Unit Trusts

In recent years Bermuda has become a valued centre for collective investment schemes, including unit trusts. Its excellent banking, administration and communications facilities, combined with a commercially sensitive regulatory environment, have created a favourable environment for growth. Whether such funds are open or closed-ended, unit trusts are particularly popular in areas where there is a significant market for long-term investment schemes designed to preserve capital, as well as provide capital appreciation.

Unit trust schemes in Bermuda are regulated by the Bermuda Monetary Authority, which has established guidelines applicable to all forms of collective investment schemes. A unit trust scheme (as defined in the Stamp Duties Act) means ‘any arrangement made for the purpose, or having the effect of providing for persons having funds available for investment facilities for participation by them as beneficiaries under a trust, in profits or income arising from the acquisition, holding, management or disposal of any property whatsoever.’ Stamp duty is no longer payable by a unit trust established by non-residents.

The promoters of the unit trust scheme are approved by the Bermuda Monetary Authority before permission is given to issue units. If units are offered to the public, a prospectus must be published and filed in Bermuda with the Registrar of Companies.

A unit trust scheme will ordinarily be established by a trust deed which is governed by Bermuda law. The trustee may be a private trustee company with special powers to act as trustee for the particular unit trust scheme. These private trust companies are not required to be licensed under The Trust Companies Act.

There is no statutory or other requirement for establishing or maintaining a minimum capitalization for a unit trust. A unit trust scheme capitalized in foreign currency and promoted for the benefit of persons who are non-residents for exchange control purposes will similarly be designated as non-resident.