administration or
management, of which (including the control of substantially all of
its assets) is carried on in or from The
Bahamas;
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(c)
a partnership that issues or has
equity interests the purpose or effect of which is the pooling of
investor funds with the aim of
spreading investment risks and
achieving profits and gains arising from the acquisition, holding,
management or disposal of investments
-
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(i)
of which one or more of the
general partners is incorporated or registered in The Bahamas or is
a person residing in The Bahamas or
uses an address in The Bahamas;
or
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(ii)
whose partnership articles are
governed by the laws of The Bahamas; or
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(iii)
of which the administrator, the
investment advisor or the investment manager is either a company
incorporated or registered in The
Bahamas or a person who has a
place of business in The Bahamas or uses an address in The
Bahamas,
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and in this Act a reference to investment fund means a "Bahamas based investment fund" but does not include - |
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(aa)
a person enrolled under the
Friendly Societies Act; or
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(bb)
a company, unit trust or
partnership, where the holder of an equity interest does not have
the option to redeem his equity interest
or require the issuer to
repurchase his equity interest;
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"investment fund administration" means - |
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(a)
to administer the operations and
administrative affairs of an investment fund;
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(b)
to provide the administrative
services for an investment fund including the accounting, valuation
or reporting services; or
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(c)
to provide the principal office
of an investment fund;
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but does not include - |
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(d)
the provision of a registered
office to an investment fund where the usual corporate secretarial
and related services are provided;
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(e)
in relation to an investment
fund, the maintenance of any register of equity interests or the
registration and payment of fees;
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(f)
the provision of investment
advice or investment management or trading execution
services;
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"investment fund administrator or administrator " means a person licensed under section 34 or authorized under section 32(2)(b) to provide investment fund administration in or from The Bahamas or a person exempted under section 32(3) from obtaining an investment fund administrators's licence; |
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"investment fund administrator's licence" means a licence granted under section 34; |
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'investment fund licence" means a licence granted under subsection (1) of section 3; |
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"investment manager" means a person, not being an officer or an employee of an investment fund who for valuable consideration, provides or is entitled to provide an investment fund with investment management services, and may include providing investment advice; |
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"investor" means a person who holds or owns an equity interest issued by an investment fund; |
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"licensed investment fund" means an investment fund licensed pursuant to section 3 or section 7; |
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"licensee" means a person to whom a licence is granted under this Act; |
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"licensor" means the Commission or an investment fund administrator licensed under section 34(1); |
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"material change" means any change that is reasonably expected to have a significant effect on an investment fund or its investors; |
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"Minister" means the Minister of Finance; |
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"non-Bahamas based investment fund" means a unit trust, company or partnership that issues or has equity interest the purpose or effect of which is the pooling of investor funds with the aim of spreading investment risks and achieving profits and gains arising from the acquisitions, holding, management or disposal of investments which - |
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(i)
does not satisfy, any of the
requirements of (a)(i) - (ii), (b)(i) - (iii) or (c)(i) - (iii) of
an investment fund as defined in this
Act; and
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(ii)
which has some form of nexus to
The Bahamas including but not limited to it being sold in or from
The Bahamas or having appointed
a custodian in The Bahamas;
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"offering document" in respect of an investment fund, means a document or series of documents on the basis of which - |
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(a)
equity interests in the
investment fund are offered for sale; or
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(b)
persons are invited to subscribe
for or purchase equity interests in the investment fund, but does
not include any other notice, advertisement,
letter or other
communication used in connection with the offer for sale of any
equity interest in the investment fund or the invitation
to any
person to subscribe for or purchase any equity interest in the
investment fund if before the offer or invitation is accepted
or
taken up the prospective investor is given the opportunity to
consider an offering document containing the information prescribed
by section 9;
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"operator" in respect of the investment fund, means - |
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(a)
where the investment fund is a
unit trust, a trustee of that trust;
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(b)
where the investment fund is a
partnership, a general partner in that partnership; or
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(c)
where the investment fund is a
company, a director of that company;
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"parties related to an investment fund" means an administrator, operator, promoter, custodian, investment manager or investment advisor; |
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"partnership" means a partnership, general or otherwise constituted, under the laws of The Bahamas or any other jurisdiction; |
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"principal office" means the place of business of an investment fund which has ultimate responsibility for the office from which the principal administration for the investment fund; |
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"professional advisor" means - |
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(a)
an investment advisor or
investment manager;
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(b)
a counsel and attorney; or
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(c)
an accountant;
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"professional fund" means an investment fund that is offered to any person who comes within any of the following categories at the time of issue of the equity interest - |
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(a)
any bank or trust company
licensed under Bank and Trust Companies Regulation Act or licensed
in a prescribed jurisdiction, whether
acting in its individual or
fiduciary capacity;
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Ch. 361. |
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(b)
any registered broker-dealer or
firm registered as a securities investment advisor under the
Securities Industry Act which maintains
a minimum of one hundred
and twenty thousand dollars ($120,000) of regulatory capital or is
a Broker-dealer or firm of Securities
Investment Advisors
registered in a prescribed jurisdiction;
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Ch. 363. |
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(c)
any insurance company licensed
under the Insurance Act or licensed in a prescribed
jurisdiction;
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(d)
any investment fund licensed or
registered under this Act or regulated in a prescribed
jurisdiction;
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(e)
any natural person whose
individual net worth, or joint net worth with the person's spouse
exceeds one million dollars ($1,000,000);
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(f)
any natural person who had an
individual income in excess of two hundred thousand dollars
($200,000) in each of the two most recent
years or joint income
with that person's spouse in excess of three hundred thousand
dollars ($300,000) in each of those years and
has a reasonable
expectation of reaching the same income level in the current
year;
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(g)
any trust with total assets in
excess of five million dollars ($5,000,000);
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(h)
any entity in which all the
equity owners satisfies one of the requirements in paragraph (a) to
(h);
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"promoter" in respect of an investment fund or proposed investment fund, means any person whether within or outside The Bahamas who directly or indirectly is responsible for the formation of an investment fund and who causes the preparation or distribution of an offering document in respect of the investment fund or proposed investment fund but does not include a professional advisor or underwriter acting for or on behalf of such a person; |
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"recognized foreign fund" means an investment fund where - |
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(a)
the equity interests are listed
on a securities exchange (including an over-the-counter market)
prescribed by the Commission by notice
in the Gazette and the fund
is not licensed in The Bahamas; or
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(b)
it is licensed or registered, in
a jurisdiction prescribed by the Commission by notice in the
Gazette and not suspended from operation;
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"record" means any means by which information may be stored; |
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"registered office" means - |
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(a)
in respect of a company
incorporated under the Companies Act, an office registered in
accordance with section 17 of that Act;
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Ch. 308. |
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(b)
in the case of a foreign company
registered under section 183 of the Companies Act, an office
registered in accordance with section
190 of that Act;
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Ch. 308. |
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(c)
in the case of a company
incorporated under the International Business Companies Act, an
office registered in accordance with section
37 of that Act;
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Ch. 309. |
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(d)
in the case of a partnership
registered under the Exempted Limited Partnership Act , the
registered office of that partnership for
the purposes of that Act;
or
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Ch. 312. |
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(e)
in the case of a unit trust the
registered office of the trustee in The Bahamas or the place of
business of an individual trustee;
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"regulated investment fund" means an investment fund that is carrying on or attempting to carry on business in compliance with section 3; |
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"restricted investment fund administrator's licence" means an investment fund administrator's licence issued under section 34(2); |
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"self-administered investment fund" means an investment fund administered by its own operators who are responsible for the functions of the investment fund administrator; |
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"share" in the case of a company limited by guarantee, includes an interest of a member of that company; |
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"SMART fund" means an investment fund established by the Commission as a Specific Mandate Alternative Regulatory Test Fund that satisfies certain prescribed parameters and requirements of a category, class or type of investment fund previously approved by the Commission; |
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"standard fund" means an investment fund that does not satisfy the requirements of a professional fund, a SMART fund or a recognized foreign fund; |
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"unit" means a unit of participation in a unit trust; |
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"unit trust" means a trust which, for valuable consideration, issues units in the undertaking of the trust entitling the holder thereof to a share in the profits or gains arising from the acquisition, holding, management or disposal of investments; |
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"unregulated investment fund" means an investment fund that is carrying on or attempting to carry on business in or from The Bahamas and is doing so without complying with section 3; |
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"unrestricted investment fund administrator" means an investment fund administrator licensed under section 34(1). |
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PART II |
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Investment Fund Regulation |
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3.
