Establishing an Investment Business in Bermuda in 2024
Bermuda has established its position as an upcoming global financial hub, offering numerous opportunities for businesses in the investment sector. With its tax advantages, stable political environment, business friendly government, and strategic access to international markets, Bermuda has become a preferred destination for investment firms.
The beautiful island’s reputation as a well-respected offshore financial center, is accomplished and maintained due to the comprehensive regulatory oversight of the Bermuda Monetary Authority (BMA), which ensures the integrity and stability of Bermuda’s financial system.
In this article, the SALVUS Investment Firms Licensing team discusses the establishment of an Investment Business in Bermuda, highlighting its benefits and other essential information:
1. Why establish an Investment Firm in Bermuda
2. Governing Legal Framework
3. Licensing Criteria
4. License Categories & Investment Activities
5. How SALVUS can assist your Investment Business Application
We regularly share bite-sized insights on LinkedIn such as those found in this article
1. Why establish an Investment Firm in Bermuda
Bermuda has long been recognized as one of the world’s foremost international financial centers. It boasts a highly sophisticated financial services infrastructure, a stable political environment, and several tax benefits that make it an attractive destination for investment businesses.
Some of its key benefits include:
- Regulatory Stability: Bermuda’s regulatory framework is not only robust and proactive but also aligned with international standards, offering businesses confidence in their operations. The BMA plays a pivotal role in ensuring that the jurisdiction remains a secure destination for investment activities. The BMA is known for its effective supervision and risk-based approach to financial regulation, which helps mitigate financial risks while safeguarding both investors and businesses.
- International Reputation: Bermuda is well established in the global financial community and respected for its strong compliance and transparency. The jurisdiction was granted the prestigious Solvency II distinction, shared with only one other non-EU jurisdiction. Solvency II refers to the prudential regime for insurance and reinsurance undertakings in the EU and aims to ensure the adequate protection of policyholders and beneficiaries and promote comparability, transparency and competitiveness. This distinction aligns with Bermuda’s commitment to excellence.
- Innovation & Adaptability: Bermuda is ideal for investors seeking innovation as the jurisdiction is open to new financial products and services and can quickly respond to regulatory changes and adapt its business environment. This allows the jurisdiction to remain competitive in the global market and provide investors with an ever-evolving environment where growth and innovation are supported.
- Favourable tax policies: Bermuda is known for its low-tax regime. While changes to corporate income tax rates are expected in 2025, the jurisdiction remains an attractive and tax-efficient destination for businesses due to its tax-neutral environment offering businesses significant advances.
- Access to International Markets: Situated in the North Atlantic Ocean, its strategic location facilitates international trade and investment, with strong connectivity to global financial markets. Its Atlantic Standard Time (AST) zone makes it ideal for businesses serving global markets.
2. Governing Legal Framework
Bermuda’s legal and regulatory framework is designed to provide a stable and secure environment for investment businesses. Bermuda operates under common law legal system based on English Common Law and provides a solid foundation for business operations. The BMA oversees all investment businesses within the jurisdiction.
Investment businesses in Bermuda are subject to the Investment Business Act 2003 (IBA), which provides the licensing and registration regime for any person or entity engaging or wishing to engage in investment business in or from Bermuda. In addition to IBA, investment firms in Bermuda must adhere to Anti-Money Laundering (AML) and Counter-Terrorism Financing (CFT) regulations, ensuring that they comply with local laws and maintain international AML/CFT standards.
Once licensed or registered, all investment businesses are subject to ongoing supervision and regulation by the BMA, which reinforces the jurisdiction’s strong compliance and transparency standards, including investor protection.
3. Licensing Criteria
To conduct investment business in or from Bermuda entities must apply for a license from the BMA, unless they qualify for registration or are designated as non-registrable. There are two main types of licenses available:
- A “standard” license: under which a person may carry on one or more investment activities, subject to any limitations imposed by the Authority.
- A “test” license: under which a person may carry on one or more investment activities for a defined period, can be extended based on compliance and performance.
For an investment provider to be granted a license or registration, the BMA must be satisfied that the applicant can fulfill the below on an ongoing basis:
- The controllers and officers of the applicant must be fit and proper persons;
- The investment provider’s corporate governance policies and processes are appropriate given the nature, size, complexity and its risk profile;
- The business is to be conducted in a prudent manner, including but not limited to, maintaining minimum net assets, adequate liquidity, accounting and other records, sufficient systems of control and insurance;
- The undertaking’s business must be carried on with integrity and professional skills appropriate to the nature and scale of its activities; and
- The position of the undertaking within the structure of any group to which it belongs or its links with any related companies shall be such that it will not obstruct the conduct of effective consolidated supervision.
4. License Categories & Investment Activities
The BMA offers several types of license categories, each tailored to different types of investment activities. These categories are:
| License Category | Investment Activities |
|---|---|
| Dealing in Investments | Buying, selling, subscribing for, or underwriting investments either as principal or agent. |
| Arranging Deals in Investments | Making or offering, or agreeing to make arrangements with a view to: i) another person buying, selling, subscribing for or underwriting a particular investment, being arrangements which bring about or would bring about the transaction in question; or ii) a person who participates in the arrangements buying, selling, subscribing for or underwriting investments. |
| Managing Investments | Managing or offering to manage assets belonging to another person, which include investments. |
| Investment Advice | Giving or offering, to give to clients or potential clients, advice on purchasing, selling, subscribing for or underwriting an investment, or exercising any right conferred by an investment to acquire, dispose of, underwrite or convert an investment. |
| Safeguarding and Administrating Investments | The safeguarding and administration (or arrangement for safeguarding and administration) of assets belonging to another party, where: i) the assets include investments as specified in paragraphs 1 to 8 of Part 1 of the First Schedule to the IBA; or ii) the arrangements for safeguarding and administering these assets are structured in a way that the assets may include investments, and the arrangements have been presented or promoted as specifically designed to safeguard and manage such investments. |
| Investment Promotion | Promoting investments to members of the public, including: i) Advertising or agreeing to advertise material or information which promotes an investment; ii) Issuing or agreeing to issue a prospectus, application for or proposal form in relation to an investment; and iii) Distributing, circulating or agreeing to distribute, circulate or make available, material relating to an investment. |
5. How SALVUS can assist your Investment Business Application
The Investment Firms Licensing team, at SALVUS utilizes a sophisticated project management approach to carefully manage each licensing process, ensuring a smooth and efficient experience for our clients.
We understand that every business is unique, which is why we provide bespoke solutions tailored to your specific needs. Whether you want to set up a new business or expand an existing one, our team can guide you through every step of the licensing process.
We efficiently collect the necessary information and prepare all required documentation, ensuring that your application for an investment business license meets all of Bermuda’s legal and regulatory requirements. We handle all aspects of the application process so you can focus on your business’s growth.
Final Thoughts
Bermuda offers a compelling combination of tax advantages, regulatory stability, and access to international markets, making it an ideal destination for establishing an investment business. With its sophisticated infrastructure, strong legal framework, and excellent reputation, Bermuda is an ideal destination for businesses seeking to expand or enter the global investment industry.
At SALVUS, our expert team in the licensing process can help you establish your investment business in Bermuda.
Contact us at info@salvusfunds.com if you are interested in establishing an Investment Business in Bermuda; our Investment Firms Licensing team is ready to guide you and answer your questions.
#StayAhead
The information provided in this article is for general information purposes only. You should always seek professional advice suitable to your needs.
