QU OF NT AT A FE RU

BERMUDA

2000 : 33

WHEREAS it is expedient to provide for the registration and regulation of companies that operate segregated accounts:

Be it enacted by The Queen’s Most Excellent Majesty, by and with the advice and consent of the Senate and the House of Assembly of Bermuda, and by the authority of the same, as follows:—

PART I — INTERPRETATION AND APPLICATION

Citation

1 This Act may be cited as the Segregated Accounts Companies Act 2000.

2. Interpretation and application

(1) In this Act— “account owner” in relation to a segregated account means any person who is—

(a) the registered holder of shares or any LLC interests which are—

(i) issued by the segregated accounts company, and

(ii) linked to that segregated account;

(b) expressly identified in the governing instrument linked to a segregated account as being an account owner for the purposes of this Act in respect of that segregated account; or

(c) expressly designated in the records of the segregated accounts company as being an account owner in respect of that segregated account; and the interests of an account owner in any of the foregoing capacities in relation to any segregated account are referred to in this Act as “account holdings”; “appointed newspaper” means the Gazette or newspaper appointed by the Registrar under section 2(6) of the Companies Act 1981; “company” means—

(a) a company as defined in section 2 of the Companies Act 1981;

(b) a limited liability company; or

(c) both a company as defined in section 2 of the Companies Act 1981 and a limited liability company, as the case may be; “contract” includes written agreements, instruments or other writings (including electronic records) which create or affect rights or obligations; “counterparty” means any party (other than the segregated accounts company itself, save where section 17A(1) applies) to a transaction to which the segregated accounts company is a party, and under which assets or liabilities are wholly or partly linked to a segregated account, but an account owner shall not (in that capacity) also be a counterparty; “court” means the Supreme Court; “creditor” means, in respect of any segregated account (and in that regard may include a counterparty of the segregated account) or the general account

respectively, any person to whom any liability is owed by the segregated accounts company and such liability is linked to that segregated account or is a liability of the general account, as the case may be; but, except as provided for in section 18(14), an account owner shall not (in that capacity) also be a creditor; “general account” means an account comprising all of the assets and liabilities of a segregated accounts company which are not linked to a segregated account of that company; “general interest holder” means any holder of an LLC interest of a segregated accounts company that is a limited liability company not being the holder of an LLC interest linked to a segregated account; “general shareholder” means any member of a segregated accounts company that is a company to which the Companies Act 1981 applies not being the holder of a share linked to a segregated account; “governing instrument” means one or more written agreements (including LLC agreements), instruments, bye-laws, prospectuses, resolutions of directors or managers of a limited liability company, registers or other documents (including electronic records), setting out the rights, obligations and interests of account owners in respect of a segregated account; “insurance business” means insurance business as defined in section 1(1) of the Insurance Act 1978; “known creditors” means creditors whose identity and whereabouts are known to, or with due diligence could be discovered by, the company, or other persons known to the company; “limited liability company” means a limited liability company registered as such under the Limited Liability Company Act 2016; “linked” means referable by means of—

(a) an instrument in writing including a governing instrument or contract;

(b) an entry or other notation made in respect of a transaction in the records of a segregated accounts company; or

(c) an unwritten but conclusive indication, which identifies an asset, right, contribution, liability or obligation as belonging or pertaining to a segregated account; “LLC agreement” has the meaning given in section 2 of the Limited Liability Company Act 2016; “LLC interest” has the meaning given in section 2 of the Limited Liability Company Act 2016; “LLC manager” means “manager” as defined in section 2 of the Limited Liability Company Act 2016;

“manager” means any person who, by virtue of the terms of a governing instrument or otherwise with the consent of a segregated accounts company and the account owners of any segregated account, has control of a segregated account; “member” means—

(a) in relation to a company to which the Companies Act 1981 applies, a member as defined in section 2 of the Companies Act 1981;

(b) in relation to a limited liability company, a member as defined in section 2 of the Limited Liability Company Act 2016; “Minister” means the Minister of Finance or such other Minister as may be appointed to administer this Act; “mutual fund” means a mutual fund within the meaning of section 156A of the Companies Act 1981; “officer” in relation to a segregated accounts company, includes director, LLC manager and secretary; “operative date” means the date on which this Act comes into force; “prescribed fee” means such fee as may be prescribed pursuant to section 31, or by regulations made under the Government Fees Act 1965, as the case may be; “register” means the register of segregated accounts companies maintained under section 6; “registered” means registered under section 6; “Registrar” means the Registrar of Companies appointed under section 3 of the Companies Act 1981; “regulated person” has the meaning given in section 10; “security” in relation to a segregated accounts company, means any share, LLC interest, note, bond, debenture, evidence of indebtedness, certificate, unit, warrant, or right conferring an option to acquire shares, LLC interests or any other right issued by or pertaining to the company, but does not include a contract of insurance unless the terms of the contract so provide; “segregated account” means a separate and distinct account (comprising or including entries recording data, assets, rights, contributions, liabilities and obligations linked to such account) of a segregated accounts company pertaining to an identified or identifiable pool of assets and liabilities of such segregated accounts company which are segregated or distinguished from other assets and liabilities of the segregated accounts company for the purposes of this Act; “segregated account representative” means a person appointed in accordance with section 10;

“segregated accounts company” means a company which is registered under section 6 and, unless the context otherwise requires, references to “the company” shall be construed as references to such company; “supervisory authority” has the meaning given in section 10; “transaction” means any dealing of whatever nature, which may be evidenced by a governing instrument (in the case of a transaction with an account owner) or contract (in the case of a transaction with a counterparty), including the issue of any security, by which assets or liabilities become linked to a segregated account or by which the assets or liabilities linked to a segregated account are otherwise affected, or, in the case of assets linked to a segregated account which are intended by the parties to be applied to a risk of any nature, any dealing which exposes such assets to liability or loss.

(2) For the purposes of this Act, excluding section 24(1)—

(a) a segregated accounts company shall be deemed to be solvent if the general account is able to pay its liabilities as they become due;

(b) a segregated account shall be deemed to be solvent if it is able to pay its liabilities (excluding obligations to account owners in that capacity) as they become due.

(3) Nothing in this Act shall be construed as requiring a company which operates segregated accounts under the authority of a private Act or otherwise to be registered.

(4) For the avoidance of doubt it is declared that, notwithstanding section 18, a segregated accounts company is not by reason only of the operation of segregated accounts carrying on trust business in or from within Bermuda for the purposes of the Trust (Regulation of Trust Business) Act 2001.

(5) Section 24 of the Insurance Act 1978 shall not apply to an insurer who is registered as a segregated accounts company under this Act.

[NB 2002:10 s.2 replaced all references in the Act to “beneficial owner” with “account owner” effective

14 June 2002. These amendments are not noted in each place in which they have been made.] [Section 2 repealed and replaced by 2002:10 s.3 effective 14 June 2002; subsection (4) amended, and

(5) inserted, by 2004:30 s.2 effective 17 December 2004; subsection (1) "Minister" deleted and substituted by BR 5 / 2011 para. 5 effective 25 February 2011; Section 2 subsection (1) definitions "company", "general interest holder", "limited liability company", "LLC agreement", "LLC interest", "LLC manager", "member", "prescribed fee", "regulated person", "segregated account representative", and "supervisory authority" inserted, and definitions "account owner", "general shareholder", "governing instrument", "officer", and "security" amended by 2021 : 44 s. 2 effective 8 November 2021]

PART II — REGISTRATION

3. Application for registration to operate segregated accounts

(1) Any company—

(a) if it is engaged in insurance business; or

(b) if it is not so engaged, with the approval of the Minister, may, by filing a notice under section 5, apply to be registered under section 6.

