Frequently Asked Questions about Investment Funds and Securities

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Q: Are all investment funds required to have a prospectus?

Under the IFA, the parties related to an investment fund are (i) the administrator (ii) operator (directors, trustee or general partner) (iii) promoter (iv) custodian (v) investment manager or investment advisor.

In the majority of cases, licensed investment funds are required to have an investment fund administrator which is licensed as such by the Securities Commission. Some SMART funds do not require an administrator or one which is licensed by the Securities Commission.

All investment funds must appoint a custodian, except for those funds whose investment structure or the nature of the fund's assets are such that they do not require that a custodian be appointed to hold the assets of the fund.

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Q: Do investment funds have financial reporting requirements?

Standard and professional funds are required to be audited annually and to file a copy of its audited financial statements with its licensor (that is, its administrator or the Securities Commission, as applicable) within six months of its financial year end.

In the case of SMART funds, SMART fund models 002, 004 and 005 are not required to be audited annually if all of the holders of equity interests unanimously waive the requirement for the fund to have an annual audit. If the annual audit requirement is waived, the fund is required to file semi-annual performance reports.

For SMART fund 001, while annual audited statements are not required, such fund is required to produce annual unaudited financial statements and semi-annual performance reports and for SMART fund 006, a performance report or management account is to be filed every six months with the Securities Commission and every shareholder of record.

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Q: Who can license investment funds?

The Securities Commission or an administrator which holds an unrestricted investment fund administrators license is authorized to license investment funds. However, while the Securities Commission can licence all types of funds, an unrestricted investment fund administrator can only licence professional funds and certain types of SMART funds.

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Q: Do regulated investment funds require a local auditor?

No, there is no such requirement for investment funds to appoint as its auditor one which is based or one that conducts business in or from The Bahamas.

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Q: Is there a regime in The Bahamas in respect of the regulation of the offer of securities to the public?

Yes, any company looking to offer its securities to the public in The Bahamas is required to file with the Securities Commission a prospectus in compliance with the provisions of the Securities Industry Act, 1999 (the "SIA") and the Securities Industry Regulations, 2000 (the "SIR"), unless an exemption from the filing of a prospectus applies. The SIA provides a definition of securities.

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Q: Is a prospectus required in all cases?

No, there is no such requirement for investment funds to appoint as its auditor one which is based or one that conducts business in or from The Bahamas.

Please visit our Investments and Securities page or Contact Us now to learn more.

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