An investment fund shall not
carry on or attempt to carry on business unless -
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Regulated Investment Funds. |
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(a)
it is licensed as -
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(i)
a professional fund;
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(ii)
a SMART fund; or
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(iii)
a standard fund; or
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(b)
it is registered as a recognized
foreign fund.
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4.(1)
Notwithstanding section 3, a
professional or standard investment fund shall not carry on or
attempt to carry on business unless -
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Professional and standard Fund. |
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(a)
it has appointed an investment
fund administrator to provide its principal office;
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(b)
if it is a unit trust, it has as
its trustee -
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(i)
a trust company licensed under
the Banks and Trust Companies Regulation Act, with an unrestricted
license;
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Ch. 316. |
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(ii)
a bank licensed under the Banks
and Trust Companies Regulation Act, with an unrestricted
licence;
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Ch. 316. |
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(iii)
such other bank or trust company
as shall have a minium paid-up capital and non-distributable
reserves of two million dollars and
is otherwise acceptable to the
Commission; or
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(iv)
a person approved by the
Commission; and
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(c)
a current offering document of
the investment fund has been filed with the Commission which
complies with section 9; and
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(d)
the prescribed fees have been
paid in respect of the investment fund.
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5.(1)
Notwithstanding section 3, a
SMART fund shall not carry on or attempt to carry on business
unless -
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Smart Fund. |
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(a)
it complies with any written rule
of the Commission establishing the parameters or requirements in
respect of the category, class
or type of investment fund;
and
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(b)
the prescribed fees have been
paid in respect of the investment fund.
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(2)
The Commission may establish
such parameters and requirements as to the administration of a
SMART Fund or the contents of the constitutive
documents and
offering documents of the SMART fund as it deems fit.
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(3)
The Commission shall make
rules establishing parameters and requirements in respect to each
category, class or type of investment
fund that it approves as a
SMART Fund.
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6.
A recognized foreign fund
shall not carry on or attempt to carry on business unless it has
been registered with the Commission and
it -
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Recognized Foreign Fund. |
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(a)
is licenced or registered in a
prescribed jurisdiction; or
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(b)
has submitted evidence of its
listing on a prescribed securities exchange; and
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(c)
has submitted to the Commission,
within thirty days of the beginning of its operations as a
Bahamas-based investment fund the prescribed
details of the
investment fund; and
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(d)
the prescribed fees have been
paid in respect of the investment fund.
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7.(1)
A company, unit trust or
partnership, where the holder of an equity interest does not have
the option to redeem his equity interest
or require the issuer to
repurchase his equity interest may elect to be licensed by the
Commission as an investment fund and if it
so elects shall from the
date of licensing be deemed an investment fund for the purposes of
this Act.
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Certain Funds may elect to be standard fund |
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(2)
An investment fund which
qualifies to be licensed as a professional or SMART fund or
registered as a recognized foreign investment
fund may elect to be
licensed as a standard fund.
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8.(1)
Notwithstanding section
4(1)(a) an investment fund may operate and conduct business as a
self-administered investment fund and in
such case a reference to
an investment fund administrator shall be deemed to be a reference
to the operator of the self-administered
investment fund who is
performing the function of an administrator.
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Self Administered Fund. |
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(2)
An operator of a
self-administered fund shall not deal with the fund as a
principal.
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(3)
A self-administered fund shall
be licensed by the Commission only.
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9.(1)
An offering document of an
investment fund shall
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Offering document. |
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(a)
describe the equity interests in
all material respects;
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(b)
contain the prescribed details;
and
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(c)
contain such other information as
is necessary to enable the prospective investor in the investment
fund to make an informed decision
as to whether or not to subscribe
for or purchase such equity interests.
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(2)
Subsection (1) shall be
without prejudice to any duty of •disclosure under the common
law or any other law.
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(3)
Unless exempted from this
provision, every investment fund other than a recognized foreign
fund shall be required at all times to
have filed with the
Commission a current offering document of the investment fund and
shall not have satisfied this requirement where
there is a
continuing offering of equity interests and any promoter, operator
or the administrator of the investment fund -
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(a)
is aware of any material
information that affects the offering document of the investment
fund filed with the Commission; and
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(b)
has not, within twenty-one days
of becoming so aware, filed with the Commission an amended offering
document of the investment fund,
incorporating the amendment, which
may be in the form of a sticker or a supplement.
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(4)
An investment fund is not in
compliance with subsection (3) if it has -
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(a)
changed its registered or its
principal office;
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(b)
changed its operators; or
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(c)
amended its constitutive or
offering documents and it has failed to inform the
Commission.
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10.
The Commission shall prescribe
the minimum number of directors required by an investment fund
which is a company.
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Directors of Fund. |
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11.(1)
An application for an
investment fund licence as a standard fund, professional fund or
SMART fund shall be made to the licensor in
the prescribed form and
shall be accompanied by -
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Applications for licensing and registration. |
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(a)
in the case of a standard or
professional investment fund, the current offering document, or if
one has not been finally settled,
the latest draft of the offering
document;
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(b)
in the case of a SMART fund, such
document as required by the Commission for the relevant approved
structure;
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(c)
a certified copy of the
constitutive documents of the investment fund;
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(d)
details necessary to satisfy the
licensor that the applicant is a fund as provided for in sections 4
or 5;
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(e)
the prescribed fees; and
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(f)
such other information and
documentation as the licensor may reasonably require for the
purpose of determining the application.
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(2)
An application for
registration with the Commission as a recognized foreign fund shall
be in the prescribed form and shall be accompanied
by -
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(a)
the prescribed details;
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(b)
a copy of its licence from a
prescribed jurisdiction or evidence of its listing on a recognized
securities exchange, as applicable;
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(c)
such other information and
documentation as may be required for the purpose of satisfying the
Commission that the investment fund
meets the conditions for being
classified as a recognized foreign fund; and
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(d)
the prescribed application
fee.
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12.(1)
A person who applies for an
investment fund licence or registration shall not supply the
licensor with information that he knows or
should reasonably know
is false or misleading.
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Misrepresentation. |
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(2)
Where an unrestricted
investment fund administrator acting in its capacity as a licensor
becomes aware that an applicant has provided
it with false or
misleading information, it shall immediately notify the Commission
in writing.
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13.(1)
An unrestricted investment
fund administrator shall, in respect of any investment fund that it
licenses, within thirty days of the
licensing file with the
Commission -
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Licensing by unrestricted investment fund administrator. |
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(a)
the offering document of the
investment fund as applicable accompanied by written certification
from the administrator of the investment
fund or a counsel and
attorney that the offering document is in compliance with this
Act;
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(b)
a certified copy of the
constitutive documents of the investment fund accompanied by
written certification from the administrator
of the fund or a
counsel and attorney that the constitutive documents are in
compliance with this Act;
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(c)
documentation establishing the
identity and fitness and properness of the promoter, operator,
investment advisor or investment manager
or both, the custodian and
auditor of the investment fund;
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(d)
a copy of the licence issued by
the licensor; and
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(e)
the prescribed fees.
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(2)
An unrestricted investment
fund administrator may license professional and SMART funds
only.
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(3)
An unrestricted investment
fund administrator may only license investment funds for which it
is the administrator and for which it
provides the principal
office.
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(4)
An unrestricted investment
fund administrator may not license an investment fund until it has
been satisfied by the applicant that
-
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(a)
each promoter, operator,
investment advisor or investment manager or both, the auditor and
custodian is "fit and proper"; and
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(b)
the business of the investment
fund and any offer of equity interests in it will be carried out in
a proper manner.
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(5)
An unrestricted investment
fund administrator who fails to file the prescribed documents of an
investment fund which it has licensed
on or before the thirtieth
day following the date of the licence shall pay to the Commission a
fine equal to double the amount of
the annual registration fee
payable by the fund.
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(6)
The Commission may, for good
cause, waive the fine imposed under subsection (5).
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14.(1)
The Commission may refuse to
license or register a fund if -
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Refusal to license or register an investment fund. |
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(a)
the investment fund has not
satisfied the provisions of this Act;
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(b)
for reasons of public interest,
the Commission determines that the investment fund should not be
licensed or registered; or
|
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(c)
the name of the investment fund
is -
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(i)
identical to that of any other
investment fund that is regulated under this Act or which so nearly
resembles the name of an investment
fund regulated under this Act
so as to be likely to deceive or cause confusion in the investment
fund industry;
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(ii)
likely to suggest, falsely, the
patronage of or connection with some person or authority, whether
within The Bahamas or elsewhere;
or
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(iii)
likely to suggest falsely, that
the fund has a special status in relation to or derived from the
Government.