(2) From the date of registration under this Act, a segregated accounts company shall be bound by this Act and from such date it may establish one or more segregated accounts to which this Act shall apply. [Section 3 subsection (1) amended, and subsection (2) substituted for (2) and (3), by 2002:10 s.4 effective

14 June 2002; subsection (2) substituted by 2004:30 s.3 effective 17 December 2004; Section 3 subsection (1) amended by 2021 : 44 s. 3 effective 8 November 2021]

Companies to notify Registrar

4 [Repealed] [Section 4 repealed by 2002:10 s.5 effective 14 June 2002]

5. Notice and documents to be filed

(1) The notice shall be in such form as the Registrar may determine but shall contain the following information—

(a) the name of the company which, in cases where the Registrar so directs, shall include the expression “(SAC)”;

(b) a statement that the company intends to operate segregated accounts;

(c) the address of the registered office of the company;

(d) the name and address of the segregated account representative of the company and where a segregated account representative is a regulated person—

(i) the supervisory authority in respect of that regulated person; and

(ii) such other particulars respecting those persons as the Registrar may reasonably require;

(e) the nature of the business of the company;

(f) the date of incorporation or formation of the company; and

(g) a statement that the company has made provision to account for segregated accounts in the manner set out in section 16.

(2) Where the company has conducted business prior to its registration, the company, in filing a notice under subsection (1), shall—

(a) file with the Registrar a statutory declaration made by, in the case of a company to which the Companies Act 1981 applies, at least one director, and in the case of a limited liability company, at least one LLC manager, as at the date of the notice setting out a true and accurate statement or description of—

(i) the assets and liabilities of the company as at a date within three months prior to the date of the notice;

(ii) any transaction or event which, as of the date of the notice, has occurred, or is expected to occur, between the date of the statement of assets and liabilities prepared pursuant to subparagraph (i) and the date of registration of the company as a segregated accounts company which, if it had occurred before the date of that statement, would have caused material changes to the assets and liabilities disclosed therein; and

(iii) the segregated accounts the company intends to operate and the assets and liabilities which the company proposes to assign to each of those segregated accounts; and declaring that—

(iv) on registration, the company and each segregated account will be solvent and—

(A) no known creditor of the company will be prejudiced,

(B) the known creditors of the company have consented in writing to the company proceeding to register, or

(C) adequate notice has been given in accordance with subsection (3) to all known creditors of the company and no creditor objects to the registration otherwise than on grounds that are frivolous or vexatious;

(v) no creditor of the company will be prejudiced; or

(vi) the creditors of the company have consented in writing to the company proceeding to register; and

(b) attach evidence of the consent in writing to registration of 75% in number of those persons who would, on the registration of the company, be the account owners of the segregated accounts of the company and 75% in number of those persons who would, on the registration of the company, be creditors.

(3) For the purposes of subsection (2)(a)(iv)(C) adequate notice is given if—

(a) a notice in writing is sent to each known creditor having a claim against the company that exceeds $1,000; and

(b) notice is published in an appointed newspaper, in each case stating that the company intends to register and that a creditor of the company may object to the registration within 28 days from the date of such notice, or publication of such notice, as the case may be.

(4) [Repealed by 2021 : 44 s. 4]

(5) [Repealed by 2021 : 44 s. 4]

(6) [Repealed by 2021 : 44 s. 4]

(7) [Repealed by 2021 : 44 s. 4]

(8) Where a company—

(a) has conducted business prior to filing a notice under subsection (1); and

(b) has filed such notice, it shall cause a copy of the notice to be contemporaneously given to all persons who, on the registration of the company, would be account owners and to its known creditors.

(9) If there is any material alteration of the particulars set out in subsection (2) between the date of the notice filed pursuant to subsection (1) and the date of registration, then the company shall give further notice to the Registrar of such alteration of particulars.

(10) The notice filed pursuant to subsection (1) and any documents accompanying that notice shall be treated as confidential by the Registrar and all public officers having access thereto, but this subsection does not preclude the disclosure of information for the purpose of enabling the Minister to exercise any functions conferred upon him by this Act. [Section 5 heading and subsections (1) and (2) amended, and subsections (3) to (10) substituted for (3) to

(7), by 2002:10 s.6 effective 14 June 2002; subsection (2)(a)(iv)(C) amended by 2004:30 s.4 effective 17 December 2004; Section 5 amended by 2021 : 44 s. 4 effective 8 November 2021; Section 5 subsection

(1)(d) repealed and substituted by 2021 : 44 s. 4 effective 31 December 2021]

6. Registration and register of segregated accounts companies

(1) The Registrar shall maintain a register of segregated accounts companies.

(2) Upon application and upon payment of the prescribed fee, the Registrar, if satisfied—

(a) that the company is capable of complying with this Act; and

(b) in the case of a financial institution as defined in section 1(1) of the Bermuda Monetary Authority Act 1969, that the Bermuda Monetary Authority has no objection to the registration, may register the company as a segregated accounts company.

(3) The Registrar may—

(a) impose such conditions on the registration of a company as he may consider necessary to ensure the reputation of Bermuda and in particular, to vet the account owners of segregated accounts and to ensure compliance with this Act;

(b) require the company to take certain steps or to refrain from adopting or pursuing a particular course of action or to restrict the scope of its segregated accounts business in a particular way.

(4) The Registrar may revoke or vary any condition or requirement imposed under subsection (3) by giving notice thereof to the company, and after giving the company the opportunity to be heard.

(5) After registering a company pursuant to subsection (2), the Registrar shall issue a certificate showing the date of registration.

(6) The Registrar shall place a copy of the certificate referred to in subsection (5) on the public file maintained by him in respect of the company.

(7) The register shall be available for inspection by members of the public.

(8) Where the Registrar refuses to register a company pursuant to subsection (2), he shall not be bound to assign any reason for his refusal and his decision shall not be subject to appeal or review in any court.

(9) A segregated accounts company aggrieved by a decision of the Registrar under subsection (4) to revoke or vary any condition or requirement may appeal to the court within

21 days (or such longer period as the court may allow after receipt of notification of any condition or requirement) and the court shall hear the matter and make such order as it thinks fit. [Section 6 heading and subsection (2) amended by 2002:10 s.7 effective 14 June 2002; Section 6 amended by 2021 : 44 s. 5 effective 8 November 2021]

6A. Objection to registration as a segregated accounts company

(1) Subject to subsection (2), an account owner or creditor who objects to the registration of a company as a segregated accounts company may apply to the court for the annulment of the registration of the company.

(2) An application under subsection (1) may only be made by—

(a) not less than 20% in number of such persons who would, on the registration of the company, be account owners;

(b) not less than 20% in number of such persons who would, on the registration of the company, be creditors; or

(c) not less than 20% in number of such persons as are mentioned in paragraphs (a) and (b) combined who would be account owners or creditors on registration, provided that an application shall not be made by any person who has voted in favour of the registration or has given to the company a statement in writing duly signed that he, having had notice, consents to the registration.

(3) An application under subsection (1) shall be made within 28 days from the date of registration, and may be made on behalf of the persons entitled to make the application by one or more of their number as they may appoint in writing for the purpose.

(4) On an application under subsection (1) the court may—

(a) make an order annulling or confirming the registration, either wholly or in part, and on such terms and conditions as it thinks fit;

(b) if it thinks fit, adjourn the proceedings in order that an arrangement may be made to the satisfaction of the court for the purchase or other disposition of the interests of dissentient persons; and

(c) give such directions and make such orders as it may think expedient for facilitating or carrying into effect any such arrangement, provided that no part of the capital of the company or of any segregated account shall be expended in the purchase or other disposition of the interests of dissentient persons. [Section 6A inserted by 2021 : 44 s. 6 effective 8 November 2021]

7. Removal from the register

(1) Subject to this section, the Registrar, on receipt of a request in writing by a segregated accounts company attaching thereto evidence of the consent in writing of 75% in number of the account owners of the segregated accounts of the company and of 75% in number of any counterparties who are creditors, shall remove the company from the register and the provisions of this Act shall cease to apply to the company.

