Business Community Applauds Passing of New 'Investment Funds Act 2006'

The Bermuda International Business Association (BIBA) soundly
endorsed the passing in Bermuda's House of Assembly of the eagerly
anticipated Investment Funds Act 2006 which more clearly outlines how
public funds are regulated and refines the framework for non-public,
institutional funds.

BIBA CEO, Cheryl Packwood, commented, "This is yet another example
of the positive results of collaborative consultation between
Bermuda's private and public sector partnership. When the Ministry of
Finance and the Bermuda Monetary Authority (BMA) commenced writing
this Act, as is the policy in Bermuda, they asked for the input of the
Financial Industry in reviewing and recommending pertinent changes or
additions to it prior to presenting the Act before the House of
Assembly.

"BIBA's Collective Investment Scheme Committee, which is chaired
by Sharon Beesley, Executive Director and General Counsel of ISIS
Limited, and comprises more than 40 members who represent the
executive levels of all areas of legal, accounting and other financial
services in Bermuda, spent enormous hours scrutinizing, reviewing and
suggesting changes throughout ongoing consultation with Government and
the BMA. The result is an Act that brings clarity and certainty about
the process for registering and licensing funds and greatly enhances
Bermuda's competitive edge in the international fund community."

Highlights of the Bill

-- There is a clearly defined distinction between public (retail)
funds and institutional or non-public funds.

-- The powers to exclude funds from particular requirements are
more refined so that there is certainty as to what minimum
requirements must be met by fund operators.

-- Exclusions from fund regulation are more clearly defined so
funds of a 'private nature' are not captured.

-- Under previous legislation, partnerships were not covered but
this gap has been now closed and they are included, as well as
mutual fund companies and unit trusts.

-- Fund administers are now regulated and licensed.

-- A new class of funds, known as "administered funds" has been
introduced. With the introduction of licensed administrators,
it is now possible to register funds under this class with the
level of regulation adapted based on the grounds that the
administrator is based in Bermuda and subject to codes of
conduct and fund rules that will ensure the proper level of
governance of the fund.

-- There is clearer definition of the rules for the appointment
of service providers and delegation of powers.

-- A new section clearly enables unit trustees to hold property
in segregated accounts and defines how these accounts will be
managed. This affords trustees the same benefits as companies
operating with segregated accounts.

-- The rules for prospectuses of funds are clearly set down and
distinguished from the general rules under the Companies Act
of 1981.

-- The powers of the BMA to require more information and to
inspect are enhanced.

-- The requirements and powers for sharing of information with
other regulators are more clearly defined.

-- Similar to other financial institutions, a right of appeal to
an appeal tribunal was introduced.

Finance Minister Paula Cox, who successfully piloted the Act to
unanimous approval by the House of Assembly, is confident that the
legislation enhances Bermuda's abilities and reputation as a premier
fund jurisdiction. Ms. Cox commented that Bermuda had to streamline
the incorporation process for investment funds and eliminate
unnecessary administrative procedures to augment Bermuda's competitive
edge by bringing more clarity and certainty to the authorization
process. She explained,

"There will be less time required to set up a fund as the rules
are more clearly stated. The Bill is another example of Bermuda's
continued efforts to ensure that we maintain the right balance as a
reputable international financial centre."

Licensed and Regulated Fund Administrators

For the first time, Bermuda's fund administrators will be
licensed. Minister Cox was quick to point out, however, that even
though fund administrators had not been licensed in the past, it would
not be true to say that there has been no regulation of these
providers. She said,

"Presently, fund administrators are regulated as regulated
entities under the Proceeds of Crime Act 1977 and are subject to a
higher level of due diligence when handling subscriptions and
redemptions similar to those imposed on banks, trust companies and
investment providers.

"Regulation has become more important to the ongoing successful
development of this sector. In fact, to gain recognition in the global
marketplace, the stakeholders of this sector support regulation.

"It is important that these service providers are recognised to
have proper personnel operating their businesses with the proper
systems in order to continue to secure business from all parts of the
world."

Cheryl Packwood pointed out that while many funds register in
other jurisdictions, Bermuda is one of the leading choices for
companies to administer their funds, regardless of where they choose
to domicile and in fact, Bermuda administers a substantial proportion
of the funds which register in Cayman, for instance.

BIBA's members are enthusiastic about both the intent and content
of this legislation. Combined with Bermuda's superior infrastructure,
reputation and intellectual capital, the Island is poised to
effectively garner its share of the booming global fund business.

About the Bermuda International Business Association

The Bermuda International Business Association (BIBA) is a
business organization of Bermuda resident service providers who
provide quality banking, legal, accounting, financial, trust,
management and e-commerce services and products to the international
client. BIBA works with the private sector and Government to develop
and promote the island as one of the world's foremost centers for
international business.