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(2)
Unless exempted by the
Commission no person other than an investment fund shall carry on
or attempt to carry on business as an investment
fund with the
words "fund" or "investment fund" in its name.
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(3)
If, in the opinion of the
Commission, an investment fund is carrying on business in a name
that the Commission would have refused
by virtue of subsection (1)
(c), the Commission may direct the investment fund to change its
name to a name approved by the Commission.
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(4)
An unrestricted investment
fund Administrator may refuse to license an investment fund for any
reasons stated in subsection 1(a) or
(b).
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15.
The Commission shall not
license or register an investment fund until it is satisfied by the
applicant that -
|
Restriction on licensing or registration. |
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(a)
each promoter, operator,
investment advisor, manager, auditor and custodian is fit and
proper;
|
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(b)
the administration of the
investment fund will be undertaken by persons who have sufficient
expertise to administer the investment
fund; and
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(c)
the business of the investment
fund and any offer of equity interests in it will be carried out in
a proper manner.
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16.(1)
The Commission may license or
register an investment fund subject to such conditions as it
considers appropriate.
|
Conditions on licensing or registration. |
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(2)
The administrator of an
investment fund shall use reasonable efforts to ensure that, when
carrying on or attempting to carry on business
in or from The
Bahamas, the investment fund complies with all conditions under
which it was licensed or registered.
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(3)
The Commission may, waive,
vary or revoke any condition attached to an investment fund licence
granted under section 3.
|
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(4)
An investment fund may request
in writing that the Commission waive, revoke or alter any condition
attached to its licence or registration.
|
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17.(1)
A non-Bahamas based investment
fund which intends to sell it's equity interest in or from The
Bahamas shall not offer it's equity
interest for sale unless it has
appointed a representative approved by the Commission after the
applicant has applied in the prescribed
form and paid the
prescribed fee.
|
Non-Bahamas based investment fund. |
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(2)
A non-Bahamas based mutual
fund which has a nexus to The Bahamas other than being sold in or
from The Bahamas shall notify the Commission
in writing of the
nature of its nexus to The Bahamas within fourteen days of the
start of such relationship and the fund shall advise
the Commission
within fourteen days of the termination of such relationship.
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(3)
No person shall do business
with a non Bahamas based investment fund that has not appointed a
representative in The Bahamas pursuant
to subsection (1) or
notified the Commission pursuant to subsection (2).
|
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(4)
A non-Bahamas based investment
fund shall renew the appointment of its representative in The
Bahamas on an annual basis by submitting
to the Commission on or
before the 31st day of January of each year -
|
||
(a)
a written declaration in the
prescribed form; and
|
||
(b)
the prescribed annual fee.
|
||
18.(1)
An investment fund shall in
the prescribed manner notify the Commission in writing of its
intention to surrender its licence or registration,
at least
fourteen days prior to the effective date of the surrender and
shall also surrender to the Commission any certificate issued
as
evidence of its being licensed or registered.
|
Surrender of licence or registration. |
|
(2)
The Commission shall within
fourteen days of receipt of notice of the investment fund's
surrender of its licence or registration cause
to be published in
the Gazette a notice that the investment fund is no longer
regulated in The Bahamas.
|
||
19.(1)
A licensed investment fund may
transfer from The Bahamas to another jurisdiction and shall advise
the Commission in the prescribed
form of such transfer at least
fourteen days prior to the effective date of the transfer, and at
such time of notice it shall surrender
to the Commission any
certificate issued as evidence of it being licensed or
registered.
|
Transfer to and from another jurisdiction. |
|
(2)
Without prejudice to
subsection (1), an investment fund shall be deemed to have
transferred from The Bahamas to another jurisdiction
upon the
severance of all contractual relationships with any investment fund
administrator, investment manager and investment advisor
operating
in or from The Bahamas.
|
||
(3)
The Commission upon being
satisfied that the provisions of this section have been met, shall
cause to be published in the Gazette
a notice that the investment
fund is no longer regulated in The Bahamas.
|
||
(4)
An investment fund that
transfers to The Bahamas from another jurisdiction shall notify the
Commission within seven days of the transfer
supplying to the
Commission, the following information -
|
||
(a)
name of the fund;
|
||
(b)
name of the Administrator;
|
||
(c)
address of registered or
principal office in The Bahamas;
|
||
(d)
name and address of the
operators;
|
||
(e)
the current offering
memorandum;
|
||
(f)
evidence that the investment fund
has complied with the laws of the jurisdiction outside The Bahamas
for transfer of the investment
fund.
|
||
(5)
An investment fund
transferring into The Bahamas shall within thirty days of the
transfer obtain an investment fund licence from a
Licensor.
|
||
(6)
The investment fund
administrator of an investment fund transferring into The Bahamas
which has licensed the investment, fund is required
to satisfy
section 13 of this Act.
|
||
(7)
The Commission may upon the
written application of the investment fund extend the period within
which the fund must obtain an investment
fund license.
|
||
20.
An investment fund which
transfers from one investment fund administrator to another shall
notify the Commission in in writing within
fourteen days of the
effective date of the transfer.
|
Transfer of investment fund administration. |
|
21.(1)
An investment fund
administrator shall inform the Commission in writing of its
intention to terminate its administration agreement
with an
investment fund at least thirty days prior to the date of the
proposed termination.
|
Termination of administration agreement. |
|
(2)
An investment fund shall be
required to appoint a new investment fund administrator at least
seven days prior to the date of termination
under subsection (1)
and shall immediately notify the Commission in writing of such
appointment.
|
||
(3)
An investment fund that
receives notice of the intention of its administrator to terminate
its administration agreement, and fails
to appoint a new
administrator under subsection (2), shall be liquidated and have
its licence revoked by the Commission.
|
||
22.(1)
An investment fund which
ceases trading and liquidates its assets, without formally
liquidating its structure shall be deemed to be
a dormant
investment fund.
|
Dormant investment funds. |
|
(2)
An investment fund shall
inform the Commission in writing within fourteen days of such
investment fund becoming dormant.
|
||
(3)
Upon being notified that an
investment fund is dormant the Commission shall suspend the licence
or registration of the investment
fund and cause to be published in
the Gazette a notice that the licence or registration of the fund
has been suspended for dormancy.
|
||
(4)
A dormant investment fund may
re-launch its operation within one year from the date of it
becoming dormant failing which the Commission
may revoke the
licence or registration of such dormant investment fund.
|
||
(5)
A dormant investment fund
which intends to re-launch its operation within one year shall
apply to the Commission to have its licence
or registration lifted,
and such application shall be made in the prescribed manner, and
the investment fund shall pay the prescribed
fee.
|
||
(6)
The Commission may upon the
written application of the investment fund extend the period of
dormancy to a total period not exceeding
eighteen months.
|
||
(7)
A dormant investment fund to
which subsection (6) applies that intends to re-launch its
operation shall apply to the Commission in
the prescribed manner
and shall pay the prescribed re-launching fee.
|
||
(8)
Upon being satisfied that the
investment fund is in compliance with all provisions of this Act,
the Commission shall lift the suspension
of the licence or
registration of the investment fund imposed thereon pursuant to
subsection (3) and cause to be published in the
Gazette a notice
that the investment fund has been re-launched.
|
||
23.
An investment fund, shall
-
|
Books and records. |
|
(a)
keep and maintain proper books of
accounts, records and documents in such manner as to -
|
||
(i)
explain its transactions and
disclose at any point in time the financial position of the
investment fund; and
|
||
(ii)
in particular, fairly present,
in all material respects, the financial position, results of
operations, changes in owners equity and
cash flows of the
investment fund;
|
||
(b)
not destroy, conceal or alter
books of accounts, records and other documents relating to its
operations, required to be kept under
this section for the purpose
of an audit or examination by the Commission or its staff or
agents.
|
||
24.
No person other than a
regulated investment fund shall represent in any way that it is an
investment fund.
|
Representation as investment fund. |
|
25.
The investment fund
administrator or operator of an investment fund shall use
reasonable efforts to ensure that the investment fund
complies with
any direction given to it by the Commission in accordance with the
provisions of this Act.
|
Compliance with directions. |
|
26.