(2) A request under subsection (1) shall be in such form as the Registrar may determine, but shall include a statutory declaration made by—

(a) in the case of a company to which the Companies Act 1981 applies, a majority of the directors of the segregated accounts company; and

(b) in the case of a limited liability company, a majority of the LLC managers of the segregated accounts company, to the effect that no creditor of the company will be prejudiced by, or the known creditors have consented in writing to, the removal of the company from the register.

(2A) There shall be attached to the statutory declaration referred to in subsection

(2), a true and accurate statement of—

(a) the assets and liabilities of the company as at a date within the three months prior to the date of the request;

(b) a description of any transaction or event which, as of the date of the request, is expected to occur between the date of the statement of assets and liabilities prepared pursuant to paragraph (a) and the date of the removal of the company as a segregated accounts company which, if it had occurred before the date of the statement of assets and liabilities, would have caused significant changes to the assets and liabilities disclosed therein; and

(c) the segregated accounts which the company has operated and the assets and liabilities which were linked to each of those segregated accounts.

(3) If there is any material alteration of the particulars set out in subsection (2A) between the date of the request given pursuant to subsection (1) and the removal of the

company from the register, the company shall give notice to the Registrar of such alteration in particulars.

(4) A segregated accounts company shall circulate contem-poraneously with the request to the Registrar under subsection (1) notice of that request to all account owners of the segregated accounts company and to all known creditors.

(5) An account owner of a segregated account or any creditor who is aggrieved by a request made pursuant to subsection (1) may, within 21 days of receipt of notice of the request, apply to the Registrar to refuse to remove the segregated accounts company from the register or, if the removal has already occurred, to reinstate the company on the register.

(6) Where an application has been made under subsection (5) and the Registrar has made a decision on the application, any person who is aggrieved by that decision may, within 21 days of the decision, appeal to the court and the court shall hear the matter and make such order as it thinks fit.

(7) The making of a request pursuant to subsection (1) shall not of itself effect the removal of a segregated accounts company from the register and the Registrar in his absolute discretion shall determine whether to give effect to the removal of the company from the register and, in this regard, may require such information from the company as he considers necessary to render such decision.

(8) Without prejudice to the provisions of Part VIII of the Companies Act 1981 or sections 19 and 27 of the Limited Liability Company Act 2016 (which relate to the powers of the Minister to investigate the affairs and require information of a company), the Registrar may, whether on his own initiative or on application by an account owner or a counterparty, remove a segregated accounts company from the register where the company has materially breached—

(a) the provisions of this Act or a condition or requirement imposed under section 6(3); or

(b) the terms of any direction given pursuant to section 26 or regulations made under section 27.

(8A) The rights and obligations of any account owner and of any creditor shall be unaffected by the removal of a segregated accounts company from the register, and the powers of the company shall continue in respect of such accrued rights and obligations but solely for the discharge thereof.

(9) Where the Registrar intends to remove a segregated accounts company from the register pursuant to subsection (8), he shall give the company notice of that intention and, before giving effect to the removal of the company from the register, he shall take into account any representations made by the company within such period as may be specified in the notice. [Section 7 subsections (1), (2), (4) , (5) amd (8) amended by 2002:10 s.8 effective 14 June 2002; Section

7 amended by 2021 : 44 s. 7 effective 8 November 2021]

8. Provisions relating to operation of segregated accounts pursuant to private Act

(1) Where a company has operated segregated accounts by virtue of authority conferred by a private Act and the company has registered—

(a) the provisions of this Act shall apply to that company and, to the extent of any inconsistency between this Act and the provisions of that private Act, the provisions of this Act shall prevail;

(b) subject to paragraph (c), any contracts to which the company was a party on the date of registration shall be construed in accordance with the private Act but contracts renewed or entered into after the date of registration shall be construed in accordance with this Act; and

(c) subsections 17A(1) to (4) shall apply with retrospective effect to any transaction entered into by the company in respect of and between accounts to the same extent that those sections would have applied to that transaction if that company had been a segregated accounts company under this Act at the time of the transaction.

(2) A company which has by virtue of authority conferred by a private Act the right to operate segregated accounts shall, within six months from the operative date or, in the case of a private Act that comes into force after the operative date, within six months of the coming into force of the private Act, give notice of that fact in writing to the Registrar, attaching thereto a copy of the private Act together with a copy of its most recent financial statements.

(3) The notice filed pursuant to subsection (2) and any documents accompanying that notice shall be treated as confidential by the Registrar and all public officers having access thereto, but this subsection does not preclude the disclosure of information for the purpose of enabling the Minister to exercise any functions conferred upon him by this Act.

(4) For the avoidance of doubt it is declared that, where a private Act confers authority on a company to operate segregated accounts but also contains other provisions not pertaining to the operation of such accounts, those other provisions shall not be affected by the registration of the company under section 6.

(5) For the purposes of this section and section 2(3) only, the meaning of the term “transaction” and “segregated account” provided for in this Act shall not be strictly applied and, for the avoidance of doubt, the meaning of the term “segregated account” shall include “separate accounts”, “segregated reserves”, “suites” or any cognate expressions thereof importing similar meaning (including such terms where capitalised) which may be used in a private Act. [Section 8 amended generally, subsection (1)(c) inserted, and subsections (3) to (5) substituted for (3), by 2002:10 s.9 effective 14 June 2002]

PART III — MANAGEMENT AND ADMINISTRATION

Company to inform persons they are dealing with segregated accounts company

9 A segregated accounts company shall—

(a) inform any person with whom it enters into a transaction that it is a segregated accounts company;

(b) where the transaction relates to a segregated account, for the purposes of that transaction identify or specify that segregated account; and

(c) include reference to the fact that the company is a company registered under the Segregated Accounts Companies Act 2000 on its letterhead and contracts. [Section 9 para (c) added by 2002:10 s.10 effective 14 June 2002]

10. Segregated account representative

(1) A segregated accounts company shall appoint and maintain a segregated account representative in Bermuda who shall be—

(a) in the case of a segregated accounts company referred to in subsection

(1A), a regulated person or a person approved by the Minister as a segregated account representative of the company;

(b) in all other cases, a regulated person.

(1A) Subsection (1)(a) shall apply to—

(a) a segregated accounts company that is engaged in insurance business;

(b) a segregated accounts company that is an AML/ATF regulated financial institution or is otherwise required to comply with the AML/ATF Regulations; and

(c) such other category of segregated accounts company as the Minister may determine by order subject to the negative resolution procedure.

(2) The particulars of the segregated account representative of a segregated accounts company shall be included—

(a) in the case of a company to which the Companies Act 1981 applies, in the register of directors and officers of the company maintained pursuant to section 92A of the Companies Act 1981; and

(b) in the case of a limited liability company, in the register of managers of a company maintained pursuant to section 59 of the Limited Liability Company Act 2016.

(3) It is the duty of the segregated account representative within 30 days of—

(a) his reaching the view that there is a reasonable likelihood of a segregated account or the general account of a segregated accounts company for which he acts becoming insolvent; or

(b) it coming to his knowledge or his having reason to believe that the segregated accounts company for which he acts—

(i) has failed to comply with—

(A) any requirement or condition imposed under section 6(3),

(B) any requirement imposed by section 11, 15 or 16,

(C) any direction given under section 26, or

(D) any regulation made under section 27; or

(ii) has become involved in any criminal proceedings in Bermuda or elsewhere, to make a written report to the Registrar setting out all the particulars of the case that are available to him relating to the insolvency, failure or involvement.

(4) For the avoidance of doubt, in a case to which subsection (1A) applies it shall be for the segregated accounts company referred to therein to decide whether to appoint a regulated person or a person approved by the Minister to be the segregated account representative of that company.

