Bermuda: Investment Funds - Non-Pooled Products

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  • 1. BERMUDA INVESTMENT FUNDS – NON-POOLED PRODUCTS
  • 2. Advantages of Bermuda
    • As a “tax-neutral” jurisdiction, Bermuda is an ideal location to domicile a non-pooled investment fund for HNW’s.
    • The Bermuda government does not impose any:
      • Income, corporations or profit tax
      • Capital Gains tax
      • Tax on dividends or interest
      • Withholding tax
      • Estate duty or inheritance tax on shareholders (other than Bermuda residents)
      • Exchange controls (for exempted companies)
  • 3. Segregated Accounts Companies
    • Segregated Accounts Company Act, 2000
    • A single company is permitted to create multiple “segregated accounts” in order to segregate the assets and liabilities attributable to a particular class or series of shares.
    • Assets and liabilities of each “account” held exclusively for the benefit of the account holder and counterparty linked to that account.
    • Avoids need to create separate companies.
  • 4. Segregated Account Companies
    • Accounts are not separate legal entities but are given statutory protection. No recourse to other accounts.
    • Each investor receives a separate class or series of shares reflecting their investment.
    • Investor places funds in a segregated account which are then invested in a tailored investment portfolio of underlying funds.
    • Administration and investment management typically outsourced to third party service providers.
  • 5. Segregated Accounts Company
    • Advantages of SAC’s:
      • Legislative framework for asset protection
      • Strong foundation in corporate law –i.e. concept of “shares” is universally understood
    • Disadvantages:
      • Legal concept of a SAC is not well-known and not tested in the courts.
      • Distribution of shares must comply with local securities laws.
  • 6. Trusts
    • Strong legal framework in Bermuda for trusts.
    • Bermuda Trust (Special Provisions) Act , 1989 provides asset protection to certain trusts – e.g. no “forced heirship”.
    • Can provide an ideal platform for a non-pooled investment product – master/feeder - trust/sub-trust structure
  • 7. Trusts
    • Advantages of trusts:
      • Flexible structure
      • Asset protection – use of individual sub-trusts
      • Confidentiality – no public record
    • Disadvantages:
      • Trusts not well-understood in some countries – e.g. civil law jurisdictions
      • Investors don’t “own” anything - i.e. no shares issued
  • 8. Questions?
    • Note:
    • While the information in this presentation is believed to be accurate, it is general in nature and should not be construed as legal advice.
            • Sarah Moule
            • Appleby
            • 1-441-298-3291
            • [email_address]