The administrator of an
investment fund shall use reasonable efforts to ensure that the
investment fund does not carry on or attempt
to carry on business
as an investment fund contrary to provisions of this Act.
|
Administrator to ensure investment fund compliance. |
|
27.(1)
An investment fund, shall
renew its licence or registration, as applicable, on an annual
basis by submitting to the Commission on
or before the 31st day of
January of each year -
|
Renewal of licence or registration and annual fees. |
|
(a)
a written declaration in the
prescribed form stating that all of the information filed with the
Commission is current and applicable;
and
|
||
(b)
the prescribed annual licence or
registration fee.
|
||
(2)
If the prescribed annual fee
referred to in subsection (1) is not paid on or before the 31st day
of January, the investment fund shall
be required to pay an
additional fee equal to that annual fee for each month or part of a
month during which the annual fee and any
additional fee imposed
under this subsection remains unpaid, up to the 1st day of April of
the relevant year.
|
||
(3)
Where the investment fund has
failed to pay the required fee and any additional fee imposed
pursuant to subsection (2) on or before
the 1st day of April, of
the relevant year, the Commission may revoke the licence or
registration of the investment fund.
|
||
(4)
The Commission may, for good
cause, waive any additional fee imposed under subsection (2).
|
||
28.
An investment fund that has
commenced winding up, dissolution or other termination procedures
shall notify the Commission, in writing,
of such winding up
dissolution or other termination procedures within fourteen days
after such commencement, and shall upon the conclusion
of the
winding up, dissolution or other termination procedures submit to
the Commission within fourteen days, such evidence of winding
up
dissolution or other termination as the Commission may reasonably
require.
|
Winding up, etc. of investment fund. |
|
29.(1)
The Commission shall keep a
register of regulated investment funds.
|
Register of regulated investment funds. |
|
(2)
It shall be the duty of the
Commission to keep the register current.
|
||
(3)
A person may, upon payment of
the prescribed fee, inspect and make copies of or take extracts
from the register.
|
||
30.(1)
An investment fund shall be
required to advise the Commission within twenty-one days of the
occurrence of any material change to the
investment fund or its
investors which the investment fund considers not to require an
amendment to the offering or constitutive
documents.
|
Material change reporting. |
|
(2)
The Commission may require
that details of any material change be reported to the investors as
stipulated by the Commission.
|
||
31.(1)
Except where exempted by the
Commission a licensed investment fund shall have its financial
statements audited annually by an auditor
approved by the
Commission pursuant to Part IV of this Act.
|
Annual audits of regulated investment fund. |
|
(2)
Except where exempted by the
Commission, a licensed investment fund shall send its audited
financial statements in respect of a financial
year of the
investment fund to the licensor within four months of that
financial year or within such extension of the period as the
Commission may allow.
|
||
(3)
Where the licensor is the
investment fund administra of the investment fund, and the
investment fund has failed to submit its audited
financial
statements within the specified time, the administrator shall
advise the Commission of such failure immediately upon the
expiration of such time.
|
||
PART III |
||
Investment Fund Administration |
||
32.(1)
An investment fund
administrator shall be either a company incorporated or registered
under the Companies Act, or incorporated under
the International
Business Companies Act.
|
Investment fund administrator. Ch. 308 Ch. 309. |
|
(2)
A company shall not carry on
or attempt to carry on business as an investment fund administrator
unless it is -
|
||
(a)
the holder of an investment fund
administrator's licence; or
|
||
(b)
acting with and in accordance
with the authorization of the Commission in extraordinary
circumstances.
|
||
(3)
Notwithstanding subsection (2)
the Commission may exempt an investment fund administrator from
obtaining an investment fund administrator's
licence if, upon
application made to it in the prescribed form accompanied by the
prescribed fee, it is satisfied that the applicant
-
|
||
(a)
would otherwise be granted a
restricted investment fund administrator's licence;
|
||
(b)
will not be administering more
than one specified investment fund; and
|
||
(c)
complies with the prescribed
financial requirements.
|
||
(4)
An exemption granted under
subsection (3) may be revoked in the same circumstances as an
investment fund administrator's licence.
|
||
(5)
An investment fund
administrator exempted by virtue of subsection (3) of this section
shall pay the prescribed annual exemption fee.
|
||
(6)
The Commission may in its
discretion withdraw the authorization for any investment fund
administrator to operate under extraordinary
circumstances granted
pursuant to subsection (2)(b).
|
||
33.
(1) An application for an
investment fund administrator's licence shall be made to the
Commission in the prescribed form and shall
be accompanied by
-
|
Applications for licensing. |
|
(a)
such information as the
Commission requires to determine the application; and
|
||
(b)
the prescribed fees.
|
||
(2)
The Commission may grant an
investment fund administrator's licence if it is satisfied that the
applicant -
|
||
(a)
is a company incorporated or
registered under the Companies Act, or incorporated under the
International Business Companies Act;
|
Ch. 308. Ch. 309. |
|
(b)
has sufficient expertise to
administer investment funds;
|
||
(c)
is of sound reputation;
|
||
(d)
will administer investment funds
in a proper manner;
|
||
(e)
has directors, officers, and
senior management who meet the fit and proper requirements of the
Commission; and
|
||
(f)
complies with prescribed
financial requirements.
|
||
(3)
An investment fund
administrator shall notify the Commission within fourteen days of
any change of its principal office, registered
office and any
individuals acting as its agents.
|
||
(4)
A person shall not, in
connection with an application for an investment fund
administrator's licence, supply to the Commission information
which
he knows or should reasonably know is false or misleading.
|
||
(5)
An investment fund
administrator shall comply when carrying on or attempting to carry
on business as an investment fund administrator,
with any
conditions contained in its investment fund administrator's
licence.
|
||
34.(1)
The Commission may grant,
subject to such conditions as it deems fit, an unrestricted
investment fund administrator's licence which
authorizes the holder
thereof to act or carry on business as an investment fund
administrator in respect of an unlimited number of
investment
funds.
|
Unrestricted and restricted licences. |
|
(2)
The Commission may grant,
subject to such conditions as it deems fit, a restricted investment
fund administrator's licence that authorizes
the holder thereof to
act or carry on business as an investment fund administrator solely
in respect of the investment funds specified
by the Commission from
time to time.
|
||
(3)
An applicant for an
unrestricted investment fund administrator's licence shall
have-
|
||
(a)
a place which will be its
principal office in The Bahamas; and
|
||
(b)
two persons residing in The
Bahamas to be its agents in The Bahamas.
|
||
(4)
An applicant for a restricted
investment fund administrator's licence shall have -
|
||
(a)
a registered office in The
Bahamas; and
|
||
(b)
a place in The Bahamas where
administration records of the investment funds under its
administration are available unless the applicant
has a physical
place of business in The Bahamas.
|
||
(5)
Where, in accordance with
subsection (3)(b), an investment fund administrator has appointed
two individuals resident in The Bahamas
to act as its agents, the
administrator may appoint them to act either separately or
jointly.
|
||
35.(1)
The Commission may refuse to
grant an investment fund administrator's licence authorizing a
person to carry on business as a investment
fund administrator in a
name that is-
|
Refusal to grant licence. |
|
(a)
identical to that of any licensed
investment fund administrator or which so nearly resembles the name
of a licensed investment fund
administrator as to be likely to
deceive or cause confusion in the investment fund industry;
|
||
(b)
likely to suggest, falsely, the
patronage of or connection with some person or authority, whether
within The Bahamas or elsewhere;
or
|
||
(c)
likely to suggest, falsely, that
the investment fund administrator has a special status in relation
to or derived from the Government.
|
||
(2)
If subsequent to granting an
investment fund administrator's licence, the Commission discovers
that the licensed investment fund administrator
is authorized to
carry on business as an investment fund administrator in or from
The Bahamas in a name which, in the opinion of
the Commission, it
would have refused by virtue of subsection (1), the Commission may
direct the licensed investment fund administrator
to change its
name to a name approved by the Commission.
|
||
(3)
An investment fund
administrator shall comply with a direction given to it in
accordance with subsection (2).
|
||
36.(1)
An investment fund
administrator shall immediately upon starting to provide the
principal office to a licensed investment fund pay
the prescribed
principal office fee and thereafter on or before the 31st day of
January in each year.
|
Principal office and annual fees. |
|
(2)
An investment fund
administrator shall be deemed to be providing the principal office
of the investment fund immediately upon the
licensing of such
investment fund.
|
||
(3)
Where an investment fund is
licensed by an unrestricted investment fund administrator, the
principal office fee may be paid at the
time that the investment
fund documents are filed under section 13.
|
||
(4)
A licensed investment fund
administrator shall on or before the 31st day of January in each
year pay the prescribed annual licence
fee for its own licence, and
submit to the Commission, in writing, a declaration that all
information filed with the Commission is
current and
applicable.
|
||
(5)
If an annual fee referred to
in subsection (1) or (4) is not paid on or before the 31st day of
January, there is payable an additional
fee equal to that annual
fee for each month or part of a month during which the annual fee
and any additional fee imposed by virtue
of this subsection remains
unpaid, up to the 1st day of April of the relevant year.
|
||
(6)
Where the investment fund
administrator has failed to pay the fee required by subsection (1)
and (4) and the additional fee imposed
pursuant to subsection (5)
on or before the 1st day of April, of the relevant year, the
Commission may revoke the licence of the
investment fund
administrator.
|
||
(7)
The Commission may, for good
cause, waive any additional fee imposed under subsection (5).
|
||
37.(1)
If the Commission is satisfied
that there is reasonable cause to do so or if the shareholders'
equity of an investment fund administrator
is less than any amount
prescribed by the Commission, it may direct the investment fund
administrator to -
|
Requirements for paid up capital. |
|
(a)
provide such guarantees or
insurance coverage or other financial support as the Commission
shall think fit; or
|
||
(b)
increase its shareholders' equity
to such amount as the Commission shall consider appropriate.
|
||
(2)
An investment fund
administrator shall comply with a direction given under subsection
(1).
|
||
38.