(5) Nothing in this section shall require the disclosure or production by a person of information or documents which he would be entitled to refuse to disclose or produce on the grounds of legal professional privilege in proceedings in Bermuda.

(6) In this section— “AML/ATF Regulations” has the meaning given in section 2 of the Proceeds of Crime (Anti-Money Laundering and Anti-Terrorist Financing Supervision and Enforcement) Act 2008; “AML/ATF regulated financial institution” has the meaning given in section 42A(1) of the Proceeds of Crime Act 1997; “regulated person” means a person in respect of whom a supervisory authority has regulatory authority; “supervisory authority” in relation to a regulated person, has the meaning given in section 3(1)(a) and (b) of the Proceeds of Crime (Anti-Money Laundering and Anti-Terrorist Financing Supervision and Enforcement) Act 2008. [Section 9 subsections (1) and (3) amended by 2002:10 s.11 effective 14 June 2002; Section 10 amended by 2021 : 44 s. 8 effective 31 December 2021]

11. Governing instruments and contracts

(1) The rights, interests and obligations of account owners in a segregated account shall be evidenced in a governing instrument and the rights, interests and obligations of counterparties shall be evidenced in the form of contracts.

(2) The governing instrument in relation to any segregated account shall be deemed to be governed by the laws of Bermuda and the parties thereto shall be deemed to submit to the jurisdiction of the courts of Bermuda and, in relation to such governing instrument—

(a) a person shall become an account owner and shall become bound by the governing instrument if such person complies with the conditions, if any, for becoming an account owner as set out in the governing instrument;

(b) an account owner shall take such interest in a segregated account as may be stipulated in respect of him in accordance with the terms of the governing instrument and, absent such stipulation or other compelling indication (in the discretion of the directors or LLC managers, as the case may be, of the company, exercised reasonably), the extent of the interest of such account owner shall be nil;

(c) if no other provision for management is specified in the governing instrument, the segregated accounts company shall manage the segregated account and may—

(i) appoint and supervise the officers, managers, employees and other persons who have management of the segregated account; and

(ii) enter into financial arrangements for payment for services including the charging of fees, disbursements and other charges which the manager shall be authorized to withdraw from the segregated account;

(d) unless otherwise provided in the governing instrument, the segregated accounts company may take any action, including—

(i) the amendment of the governing instrument;

(ii) the appointment of one or more managers;

(iii) for the benefit of the segregated account only, the sale, lease, exchange, transfer, pledge or other disposition of all or any part of the assets of the segregated account, or the orderly winding-up of the affairs and termination of the segregated account, or may provide for the taking of any action to create under the provisions of the governing instrument a class, group or series of account holdings that was not previously outstanding, without the vote or approval of any particular manager or account owner, or class, group or series of managers or account owners;

(e) the segregated accounts company may, if and to the extent that voting rights are granted under the governing instrument, set forth provisions relating to—

(i) notice of the time, place or purpose of any meeting at which any matter is to be voted on;

(ii) waiver of any such notice;

(iii) action by consent without a meeting;

(iv) the establishment of record dates;

(v) quorum requirements;

(vi) voting in person, by proxy or in any other manner; or

(vii) any other matter with respect to the exercise of any voting rights;

(f) unless otherwise provided in the governing instrument in relation to a segregated account, the segregated accounts company may in respect of that account grant to, or withhold from, all or certain managers or account owners, or a specified class, group or series of managers or account owners, the right to vote, separately or with any or all other classes, groups or series of managers or account owners, on any matter, such voting being on a per capita, number, financial interests, class, group, series or any other basis;

(g) unless otherwise provided in the governing instrument in relation to a segregated account, the segregated accounts company in respect of that account may create further segregated accounts to which all or any part of the assets, liabilities, profits or losses linked to any existing segregated account may be transferred, and for the conversion of the interest (or any part thereof) of all or certain account owners in an existing segregated account into interests of account owners in the separate segregated account; and

(h) unless otherwise provided in the governing instrument in relation to a segregated account, the segregated accounts company in respect of that account may set forth provisions therein regarding—

(i) the governance of the business (or any aspect thereof) of the segregated account and the rights, powers and duties of the company, any manager and the account owner and their respective servants, agents, employees, successors or assigns;

(ii) the identity of the segregated account to which the transaction and any assets or liabilities are linked; and

(iii) the extent of the interest of the account owners and others (if any) therein and subordination thereof (if any).

(3) Any contract governing a transaction with a counterparty, including those executed outside Bermuda, shall include the name of the counterparty, and, unless

otherwise provided therein, shall include an implied term that the parties select the law of Bermuda as its governing law and submit to the jurisdiction of the courts of Bermuda.

(4) Unless otherwise expressly agreed in writing by the parties to the transaction—

(a) by virtue of a governing instrument or contract which is binding on those parties in relation to the affected segregated accounts or general account, as the case may be, and which is executed by parties having authority in relation to those accounts; and

(b) in the case of a mutual fund only where the document or documents mentioned in paragraph (a) clearly indicate an intention of the parties to extend liability to more than one segregated account or the general account as permitted by this section and contain a specific reference to this subsection and to subsection 17(5), any contract pertaining to a transaction shall be deemed to contain a statement that the rights of the counterparty shall not extend to, and the counterparty will not have recourse to, the assets which are linked to any other segregated account or to the general account.

(5) For the avoidance of doubt, it is hereby declared that any provision of a contract or governing instrument relating to the segregation of assets or liabilities of a segregated account shall be governed by and construed in accordance with this Act, and the parties may not contract otherwise in such regard. [Section 11 repealed and replaced by 2002:10 s.12 effective 14 June 2002; Section 11 subsection (2)(b) amended by 2021 : 44 s. 9 effective 8 November 2021]

12. Apportionment of assets and liabilities

(1) Notwithstanding any other provision of this Act but subject to subsection (1A), a segregated accounts company may apportion an asset or liability among two or more segregated accounts and the general account.

(1A) Subsection (1) shall not apply to a segregated accounts company that is a mutual fund unless the relevant contract or governing instrument contains a specific reference to sections 11(4) and 17(5).

(2) Where a segregated accounts company has apportioned an asset or liability pursuant to subsection (1), the extent to which the asset or liability is linked to each segregated account shall be clearly indicated in the contract or governing instrument effecting the apportionment. [Section 12 repealed and replaced by 2002:10 s.13 effective 14 June 2002; Section 12 subsection (1) repealed and substituted, and subsection (1A) inserted by 2021 : 44 s. 10 effective 8 November 2021]

Amalgamations and consolidations

13 [Repealed] [Section 13 repealed by 2002:10 s.14 effective 14 June 2002]

14. Issue of securities linked to a segregated account

(1) A segregated accounts company may create and issue securities in one or more classes linked to the same segregated account, the proceeds of issue of which shall be included in the assets linked to that segregated account.

(2) Where a segregated accounts company has effected a transaction by issuing a security linked to a segregated account, the issue of the security shall be identified as being linked to the segregated account in the accounts, books and records required to be kept by the company pursuant to this Act.

(2A) Notwithstanding any enactment to the contrary except section 66 of the Companies Act 1981, no record or register or that part of a record or register detailing any ownership of such security shall be open to public inspection save that any owner thereof shall be entitled to receive a copy of the information contained therein pertaining to such security.

(2B) For the avoidance of doubt, the provisions of section 65(6) and 66 of the Companies Act 1981 shall not apply to a segregated accounts company that is a mutual fund.

