Bermuda Insights: Regulatory & Risk Advisory

The economic substance regime has continued to develop, with the most notable change being the amendment to the definition of the ‘relevant activity’ of ‘fund management’, which was effective from 1 January 2022. As a result of the amendments, an entity will be carrying on the ‘relevant activity’ of ‘fund management’ if it manages investments for an investment fund, as defined under the Investment Funds Act 2006 (as amended), whether or not it is required to be licensed under the Investment Business Act 2003 (as amended) and will therefore include all entities even if they do not have a physical presence in Bermuda.

In March 2022, the ROC issued the first Notice to Comply and Warning Notices (the “Notices”) for non-compliance with the economic substance requirements. These Notices were issued to entities that self-declared on their economic substance declarations filed with the Registrar of Companies for the 2019 and 2020 relevant financial period that the entity was non-compliant with the economic substance requirements as defined in section 3 of the Economic Substance Act 2018 and the Economic Substance Regulations 2018. The Notices permitted entities to make representations to the ROC for the ROC to decide whether the actions taken by the entity are adequate to meet the economic substance requirements or whether further enforcement action is required.

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This article is taken from the Bermuda Insights: Trends and Opportunities 2022 white paper, available here:

Bermuda Trends 2022