An investment fund
administrator shall not provide a principal office to a licensed
investment fund unless it is satisfied that -
|
Requirements for provisions of principal office. |
|
(a)
each operator and promoter of the
investment fund is of sound reputation;
|
||
(b)
if applicable, the administration
of the investment fund will be undertaken by persons who -
|
||
(i)
have sufficient expertise to
administer the investment fund; and
|
||
(ii)
are fit and proper; and
|
||
(c)
that the business of the
investment fund and any offer of equity interest in it will be
carried out in a proper manner.
|
||
39.
If an investment fund
administrator knows or has reason to believe that an investment
fund for which it provides a principal office,
or a promoter or
operator of such an investment fund -
|
Requirements to report certain matters. |
|
(a)
is or is likely to become unable
to meet any of its obligations as they fall due;
|
||
(b)
is carrying on business otherwise
than in accordance with this Act or any other applicable
legislation; or
|
||
(c)
is carrying on business in a
manner that is or is likely to be prejudicial to investors or
creditors of the investment fund,
|
||
the investment fund administrator shall immediately give the Commission written notice of its knowledge or belief giving its reason for such knowledge or belief. |
||
40.
An investment fund
administrator shall not issue shares and no person owning or having
an interest in shares in the investment fund
administrator shall
transfer or otherwise dispose of such shares or deal in such shares
or such interest unless -
|
Transfer or disposal of shares. |
|
(a)
the Commission has given its
approval to the issue, transfer, disposal or dealing as the case
may be; or
|
||
(b)
the Commission has waived the
obligation to obtain that approval, and any conditions of the
approval or waiver are complied with;
and
|
||
(c)
the prescribed fee has been
paid.
|
||
41.
No person other than a
licensed investment fund administrator shall carry on or attempt to
carry on investment fund business in or
from The Bahamas with the
words "fund administrator" in its name or title and shall not
represent in any way that it is carrying
on or attempting to carry
on business in or from The Bahamas as an investment fund
administrator unless exempted or otherwise authorized
to do so by
the Commission.
|
Name of investment fund administrator restricted. |
|
42.(1)
An investment fund
administrator shall have its financial statements audited annually
by an auditor approved by the Commission.
|
Annual audits of investment fund administrator. |
|
(2)
An investment fund
administrator shall submit its audited financial statements in
respect of the financial year of the administrator
to the
Commission within four months of the end of that financial year or
within such extension of that period as the Commission
may
reasonably allow.
|
||
43.
The Commission shall prescribe
the minimum number of directors required by an investment fund
administrator.
|
Minimum number of Directors. |
|
44.(1)
An investment fund
administrator shall not appoint or change a director or chief
executive officer (or the equivalent position) as
the case may be,
unless -
|
Approval to change Directors etc. required. |
|
(a)
the prior written approval of the
Commission to the appointment has been obtained; or
|
||
(b)
the Commission has exempted the
investment fund administrator from the obligation to obtain the
Commission's approval; and
|
||
(c)
the prescribed fee has been
paid.
|
||
(2)
An investment fund
administrator shall notify the Commission immediately of any
material change in the information furnished to the
Commission in
support of its application.
|
||
PART IV |
||
Approved Auditors |
||
45.(1)
The auditors of an investment
fund or an investment fund administrator shall be approved by the
Commission.
|
Auditors to be approved and report. |
|
(2)
The approved auditor of an
investment fund or a investment fund administrator shall prepare
-
|
||
(a)
a report on the financial
statements prepared in respect of each year of the investment fund
or investment fund administrator pursuant
to subsection
(3)(a);
|
||
(b)
a report on the results of the
procedures performed by the auditors pursuant to subsection
(3)(b).
|
||
(3)
The auditor shall issue
-
|
||
(a)
a report on the audit of the
financial statements stating whether or not the financial
statements present fairly, in all material
respects, the financial
position of the investment fund or investment fund administrator
and the results of its operation, changes
in it owners' equity and
its cash flow in accordance with standards accepted by The Bahamas
Institute of Chartered Accountants or
any other international
accounting body recognized by the Commission; and
|
||
(b)
a report on whether or not the
business of the investment fund or investment fund administrator
has been conducted in accordance with
the provisions of this Act
relating to the record keeping, filing requirements, and the
financial affairs of the investment fund
or investment fund
administrator.
|
||
(4)
Where in the course of
performing the duties required by subsection (3) the auditor comes
to the view that a matter could give rise
to a qualification in the
audit report on the financial statements or that a major
deficiency, weakness or non-compliance should
be reported to the
Commission, the auditor shall request the investment fund or the
investment fund administrator, as the case may
be, to notify the
Commission accordingly and, if the investment fund or investment
fund administrator fails or refuses to do so,
the auditor shall
notify the Commission immediately in writing and shall supply a
copy of the notification to the investment fund
or investment fund
administrator.
|
||
PART V |
||
Regulatory Authority of the Commission |
||
46.(1)
It shall be the duty of the
Commission -
|
Commission to review operations of investment funds. |
|
(a)
to maintain a general review of
the operations of investment funds and parties related to
investment funds in The Bahamas;
|
||
(b)
to monitor, by way of receipt of
regular reports or in such other manner as it thinks necessary the
affairs or business of any investment
fund or party related to an
investment fund in The Bahamas.
|
||
(2)
The Commission may make rules
providing for such matters as may be necessary or expedient for
giving effect to its duties.
|
||
47.(1)
The Commission shall have the
authority to regulate the investment fund industry and the
operations and duties of investment funds
and parties related to
the investment fund.
|
Authority to regulate. |
|
(2)
Without prejudice to the
generality of the foregoing the Commission shall have the authority
to establish by rules the standards or
educational criteria, if
any, which govern the suitability of a party related to an
investment fund or contracted to provide any
of the services of a
party related to an investment fund.
|
||
48.
In the exercise of its
functions under this Act the Commission shall satisfy itself that
the provisions of the Financial Transactions
Reporting Act are
being complied with.
|
Compliance with Financial Transactions Reporting Act, Ch. 368. |
|
PART VI |
||
On-Site and Off-Site Examinations |
||
49.(1)
The Commission shall on a
regular basis or whenever it thinks fit conduct on-site and
off-site examinations of the business of investment
funds and
parties related to an investment fund under this Act for the
purpose of satisfying itself that -
|
Duty of Commission to conduct examinations and review. |
|
(a)
the provisions of this Act or any
regulations made hereunder are being complied with; and
|
||
(b)
the provisions of the Financial
Transactions Reporting Act, or any regulations made thereunder are
being complied with,
|
Ch. 368. |
|
and after the conclusion of such examination to prepare a report on its findings. |
||
(2)
In any case where the
Commission is unable to conduct an examination described in
subsection (1), it may appoint an auditor, at the
expense of the
investment fund or party related to the investment fund, to conduct
such examination and to report thereon to the
Commission.
|
||
(3)
The Commission may assess
charges to recover the cost of such examination.
|
||
(4)
The Commission shall examine,
consider and make recommendations on any information or report
prepared as a result of such examination.
|
||
(5)
The Commission shall be
entitled at all reasonable times to exercise its authority under
sections 51 and 52, to have access to or
to request the books,
records or any information of or from the investment fund or
parties related to an investment fund.
|
||
PART VII |
||
Supervisory Authority of The Commission |
||
50.(1)
The Commission may at any time
instruct an investment fund or investment fund administrator to
have its accounts audited other than
as required in section 31(1)
and to submit its audited financial statements to the Commission
within such time as the Commission
shall specify.
|
Instructions to audit accounts. |
|
(2)
The operator or investment
fund administrator of an investment fund shall ensure that an
instruction given to an investment fund in
accordance with
subsection (1) is complied with within the specified time.