(3) The proceeds of the issue of shares, LLC interests or other securities, other than securities linked to a segregated account, shall be included in the general assets of the segregated accounts company only and the general shareholders and general interest holders shall have no rights to the assets of any segregated account by reason only of being a general shareholder or general interest holder. [Section 14 subsections (2A) and (2B) inserted by 2002:10 s.15 effective 14 June 2002; Section 14 subsection (3) amended by 2021 : 44 s. 11 effective 8 November 2021]

15. Dividends, distributions, redemptions, repurchases and reduction of capital

(1) A segregated accounts company may pay a dividend or make a distribution in respect of securities of any class linked to a segregated account whether or not a dividend or distribution is declared on any other class of securities linked to the same or any other segregated account or any other securities issued by the company.

(2) Notwithstanding any other provision of this Act, a dividend shall not be declared or paid, or a distribution declared or made, in respect of shares, LLC interests or other account holdings linked to a segregated account if there are reasonable grounds for believing that—

(a) the segregated account is not, or would after the payment not be, solvent; or

(b) the realisable value of the assets of the segregated account would thereby be less than the aggregate of its liabilities.

(3) Dividends or distributions in respect of securities linked to a segregated account shall be paid or made on or in respect of those securities by reference only to the assets and liabilities of the segregated account linked to those securities, and not by reference to the general account or any other segregated account, and otherwise in accordance with the rights of such securities.

(4) Section 54 of the Companies Act 1981 and section 80 of the Limited Liability Company Act 2016 do not apply to a segregated accounts company in relation to a dividend or distribution in respect of a segregated account, declared, paid or made under this section.

(5) Notwithstanding subsections 42(2) and 42A(5) of the Companies Act 1981, or section 82(8) of the Limited Liability Company Act 2016, a segregated accounts company may redeem or repurchase the shares, LLC interests or other account holdings using the assets linked to the relevant segregated account provided that—

(a) on the date of redemption or repurchase, after taking into account the redemption or repurchase, there are reasonable grounds for believing that the relevant segregated account is solvent; or

(b) all creditors with claims linked to that segregated account on that date have expressed in writing their concurrence to the redemption or repurchase.

(6) Sections 15(2)(b), 15(5) and 16(4) shall not apply to a mutual fund.

(7) A segregated accounts company which is a mutual fund may redeem or repurchase for cancellation shares using the assets linked to the relevant segregated account provided that, on the date of redemption or repurchase, there are reasonable grounds for believing that the relevant segregated account is solvent and would remain so after the redemption or repurchase.

(8) A segregated accounts company which is a mutual fund on the redemption or repurchase of shares linked to a segregated account may—

(a) repay the capital paid on such shares out of paid in capital, additional paid in capital or other reserves of the company linked to the relevant segregated account;

(b) pay the premium, if any, out of realised or unrealised profits, additional paid in capital or other reserves of the company linked to the relevant segregated account, on such terms and in such manner and at such price as may be determined having regard to the asset value of such shares as ascertained in accordance with the governing instrument.

(9) A segregated accounts company which is a mutual fund on the redemption or repurchase of shares linked to a segregated account may effect the redemption or repurchase out of the assets of the company linked to the relevant segregated account, on such terms and in such manner and at such price as may be determined having regard to the asset value of such shares as ascertained in accordance with the governing instrument.

(10) In any case where a segregated accounts company in respect of a segregated account has share capital, if authorised in a general meeting of the account owners of the segregated account to which the shares are linked and subject to the governing instrument in relation to that segregated account, on such terms as it may decide, the company may reduce its capital in any way, and in particular, without prejudice to the generality of the foregoing power, by—

(a) extinguishing or reducing the liability on any of its shares in respect of capital not paid up;

(b) either with or without extinguishing or reducing liability on any of its shares, cancelling any paid up capital that is lost or unrepresented by available assets; or

(c) either with or without extinguishing or reducing liability of any of its shares and either with or without reducing the number of such shares, paying off any paid up capital that is in excess of the requirements of the company.

(11) No company shall reduce the amount of its share capital in respect of a segregated account—

(a) unless, at a date not more than thirty days and not less than fifteen days before the date on which the reduction of the share capital is to have effect, the company causes a notice to be published in an appointed newspaper stating—

(i) the amount of the capital of the segregated account as last determined by the company;

(ii) the amount to which the share capital of the segregated account is to be reduced; and

(iii) the date on which the reduction is to have effect; and

(b) if, on the date the reduction is to be effected, there are reasonable grounds for believing that the segregated account is not, or after the reduction would not be, solvent.

(12) Unless the governing instrument pertaining to the affected segregated account otherwise provides, where the capital of a segregated account is reduced by the cancellation of shares and part only of a class of shares is to be cancelled, the shares to be cancelled shall be selected—

(a) by lot in such manner as the directors shall determine;

(b) as nearly as may be in proportion to the number of shares of the class registered in the name of each account holder; or

(c) in such other manner as the directors determine with the consent of the majority of the account owners of the class to be cancelled.

(13) Where shares are to be cancelled in order to reduce the capital of a segregated accounts company in respect of a segregated account, the shares shall be acquired at the lowest price at which, in the opinion of the directors, the shares are obtainable, but not exceeding an amount, if any, stated in or determined by the governing instrument.

(14) Where a company in respect of a segregated account having share capital reduces the amount of that share capital, then within thirty days after the date as from which the reduction has effect the company shall file a memorandum, with a copy of the notice referred to in subsection (11)(a) in the office of the Registrar stating that this section has been duly complied with.

(15) If any company fails to comply with subsection (11), (12) or (13) every officer of the company shall be liable to a fine of $5,000, and if the company fails to comply with subsection (14) the company shall be liable to a fine of $20 for every day during which such failure continues. [Section 15 subsections (2) and (5) substituted, and (6) to (15) added, by 2002:10 s.16 effective 14 June 2002; Section 15 amended by 2021 : 44 s. 12 effective 8 November 2021]

16. Accounts, records and registers

(1) A segregated accounts company shall—

(a) maintain records in accordance with generally accepted accounting principles used in the preparation of the financial statements of the company;

(b) maintain a record of each transaction entered into by the company; and

(c) maintain a general account which records in accordance with this Act all of the assets and liabilities of the company which are not linked to a segregated account and which discloses any assets intended by the parties to be applied to a risk of any nature, and which therefore exposes such assets to liability or loss.

(1A) The records referred to in subsection (1)(a) shall be prepared in accordance with section 84 of the Companies Act 1981 (in the case of a company to which the Companies Act 1981 applies) and section 51 of the Limited Liability Company Act 2016 (in the case of a limited liability company) or other accounting principles so that the records shall, to the best of the knowledge, information and belief of the directors or managers (as the case may be) and officers of the company, clearly show the share capital or LLC interests (as the case may be), proceeds of rights issues, securities, reserves, assets, liabilities, income and expenses, dividends and distributions that are linked to each segregated account.

(2) For the purposes of subsection (1A), “reserves” includes retained earnings, contributed surplus and share premium.

(3) The records referred to in subsection (1) shall be kept in accordance with section 83 of the Companies Act 1981 or section 50 of the Limited Liability Company Act

2016 (as the case may be), provided that in the case of a segregated accounts company to which the Insurance Act 1978 applies, the records may be kept at the principal office.

(4) The records maintained with respect to a segregated account may be inspected by any account owner of that segregated account, but an account owner shall not have a right to inspect the records relating to any other segregated account or (in such capacity) the general account.

(5) Subject to subsection (5A), a segregated accounts company shall prepare or cause to be prepared financial statements in respect of each segregated account, and the provisions of sections 84, 88 and 90 of the Companies Act 1981 or sections 51 and 52 of the Limited Liability Company Act 2016 (as the case may be) shall apply, with the necessary modifications, to the preparation of financial statements under this section and any

reference in those provisions to “member” shall be construed as a reference to the account owner of the segregated account.

(5A) The account owner of a segregated account may, for the purposes section 88(1) of the Companies Act 1981 or section 52 of the Limited Liability Company Act 2016 (as the case may be), agree in writing to waive his right to have laid before a general meeting or prepared financial statements or the auditor’s report thereon for an indefinite period but such waiver shall be expressed to be revocable at the option of such account owner.

(6) Subject to subsections (5) and (5A), a copy of the financial statements of a segregated account shall be made available to the account owner of a segregated account at such intervals and for such periods as are agreed between the segregated accounts company and the account owner of the segregated account, but in any event shall be made available not less frequently than once in each financial year.

(7) If—

(a) the records maintained with respect to a segregated account; or

(b) the financial statements of a segregated account, are not made available for inspection by any account owner of that segregated account, the court may, on application by the affected account owner, by order compel immediate production of the records or financial statements.

(8) A segregated accounts company shall maintain a register of account owners setting out their respective interests in any segregated account together with the particulars required in respect of members of the company as set out in section 65(1) of the Companies Act 1981 or section 55 of the Limited Liability Company Act 2016 (as the case may be).

(9) The register of account owners shall not be open to public inspection and in the case of a segregated accounts company which is a mutual fund, the register of account owners shall not be open to inspection by any person without the consent of the company, provided that an account owner shall be entitled to receive a copy of the information in the register pertaining to his interest in the company.

(10) The register of account owners shall be prima facie evidence of any matters by this Act directed or authorised to be inserted therein. [Section 16 subsections (1), (4), (5), (7) and (9) amended, and (10) added, by 2002:10 s.17 effective 14 June 2002; Section 16 amended by 2021 : 44 s. 13 effective 8 November 2021]

17. Nature of segregated accounts, application of assets and liabilities

(1) Notwithstanding any other provision of this Act, the establishment of a segregated account does not create a legal person distinct from the segregated accounts company.

(2) Notwithstanding any enactment or rule of law to the contrary, but subject to this Act, any liability linked to a segregated account shall be a liability only of that account and not the liability of any other account and the rights of creditors in respect of such liabilities shall be rights only in respect of the relevant account and not of any other account.

(2A) For the purposes of subsection (2) and for the avoidance of doubt, any asset which is linked by a segregated accounts company to a segregated account—

(a) shall be held by the segregated accounts company as a separate fund which is—

(i) not part of the general account and shall be held exclusively for the benefit of the account owners of the segregated account and any counterparty to a transaction linked to that segregated account; and

(ii) available only to meet liabilities to the account owners and creditors of that segregated account; and

(b) shall not be available or used to meet liabilities to, and shall be absolutely and for all purposes protected from, the general shareholders or general interest holders and from the creditors of the company who are not creditors with claims linked to segregated accounts.

(3) For the purposes of this Act, the Companies Act 1981, the Limited Liability Company Act 2016 and otherwise at law, the assets recorded in the general account shall be the only assets of a segregated accounts company available to meet liabilities of the segregated accounts company that are not linked to a segregated account.

(4) No assets of the general account may be transferred from the general account to a segregated account unless, on the date from which the transfer is to be effective, and taking into account that transfer—

(a) the general account is solvent; or

(b) all the shareholders or LLC interest holders (as the case may be) and creditors of the general account on that date have expressed in writing their concurrence to the transfer.

(4A) For the purposes of subsection (4), in the event a transfer is made to a segregated account in breach of that subsection, on an application by an affected party, the court may declare that the transfer is void, without prejudice to the rights of bona fide purchasers for value without notice.

(5) Unless otherwise expressly agreed in writing by the affected parties—

(a) by virtue of one or more contracts, governing instruments or other documents which are binding on those parties in relation to the affected segregated accounts or general account, as the case may be, and which are executed by parties having authority in relation to those accounts; and

(b) in the case of a mutual fund only where the documents mentioned in paragraph (a) clearly indicate an intention of the parties to extend liability to more than one segregated account or the general account as permitted by this section and contain a specific reference to this subsection and to subsection 11(4),

where a liability of a segregated accounts company to a person arises from a transaction or matter relating to, or is otherwise imposed in respect of or attributable to, a particular segregated account, that liability shall—

(c) extend only to, and that person shall, in respect of that liability, be entitled to have recourse only to, the assets linked to that segregated account;

(d) not extend to, and that person shall not, in respect of that liability, be entitled to have recourse to, the assets linked to any other segregated account; and

(e) not extend to, and that person shall not in respect of that liability, be entitled to have recourse to, the general account.

(6) Where a liability of a segregated accounts company to a person—

(a) arises otherwise than in respect of a particular segregated account; or

(b) is imposed otherwise than in respect of a particular segregated account, that liability shall extend only to, and that person shall, in respect of that liability, be entitled to have recourse only to, the general account.

(7) In the event that a segregated account has insufficient assets to pay all of its obligations in full, the order and priority of the rights in relation to assets linked to a segregated account shall (without prejudice to the rights of any parties holding valid security interests against assets linked to that segregated account and any valid preferential claims in respect of that segregated account) be determined by the terms of the governing instrument and any contracts pertaining to that account, and any ambiguity in respect of the order and priority rights shall be resolved as follows:

(a) the claims of creditors shall rank ahead of the claims of account owners;

(b) the claims of creditors inter se shall rank pari passu; and

(c) the claims of account owners inter se shall rank pari passu.

(8) A segregated accounts company may, with the consent in writing of all account owners of, or counterparties who are creditors with claims linked to, a given segregated account, transfer to the general account or another segregated account an asset from the segregated account to which it is linked, if the segregated account to which such asset is linked, taking into account the proposed transfer, remains solvent, and, in the event a transfer is made to the general account in breach of this subsection, on an application by an affected party, the court may declare that the transfer is void, without prejudice to the rights of bona fide purchasers for value without notice.

(9) Any asset transferred in accordance with subsection (8) shall cease to be linked to the segregated account from which it was transferred on the date of the transfer.

(10) Subject to the terms of the governing instrument relating to a given segregated account, on dissolution of the segregated accounts company or termination of the segregated account and after paying creditors of the segregated account, any property linked to that segregated account shall be paid pro rata to the account owners of such

segregated account or, if there are no account owners, shall be deemed to fall into the general account.

(11) Without prejudice to the rights of parties to resolve disputes by reference to arbitration or to the court, where—

(a) there is, on grounds that are reasonable, uncertainty as to whether any given interest in a segregated account is an interest as a counterparty or an interest as an account owner, that interest shall be deemed to be an interest as a counterparty;

(b) a given liability is not linked to a particular segregated account, or where there is, on grounds that are reasonable, uncertainty as to whether the liability is linked to a segregated account, that liability shall be deemed to be the liability of the general account. [Section 17 repealed and replaced by 2002:10 s.18 effective 14 June 2002; Section 17 amended by 2021 :

44 s. 14 effective 8 November 2021]

17A. Internal transactions

(1) Notwithstanding any enactment or rule of law to the contrary—

(a) a segregated accounts company acting in respect of the general account may enter into transactions with the company acting in respect of one or more segregated accounts; and

(b) a segregated accounts company acting in respect of a segregated account may enter into transactions with the company acting in respect of one or more other segregated accounts.

(2) For the avoidance of doubt—

(a) a transaction referred to in subsection(1); and

(b) any transaction between the company in respect of one segregated account and a third party, shall have effect or otherwise (as the case may be) as the transaction would have done under the general law if the transaction had been entered into between the company and a third party, and without restricting the generality of the foregoing—

(c) such a transaction shall be void, voidable, illegal or reversible at the instance of any creditor of the company in respect of the relevant segregated account or at the instance of the company itself in respect of the relevant segregated account or at the instance of any other person if the transaction would have been void, voidable, illegal, or reversible (as the case may be) by such person under any rule of law (including Part IVA of the Conveyancing Act 1993) which would have applied to the transaction if the transaction had been entered into between the company and a third party in the same circumstances; and

(d) an account owner, counterparty, or receiver of any given segregated account shall have standing to pursue, on behalf of the relevant segregated

account, any rights of action (including recourse to arbitration under subsection (4)) available to the segregated accounts company in respect of that segregated account pursuant to this section.