|
||
51.(1)
If requested to do so by the
Commission a party related to an investment fund shall give the
Commission such information or such explanation
in respect of the
investment fund as the Commission may reasonably require to enable
it to carry out its duties under this Act.
|
Requirement of information or explanation. |
|
(2)
If requested to do so by the
Commission, an investment fund administrator shall give the
Commission such information or such explanation
in respect of its
investment fund administration or its operations as the Commission
may reasonably require to enable it to carry
out its duties under
this Act.
|
||
(3)
A person giving information or
an explanation for the purpose of subsection (1) or (2) shall not
give the Commission information or
an explanation that he knows or
should reasonably know is false or misleading.
|
||
52.(1)
If requested to do so by the
Commission, a party related to an investment fund shall give the
Commission access to or provide at any
reasonable time all records
relating to the investment fund.
|
Access to Records. |
|
(2)
When requested to do so by the
Commission, an investment fund administrator shall give the
Commission access to, or provide within
a reasonable time -
|
||
(a)
the records of the administrator;
and
|
||
(b)
any records under the control of
the administrator, relating to the investment fund administration
carried out by the investment fund
administrator.
|
||
(3)
The Commission may copy or
take an extract of a document it is given access to, or provided
with in accordance with this section.
|
||
53.(1)
Without prejudice to the
Commission's authority in section 55(1)(e) and (f) the Commission
may -
|
Authority to revoke licence. |
|
(a)
by order, revoke the licence or
registration of an investment fund -
|
||
(i)
where the investment fund has
ceased to carry on or attempt to carry on its business; or
|
||
(ii)
if the investment fund becomes
insolvent or goes into liquidation or is wound up or otherwise
dissolved;
|
||
(b)
by order, revoke the licence of
an investment fund administrator where-
|
||
(i)
the investment fund
administrator has ceased to carry on or attempt to carry on its
business; or
|
||
(ii)
the investment fund
administrator becomes insolvent or goes into liquidation or is
wound up or otherwise dissolved;
|
||
(c)
apply to the Court for an order
compelling a person -
|
||
(i)
where that person has failed to
comply with the direction of the Commission to comply with the
direction;
|
||
(ii)
where that person is
contravening this Act to cease contravening it; or
|
||
(iii)
where that person has omitted to
do anything required under this Act to rectify the omission.
|
||
(2)
Whenever the Commission is of
the opinion that any action under subsection (1) (a) or (b) should
be taken, it may attach conditions
to the licence or registration
of such investment fund or investment fund administrator but before
taking such action the Commission
shall give that investment fund
or investment fund administrator notice in writing of its intention
so to do setting out in the notice
the grounds on which it proposes
to act and shall afford such investment fund or investment fund
administrator, within such time
as may be specified therein, not
being less than seven days, an opportunity to respond in writing to
such action, and thereafter
the Commission shall advise the
investment fund or investment fund administrator of its
decision.
|
||
(3)
Whenever the Commission
attaches conditions to a licence or registration under subsection
(2) it shall cause notice of the conditions
to be published in the
Gazette.
|
||
(4)
Any condition attached to a
licence or registration under subsection (2) shall be for a period
of ninety days, or until the Commission
takes action under
subsection (1) or until the Commission notifies the licensee that
the conditions have been removed, whichever
period is
shorter.
|
||
(5)
Where the Commission deems it
necessary it may apply to the Court for an order that the
investment fund or investment fund administrator,
as the case may
be, shall be wound up, dissolved, liquidated or otherwise
terminated, as appropriate.
|
||
(6)
The Commission may, in the
case of an investment fund or investment fund administrator that is
or has been licensed or registered
under this Act apply to the
Court for directions if it considers that the winding up is not
being conducted in the best interests
of the investors or creditors
of such investment fund or investment fund administrator and the
court shall make such order as it
considers fit.
|
||
PART VIII |
||
Investigative and Disciplinary Authority of The Commission |
||
54.
The Commission shall have
authority to conduct regulatory hearings to determine whether
-
|
To conduct regulatory hearings. |
|
(a)
there has been or there is likely
to be a failure to comply with the provisions of this Act or any
regulations or rules made hereunder;
|
||
(b)
an investment fund or investment
fund administrator is carrying on its business in a manner
detrimental to the public interest;
|
||
(c)
an investment fund or investment
fund administrator is carrying on or attempting to carry on
business or is winding up, dissolving,
liquidating or terminating
its investment fund or investment fund administration business
voluntarily in a manner that is prejudicial
to -
|
||
(i)
the investors in the investment
fund; or
|
||
(ii)
any investment fund being
administered by an investment fund administrator; or
|
||
(iii)
the creditors of the investment
fund; or
|
||
(iv)
the creditors of the investment
fund administrator; or
|
||
(d)
an investment fund or an
investment fund administrator is carrying on or attempting to carry
on its investment fund or investment
fund administration business
without complying with any of the conditions of its investment fund
licence or its investment fund administration
licence.
|
||
55.(1)
The Commission shall have
authority to impose one or more of the following sanctions,
remedies or other relief as the result of any
settlements of
disputes between persons or decisions of the Commission as a result
of regulatory hearings -
|
To impose sanctions, remedies, etc. |
|
(a)
censure;
|
||
(b)
fine, not to exceed three hundred
thousand dollars;
|
||
(c)
disgorgement of profits or other
unjust enrichment plus a penalty not to exceed twice the amount of
such profits or unjust enrichments;
|
||
(d)
restitution;
|
||
(e)
suspension of licence or
registration;
|
||
(f)
revocation of licence or
registration;
|
||
(g)
reclassification of an investment
fund administrator's licence;
|
||
(h)
revocation of approval or
authorization;
|
||
(i)
to require the substitution of
any party related to. the investment fund or any similar senior
officer of an investment fund or investment
fund
administrator;
|
||
(j)
to appoint a person to advise an
investment fund on the proper conduct of its affairs or to advise
an administrator on the proper
conduct of its investment fund
administration;
|
||
(k)
to appoint a person to assume
control of the investment fund's affairs or of an investment fund
administrator's affairs relating to
fund administration;
|
||
(l)
to apply to the Court for an
Order to take such other action as it considers necessary to
protect the interests of‑
|
||
(i)
the investors in an investment
fund;
|
||
(ii)
any investment fund being
administered by an investment fund administrator;
|
||
(iii)
the creditors of the investment
fund; or
|
||
(iv)
the creditors of the investment
fund administrator;
|
||
(m)
to impose any other sanctions or
remedies as the justice of the case may require.
|
||
(2)
Where it considers it
necessary or appropriate to do so and if it is practical to do so
the Commission may inform the investors of
an investment fund of
any action it is taking or intending to take in respect of the
investment fund.
|
||
(3)
A person appointed under
subsection (1)(j) or (k) is appointed at the expense of the
relevant investment fund or investment fund administrator
and any
expenses reasonably incurred by the Commission by virtue of the
appointment is an amount due to the Commission payable by
the
investment fund or investment fund administrator.
|
||
(4)
A person appointed under
subsection (1)(k) has all the powers necessary, to the exclusion of
any other person (other than a liquidator
or receiver), to
administer the affairs of the relevant investment fund or the
affairs of an investment fund administrator relating
to its
investment fund administration business in the best interest of the
-
|
||
(a)
investors and creditors of the
investment fund; or
|
||
(b)
investors or creditors of
investment funds administered by the investment fund administrator;
or
|
||
(c)
the creditors of any such
investment fund administrator.
|
||
(5)
The powers referred to in
subsection (4) include the power to terminate the business of the
investment fund or investment fund administrator
if it is adjudged
insolvent.
|
||
(6)
A person appointed in respect
of an investment fund or investment fund administrator under
subsection (1)(j) or (k) shall -
|
||
(a)
when requested to do so by the
Commission, supply the Commission with such information in respect
of -
|
||
(i)
the investment fund; or
|
||
(ii)
the administration of investment
funds by the investment fund administrator as is specified by the
Commission;
|
||
(b)
within three months of his
appointment, or within such other period as the Commission may
specify, prepare and supply to the Commission
a report on -
|
||
(i)
the affairs of the investment
fund; or
|
||
(ii)
the affairs of the investment
fund administrator relating to its investment fund administration;
and
|
||
where appropriate make recommendations in respect of the investment fund or investment fund administrator ; and |
||
(c)
if his appointment is not
terminated after supplying the report referred to in paragraph (b),
subsequently supply to the Commission
such other information,
reports and recommendations as the Commission shall require.