(3) Notwithstanding any enactment or rule of law to the contrary—

(a) where a manager or officer of or other person on behalf of a segregated accounts company or a segregated account is also acting in respect of the general account and one or more of the segregated accounts or in respect of two or more segregated accounts which are entering into a transaction, he may so act notwithstanding any material interests or conflicts which may exist as between the manager, officer, directors or LLC managers or which any of them may have in acting in respect of such accounts; and

(b) where—

(i) a given segregated account enters into a transaction as described in paragraph (a), and

(ii) the governing instrument of the segregated account so authorises, or a majority of the account owners consent in writing to the entry into of such a transaction, then the manager, officer or such other person, the segregated accounts company and the company in respect of any segregated accounts (as the case may be) shall not be held liable to the company in respect of that segregated account or any of its account owners in respect of any conflict of interest arising in relation to the transaction.

(4) Any dispute which arises in connection with a transaction under subsection

(1)—

(a) as between the company in respect of a given segregated account and the company in respect of any one or more other segregated accounts; or

(b) as between the company in respect of the general account and the company in respect of one or more segregated accounts; may (notwithstanding any submission to the governing law of choice otherwise provided for in this Act or otherwise) be referred to the court or may be submitted to arbitration under the Bermuda International Conciliation and Arbitration Act 1993 and (if the matter is submitted to arbitration) as if the arbitration were an international commercial arbitration.

(5) If the managers, officers, legal advisers or others representing the company in respect of the separate interests of the affected accounts cannot agree on whether a particular matter should be referred to court or to arbitration, then that matter shall be referred to arbitration. [Section 17A inserted by 2002:10 s.18 effective 14 June 2002; Section 17A subsection (3)(a) amended by

2021 : 44 s. 15 effective 8 November 2021]

17B. Creditor enforcement rights limited to account assets

(1) There shall be implied (except in so far as the same is expressly excluded in writing) in every contract and governing instrument entered into by a segregated accounts company the following terms:-

(a) that no party shall seek, whether in any proceedings or by any other means whatsoever or wheresoever, to establish any interest in or recourse against any asset linked to any segregated account to satisfy a claim or liability not linked to that segregated account;

(b) that if any party succeeds by any means whatsoever or wheresoever in establishing any interest in or recourse against any asset linked to any segregated account of the company in respect of a liability not linked to that segregated account, that party shall be liable to the company to pay a sum equal to the value of the benefit thereby obtained by him; and

(c) that if any party shall succeed in seizing or attaching by any means or otherwise levying execution against any assets linked to any segregated account of the company in respect of a liability not linked to that segregated account, that party shall hold those assets or their proceeds on trust for the company and shall keep those assets or proceeds separate and identifiable as such trust property.

(2) All sums recovered by a segregated accounts company as a result of any such trust as is described in subsection (1)(c) shall be credited against any concurrent liability pursuant to the implied term set out in subsection (1)(b).

(3) Any asset or sum recovered by a segregated accounts company pursuant to the implied term set out in subsection (1)(b) or (1)(c) or by any other means whatsoever or wheresoever in the events referred to in those subsections shall, after the deduction or payment of any costs of recovery, be applied by the company so as to compensate the segregated account affected.

(4) Notwithstanding subsections 17(4) and (8), in the event of any assets linked to a segregated account being taken in execution in respect of a liability not linked to that segregated account, and in so far as such assets or compensation in respect thereof cannot otherwise be restored to the segregated account affected, the company shall—

(a) cause or procure its auditor, acting as expert and not as arbitrator, to certify the value of the assets lost to the segregated account affected; and

(b) in priority to all other claims against the account transfer or pay, from the assets of the account to which the liability was attributable to the segregated account affected, assets or sums sufficient to restore to the segregated account affected the value of the assets lost. [Section 17B inserted by 2002:10 s.18 effective 14 June 2002; paragraphs (a) and (b) of subsection (1) substituted, para (c) of subsection (1) and subsection (4) amended by 2004:30 s.5 effective 17 December 2004]

18. Rights and obligations with respect to segregated accounts

(1) Notwithstanding any enactment or rule of law to the contrary, any asset of a segregated accounts company which is linked to a particular segregated account is deemed to be owned by the company as a separate fund which does not form part of the general account.

(2) [Repealed]

(3) To the extent provided in the governing instrument any person (including an account owner) may give directions to the segregated accounts company or other persons in the management of the segregated account and the managers shall have regard to such directions.

(4) Except to the extent otherwise provided in the governing instrument but subject to subsection (7)(b), neither the power to give directions to the segregated accounts company or other persons nor the exercise thereof by any person (including an account owner) shall cause the person giving directions to be a trustee or officer of the company.

(5) Except to the extent otherwise provided in the governing instrument, the account owners are entitled to the same limitation of personal liability as is enjoyed by members of companies limited by shares under section 158(d) of the Companies Act 1981 and by members of limited liability companies under section 105(c) of the Limited Liability Company Act 2016.

(6) [Repealed]

(7) A segregated accounts company may—

(a) sue and be sued in respect of a particular segregated account, and service of process upon the company in accordance with subsection (9) shall be sufficient;

(b) be sued for debts and other obligations or liabilities contracted or incurred by the company in respect of a particular segregated account, and for any damages to persons or property resulting from the negligence of the company acting in the performance of duties with respect to that account;

(c) exercise the same rights of set-off (if any) as between accounts as apply under the general law in respect of companies, including, on an insolvent liquidation of the company, the same rights of set-off which arise in an insolvent liquidation of a company.

(8) The property of a segregated account is subject to orders of the court as it would have been if the segregated account were a separate legal person (and notwithstanding that it is not a separate legal person).

(9) A segregated accounts company may be served with process in the manner prescribed in section 62A of the Companies Act 1981 or section 26(4) of the Limited Liability Company Act 2016 (as the case may be) in all civil actions or proceedings involving or relating to the activities of a segregated account or a breach by the company of a duty to the segregated account, or to any account owner thereof or to a counterparty to a transaction linked thereto.

(10) Except to the extent it may be agreed otherwise by virtue of the governing instrument or contract, as the case may be, an account owner of a segregated account and any counterparty who is a creditor in respect of a transaction linked to that segregated account shall have an undivided beneficial interest in the assets linked to a segregated account, and, after satisfying in full the claims of creditors of the segregated account, account owners shall share in the profits and losses of the segregated account in such proportions of the residual undivided beneficial interest in the segregated account owned by that account owner as may be specified in any governing instrument relating to such segregated account.

(11) An account owner’s or counterparty’s beneficial interest in a segregated account is personal property notwithstanding the nature of the property of the segregated account.

(12) Except to the extent it may be agreed otherwise by virtue of the governing instrument or contract, as the case may be, an account owner or counterparty has no interest in specific segregated account property.

(13) Except to the extent it may be agreed otherwise by virtue of the governing instrument or contract, as the case may be, but subject to the provisions of the Exchange Control Act 1972, an account owner’s or counterparty’s beneficial interest in the segregated account is freely transferable.

(14) Subject to the segregated accounts company complying with section 15, and except to the extent it may be agreed otherwise by virtue of the governing instrument or contract, as the case may be, at the time an account owner or counterparty becomes entitled to receive a payment, distribution, allocation or dividend pursuant to any governing instrument, he has the status of, and is entitled to all remedies available to, a creditor of the segregated account with respect to the payment, distribution, allocation or dividend, and the governing instrument or contract may provide for the establishment of record dates with respect to such payment, distribution, allocation or dividend.