|
||
(7)
If a person appointed under
subsection (1)(j) or (k) -
|
||
(a)
fails to comply with an
obligation under subsection (6); or
|
||
(b)
in the Commission's opinion, is
not carrying out his obligation in respect of the relevant
investment fund or investment fund administrator
satisfactorily,
|
||
the Commission may revoke the appointment and appoint some other person in his place, and may assess the charges payable to such appointed person up to the date of the revocation of the appointment. |
||
(8)
On receipt of any information
or report pursuant to subsection (6) in respect of an investment
fund or investment fund administrator,
the Commission may -
|
||
(a)
require the investment fund or
investment fund administrator to reorganize its affairs in a manner
specified by the Commission; or
|
||
(b)
apply to the Court for an order
to wind up, dissolve, liquidate or otherwise terminate (as
appropriate) the investment fund or investment
funds administrator
upon such terms and conditions as the Court thinks fit;
|
||
(c)
take such action in respect of
the appointment or continued appointment of the person appointed
under subsection (1)(j) or (k) as
the Commission considers
appropriate.
|
||
(9)
If the Commission takes action
under subsection (8) it may -
|
||
(a)
apply to the court for an Order
to take such other action as it considers necessary to protect the
interests of -
|
||
(i)
the investors in the investment
fund; or
|
||
(ii)
an investment fund administered
by an investment fund administrator;
|
||
(iii)
the creditors of an investment
fund; or
|
||
(iv)
an investment fund
administrator.
|
||
(b)
take any other action provided
for in subsection (1) or subsection (2).
|
||
56.
Sections 34 to 42 of the
Securities Industry Act, shall mutatis mutandis apply to any
investigations, sanctions, decisions or appeals
in relation to any
disciplinary proceedings carried on by the Commission under this
Act.
|
Disciplinary proceedings. Ch. 363. |
|
PART IX |
||
Enforcement Authority of the Commission over Unregulated Investment Funds and Unlicensed Investment Fund Administrators. |
||
57.(1)
Where the Commission has
reasonable grounds for believing a person is carrying on or
attempting to carry on business as an investment
fund or investment
fund administrator in contravention of this Act, the Commission may
instruct that person to give it such information
or explanation as
it may reasonably require to enable it to carry out its duties
under this Act.
|
Instruction to investment fund to provide information or explanation. |
|
(2)
A person shall comply with an
instruction given to him in accordance with subsection (1).
|
||
(3)
A person giving information or
an explanation for the purpose of subsection (1) shall not give the
Commission information or an explanation
that he knows or should
reasonably know is false or misleading.
|
||
58.(1)
Where it appears to the
Commission that an investment fund or investment fund administrator
is carrying on or attempting to carry
on business as an investment
fund or an investment fund administrator as the case may be in
breach of this Act, the Commission shall
have authority to -
|
Disciplinary authority of Commission. |
|
(a)
take any action provided in Part
VI, VII, VIII and X; and;
|
||
(b)
impose any one or more of the
sanctions or remedies in section 55(l)(b).
|
||
(2)
Without prejudice to the
Commission's authority in subsection (1) the Commission shall also
have the authority to apply to the court
for such Order -
|
||
(a)
requiring the investment fund or
investment fund administrator to reorganize its affairs in a manner
specified by the Commission;
or
|
||
(b)
to wind up, dissolve, liquidate
or otherwise terminate (as appropriate) the investment fund or
investment fund administrator upon
such terms and conditions as the
court thinks fit; or
|
||
(c)
to preserve the assets of the
investors in the investment fund or to protect the creditors of the
investment fund, as the court thinks
fit.
|
||
PART X |
||
Miscellaneous Provisions |
||
59.(1)
Subject to subsections (2) and
(3), licensees, recognized foreign funds or persons exempted from
licensing under this Act (in this
section collectively referred to
as "regulated persons') or any officer, employee, agent or
technical advisor of the Commission or
such regulated person who
discloses any information relating to -
|
Confidentiality. |
|
(a)
the affairs of the Commission or
a regulated person;
|
||
(b)
any application made to the
Commission or a licensor; or
|
||
(c)
the affairs of a customer or
client of a regulated person,
|
||
that was acquired in carrying out any duty or exercising any function under this or any other law, is guilty of an offence and is liable on summary conviction to a fine not exceeding fifty thousand dollars or to imprisonment for a term not exceeding three years. |
||
(2)
Subsection (1) shall not apply
to a disclosure -
|
||
(a)
lawfully required or permitted by
any court of competent jurisdiction within The Bahamas;
|
||
(b)
for the purpose of assisting the
Commission or a regulated person to exercise any functions
conferred on it by this Act, by any other
Act or by regulations
made thereunder;
|
||
(c)
in respect of the affairs of a
regulated person or of a customer or client of a regulated person,
with the consent of the regulated
person, customer or client, as
the case may be, which consent has been voluntarily given;
|
||
(d)
where the information disclosed
is or has been available to the public from any other source;
|
||
(e)
where the information disclosed
is of a type or is disclosed in a manner that does not enable the
identity of any beneficial owners
of a regulated person or of any
customer or client of the regulated person to which the information
relates to be ascertained;
|
||
(f)
to a person with a view to the
institution of, or for the purpose of -
|
||
(i)
criminal proceedings;
|
||
(ii)
disciplinary proceedings,
whether within or outside The Bahamas, relating to the exercise by
a counsel and attorney, auditor, accountant,
valuer or actuary of
his professional duties;
|
||
(iii)
disciplinary proceedings
relating to the discharge by a public officer, director, officer or
a member or employee of the Commission,
or regulated person of his
duties; or
|
||
(g)
in any legal proceedings in
connection with -
|
||
(i)
the winding-up or dissolution of
a regulated person; or
|
||
(ii)
the appointment or duties of a
receiver of a regulated person.
|
||
(3)
Subject to subsection (6), the
Commission may disclose to an overseas regulatory authority
information necessary to enable that authority
to exercise
regulatory functions including the conduct of civil or
administrative investigations and proceedings to enforce laws,
regulations and rules administered by that authority.
|
||
(4)
In deciding whether or not to
exercise its power under subsection (3), the Commission may take
into account -
|
||
(a)
whether the inquiries relate to
the possible breach of a law or other requirement which has no
equivalent provision in The Bahamas
or involves the assertion of a
jurisdiction not recognized by The Bahamas; and
|
||
(b)
the seriousness of the matter to
which the inquiries relate and the importance to the inquiries of
the information sought in The Bahamas.
|
||
(5)
The Commission may decline to
exercise its powers under subsection (3) unless the overseas
regulatory authority undertakes to make
such contribution towards
the cost of the exercise as the Commission considers
appropriate.
|
||
(6)
Nothing in subsection (3)
authorizes a disclosure by the Commission unless -
|
||
(a)
the Commission has satisfied
itself that the intended recipient authority is subject to adequate
legal restrictions on further disclosures
which shall include the
provision of an undertaking of confidentiality; or
|
||
(b)
the Commission has been given an
undertaking by the recipient authority not to disclose the
information provided without the consent
of the Commission;
and
|
||
(c)
the Commission is satisfied that
the assistance requested by the overseas regulatory authority is
required for the purposes of the
overseas regulatory authority's
regulatory functions including the conduct of civil o
administrative investigations or proceedings
to enforce laws,
regulations and rules administered by that authority; and
|
||
(d)
the Commission is satisfied that
information provided following the exercise of its power under
subsection (3) will not be used in
criminal proceedings against the
person providing the information.
|
||
(7)
Where in the opinion of the
Commission it appears necessary in relation to any request for
assistance received from an overseas regulatory
authority to invoke
the jurisdiction of a stipendiary and circuit magistrate in
obtaining information requested by the overseas regulatory
authority, the Commission shall immediately notify the
Attorney-General with particulars of the request, and shall send
him copies
of all documents relating to the request, and the
Attorney-General shall be entitled, in a manner analogous to amicus
curiae, to
appear or take part in any proceedings in The Bahamas,
or in any appeal from such proceedings, arising directly or
indirectly from
any such request.
|
||
(8)
The Commission may provide
information that it has acquired in the course of its duties or in
the exercise of its functions under
this or any other law to any
other regulatory authority in The Bahamas where it considers such
information may be relevant to the
functions of such other
regulatory authority.
|
||
(9)
Where a regulated person,
receives a request to disclose information to a overseas regulatory
authority such request shall be submitted
to the Commission and the
Commission shall decide whether or not to exercise its powers under
this section in relation to such disclosure.
|
||
(10)
In this section "overseas
regulatory authority" means an authority, which in a country or
territory outside The Bahamas exercises,
functions corresponding to
any functions of the Commission.
|
||
60.
A person aggrieved by any
action taken by the Commission under this Act has a right of appeal
to the court but the Commission's decision
on any matter of a
purely administrative nature shall be final.
|
Right to to appeal to Court. |
|
61.(1)
Any person who contravenes
-
|
Offences. |
|
(a)
sections 3, 6, 12, 17, 19(5), 24,
25, 26 or 32 is guilty of an offence and shall be liable on
conviction on information to a fine
of $150,000 or to imprisonment
for three years or to both such fine and imprisonment;
|
||
(b)
sections 27, 30, 31, 36, 37, 39,
40, 42 is guilty of an offence and shall be liable on summary
conviction to a fine of $75,000 or
to imprisonment for two years or
to both such fine and imprisonment;
|
||
(c)
section 50, 51 (1) or (2), 52, 59
is guilty of an offence and shall be liable on summary conviction
to a fine of $20,000 plus $500
in respect of each day during which
the person failed to comply with the direction or to imprisonment
for twelve months or to both
such fine and imprisonment;
|
||
(d)
section 14(3) and 35(3) is guilty
of an offence and shall be liable on summary conviction to a fine
of $10,000 plus $200 in respect
of each day after the specified
time during which the person failed to comply with the instruction
or to imprisonment for six months
or to both such fine and
imprisonment.
|
||
(2)
Any person who -
|
||
(a)
refuses to do anything that is
properly required to be done by him under this Act;
|
||
(b)
fails to pay any fee that is due
and payable under this Act; or
|
||
(c)
without reasonable cause
contravenes any section of this Act for which no other penalty is
provided,
|
||
is guilty of an offence and shall be liable on summary conviction to a fine of $20,000 or to imprisonment for two years or to both such fine and imprisonment. |
||
(3)
A person who -
|
||
(a)
upon an examination, oath or
affirmation required under this Act; or
|
||
(b)
otherwise in or about any matter
arising under this Act,
|
||
guilty of the offence of perjury and liable on conviction to imprisonment for ten years. |
||
62.(1)
The Minister, after
consultation with the Commission may make regulations for carrying
out the purposes of this Act and, without prejudice
to the
generality of the foregoing, may make regulations relating to
-
|
Minister to make regulations. |
|
(a)
the operation of investment
funds;
|
||
(b)
investment fund administrators in
relation to their investment fund administration;
|
||
(c)
the role and obligation of any
party related to an investment fund;
|
||
(d)
the requirements of
non-Bahamas-based investment funds; and
|
||
(e)
any other matter or thing which
may be or is required to be prescribed under this Act.
|
||
(2)
Regulations made under this
section may, notwithstanding the provisions of section 25(e) of the
Interpretation and General Clauses
Act, prescribe greater penalties
than those specified in that section, provided that the maximum
penalty that may be imposed by any
such regulation shall be a fine
of $75,000 or imprisonment for two years or both such a fine and
imprisonment.
|
Ch. 2. |
|
63.
An investment fund or an
investment fund administrator on behalf of an investment fund may
apply to the Commission in the prescribed
manner accompanied by the
prescribed fee, to be exempt from some or all of the regulations
made under this Act and the Commission
shall have the power to
grant such exemption.
|
Application for exemption from certain provisions of this Act. |
|
64.(1)
The Commission may if
satisfied that to do so would not be prejudicial to the public
interest, direct that all or any of the provisions
of this Act or
the regulations shall -
|
Waiver of provisions. |
|
(a)
not apply, or
|
||
(b)
apply subject to such
modifications as may be specified to any person or class of
persons.
|
||
(2)
A direction under this section
may be -
|
||
(a)
subject to any conditions as the
Commission may see fit to specify; and
|
||
(b)
revoked at any time at the
discretion of the Commission.
|
||
PART XI |
||
Transitional Provisions |
||
65.(1)
A mutual fund in existence
immediately before the commencement of this Act carrying on
business as a licensed or authorized fund pursuant
to section 3(1)
or (3) of the Mutual Funds Act, is deemed to have complied with the
requirements for licensing under this Act.
|
Licensed and Authorized Mutual Funds under the Mutual Funds Act. Ch. 366. |
|
(2)
A mutual fund described in
subsection (1) shall submit the details required by the Commission
regarding its classification and structure
within nine months of
the commencement of this Act.
|
||
66.(1)
A mutual fund in existence
immediately before the commencement of this Act carrying on
business as an exempt mutual fund pursuant
to section 3 (4) of the
Mutual Funds Act, may continue to carry on business for nine months
after the promulgation of regulations
made hereunder, if the mutual
fund applies to a licensor in the prescribed manner within ninety
days after the promulgation of regulations
to be licensed as an
investment fund and the application is not refused within the nine
month period.
|
Funds exempt pursuant to section 3(4) of Mutual Funds Act. Ch. 366. |
|
(2)
An unrestricted mutual fund
administrator licensed under the Mutual Funds Act, shall provide
the details required by the Commission
of all applications for
licensing submitted by investment funds exempt pursuant to section
3(4) of the Mutual Funds Act, within one
hundred and twenty days of
the promulgation of the prescribed regulations.
|
||
(3)
An unrestricted investment
fund administrator shall -
|
||
(a)
advise the Commission in writing
of its refusal to license a mutual fund pursuant to subsection (1)
within 7 days of such refusal;
and
|
||
(b)
file with the Commission in
accordance with section 13 of this Act any investment fund licensed
by the investment fund administrator
pursuant to subsection (1)
within nine months of the promulgation of the prescribed
regulations.
|
||
(4)
Where an investment fund
administrator fails to comply with subsections (2) or (3) the
investment fund administrator shall pay a penalty
of $1000 for each
month or part of a month during which the investment fund fails to
comply with subsections (2) or (3).
|
||
67.(1)
A mutual fund in existence
immediately before the commencement of this Act carrying on
business as an exempt fund pursuant to section
3(6) of the Mutual
Funds Act, may continue to carry on business for nine months after
the promulgation of regulations provided that
the investment fund
applies to the Commission in the prescribed manner within ninety
days after the promulgation of the regulations
to be filed as a
recognized foreign fund and the application is not refused within
the nine month period.
|
Funds exempt pursuant to section 3(6) of the Mutual Funds Act. Ch. 366. |
|
(2)
A mutual fund described in
subsection (1) which had submitted its documents to the Commission
for filing prior to the commencement
of this Act, shall submit any
further details required by the Commission along with the
prescribed filing fee within three months
of the promulgation of
regulations.
|
||
68.
A person who immediately
before the commencement of this Act was carrying on business as a
licensed mutual fund administrator pursuant
to section 9 of the
Mutual Funds Act, is deemed to have complied with the requirements
for licensing under this Act, save that such
mutual fund
administrator shall be referred to as an investment fund
administrator and shall be required to comply with the paid-up
capital requirements established in regulations made hereunder and
must provide the Commission with evidence of such compliance within
nine months of the date of the promulgation of such
regulations.
|
Mutual Fund Administrators. Ch. 366. |
|
69.
The Commission may upon
written application grant an extension of the periods specified in
sections 65 to 67, as it sees fit.
|
Extensions. of Fees. |
|
70.
A mutual fund or a mutual fund
administrator in existence immediately before the commencement of
this Act shall be subject to such
fees prescribed in the
regulations made hereunder.
|
Application |
|
71.(1)
Where an investment fund has
failed to comply with sections 65 to 67 within the specified period
or such extended period granted by
the Commission, the investment
fund shall be required to pay a penalty of $3000 per month for each
month or part of a month during
which the investment fund fails to
comply with the relevant provisions.
|
Penalty - Investment Funds. |
|
(2)
Where an investment fund has
continued to fail to comply with sections 65 to 67 for a period of
three months after the penalty in
subsection (1) has been imposed
the investment fund shall cease its operation and the Commission
may revoke any licence or registration
held by such investment
fund.
|
||
(3)
The Commission may waive for
good cause any penalty imposed pursuant to subsection (1)
|
||
72.(1)
Where an investment fund
administrator fails to comply with section 68 within the specified
period or such extended period granted
by the Commission, the
investment fund administrator shall be required to pay a penalty of
$20,000 for each month or part of a month
during which the
investment fund administrator continues to fail to comply with
section 68.
|
Penalty - Investment Fund Administrators. |
|
(2)
Where an investment fund
administrator continues to fail to comply with section 68 for a
period of three months after the penalty
in subsection (1) has been
imposed the Commission may revoke the licence of the investment
fund administrator.
|
||
(3)
The Commission may waive for
good cause any penalty imposed pursuant to subsection (1).
|
||
73.
The Mutual Funds Act, is
hereby repealed.
|
Repeal of Ch. 366. |
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