(15) To the extent that, at law or in equity, a segregated accounts company or manager has duties (including fiduciary duties) and liabilities relating to a segregated account or to an account owner or to a counterparty—

(a) that company or manager acting under a governing instrument or contract is not liable to the segregated account or to any account owner or counterparty for the company’s good faith reliance on the provisions of that governing instrument or contract to which that account owner or counterparty is a party; and

(b) the company’s or manager’s duties and liabilities may be expanded or restricted by provisions in a governing instrument to which the person is a party.

(16) Subject to section 17B(1)(c) and (2), the provisions of this section and section

11 operate to the exclusion of any rule of law relating to trusts treating with the same subject matter, and no rule of law relating to trusts may be pleaded by any person to augment or modify the operation of this Act, but nothing in this section shall be construed so as to deny—

(a) the remedy of tracing in law and in equity the assets or the proceeds of the assets of any segregated account where such assets or proceeds have been commingled with the assets of any other segregated account or the general account; or

(b) any remedies available under the doctrine of constructive trusts or similar equitable remedies where those remedies would otherwise be available.

(17) To the extent permitted in the governing instruments of the affected segregated accounts, a company in respect of a segregated account may be an account owner of one or more other segregated accounts of the same segregated accounts company. [Section 18 subsection (1) amended, (2) and (6) repealed, (7) amended, (8) and (10)-(14) substituted, (15) amended, (16) substituted, and (17) inserted, by 2002 :10 s.19 effective 14 June 2002; subsection (1) substituted, and (13) amended, by 2004 : 30 s.6 effective 17 December 2004; Section 18 subsections (5) and (9) amended by 2021 : 44 s. 16 effective 8 November 2021]

PART IV — RECEIVERSHIP AND WINDING UP

19. Receivership orders

(1) Subject to the provisions of this section, if, in relation to a segregated accounts company, the court is satisfied that—

(a) a particular segregated account is not solvent, the general account is not solvent, a liquidation has been commenced in relation to the company, or for other reasons it appears to the court just and equitable that a receiver should be appointed;

(b) the making of a receivership order under this section would achieve the purposes set out in subsection (3), the court may make a receivership order in respect of that segregated account.

(2) A receivership order may be made in respect of one or more segregated accounts.

(3) A receivership order shall direct that the business and assets linked to a segregated account shall be managed by a receiver specified in the order for the purposes of—

(a) the orderly management, sale, rehabilitation, run-off or termination of the business of, or attributable to, the segregated account; or

(b) the distribution of the assets linked to the segregated account to those entitled thereto.

(4) No resolution for the winding up of a segregated accounts company of which any segregated account is subject to a receivership order shall be effective without leave of the court. [Section 19 subsections (1), (3) and (4) amended by 2002:10 s.20 effective 14 June 2002]

20. Application for receivership orders

(1) An application for a receivership order in respect of a segregated account may be made by—

(a) the segregated accounts company;

(b) the directors or LLC managers (as the case may be) of the segregated accounts company;

(c) any creditor of the segregated accounts company in respect of that segregated account;

(d) any account owner of that segregated account;

(e) [Deleted]

(f) the Registrar.

(2) The court, on hearing an application—

(a) for a receivership order; or

(b) for leave, pursuant to section 19(4), for a resolution for winding up, may make an interim order or adjourn the hearing conditionally or unconditionally.

(3) Notice of an application to the court for a receivership order in respect of a segregated account shall be served upon—

(a) the segregated accounts company;

(b) the Registrar; and

(c) such other persons (if any) as the court may direct, each of whom shall be given an opportunity to make representations to the court before the order is made. [Section 20 subsection (1)(e) deleted, and (2)(b) amended, by 2002:10 s.21 effective 14 June 2002; Section

20 subsection (1)(b) amended by 2021 : 44 s. 17 effective 8 November 2021]

21. Functions and powers of receiver

(1) The receiver of a segregated account—

(a) may do all such things as may be necessary for the purposes set out in section 19(3); and

(b) shall have all the functions and powers of the directors and managers of the segregated accounts company in respect of the business and assets linked to the segregated account.

(2) The receiver may at any time apply to the court for—

(a) directions as to the extent or exercise of any function or power; or

(b) the receivership order to be discharged or varied.

(3) In exercising his functions or powers the receiver is deemed to act as the agent of the segregated accounts company in respect of the segregated account, and does not incur personal liability except to the extent that his conduct amounts to misfeasance.

(4) Any person dealing with the receiver in good faith is not concerned to enquire whether the receiver is acting within his powers.

(5) During the period of operation of a receivership order the functions and powers of the directors and managers and any liquidator of the segregated accounts company cease in respect of the business and assets linked to the segregated account in respect of which the order was made.

(6) At any time after the appointment of a receiver in respect of a segregated account, the company or any account owner or creditor of that account may, where an action or proceeding against the company in respect of that account is pending, apply to the court for a stay of those proceedings, and, on such an application being made, the court may stay the proceedings accordingly on such terms as it thinks fit. [Section 21 subsections (3) and (5) amended, and (6) added, by 2002:10 s.22 effective 14 June 2002]

22. Discharge and variation of receivership orders

(1) The court shall not discharge a receivership order unless it appears to the court that the purpose for which the order was made has been achieved or substantially achieved or is incapable of achievement.

(2) The court, on hearing an application for the discharge or variation of a receivership order, may make any interim order it thinks fit or adjourn the hearing, conditionally or unconditionally.

(3) When making an order discharging the receiver, the court may release the receiver from liability save in respect of misfeasance. [Section 22 subsection (3) added by 2002:10 s.23 effective 14 June 2002]

Remuneration of receiver

23 The remuneration of a receiver and any expenses properly incurred by him shall be payable in priority to all other unsecured claims from the assets linked to the segregated account in respect of which the receiver was appointed but not from any assets of the general account or any assets linked to other segregated accounts. [Section 23 repealed and replaced by 2002:10 s.24 effective 14 June 2002]

24. Winding up of segregated accounts companies

(1) Subject to this section, a segregated accounts company shall be wound up in accordance with the provisions of this Act, the Companies Act 1981 or the Limited Liability Company Act 2016 (as the case may be) and any other Act or rules which apply to the winding up of a company, save that in the event of any conflict, the provisions of this Act shall prevail.

(1A) For the purposes of determining whether a segregated accounts company may be wound up on the ground of insolvency—

(a) the test of insolvency which applies under section 162 of the Companies Act 1981 or section 109 of the Limited Liability Company Act 2016 (as the case may be) and (in the case of an insurance company) section 33 of the Insurance Act 1978 shall apply; and

(b) assets and liabilities linked to segregated accounts shall not be taken into account.

(2) Where—

(a) a petition for the winding up of a segregated accounts company is presented pursuant to Part XIII of the Companies Act 1981 or Part 13 of the Limited Liability Company Act 2016 (which relate to winding up); and

(b) the segregated accounts company is solvent under section 2(2) of this Act, the court shall not proceed on the petition on any ground provided for in paragraph (a), (b),

(c) or (d) of section 161 of the Companies Act 1981 or section 108(a), (b) or (d) of the Limited Liability Company Act 2016 (as the case may be) and shall not proceed unless the court is satisfied that to proceed would be just and equitable in all the circumstances.

(3) A segregated accounts company shall not be voluntarily wound up without the consent of the Registrar. [Section 24 subsection (1A) inserted, (2)(b) substituted, and (3) added, by 2002:10 s.25 effective 14 June 2002; Section 24 amended by 2021 : 44 s. 18 effective 8 November 2021]

25. Application of assets

(1) Notwithstanding any statutory provision or rule of law to the contrary, in the winding up of a segregated accounts company the liquidator shall deal with the assets and liabilities which are linked to each segregated account only in accordance with this Act and accordingly the liquidator shall ensure that the assets linked to one segregated account are not applied to the liabilities linked to any other segregated account or to the general account, unless an asset or liability is linked to more than one segregated account, in which case the liquidator shall deal with the asset or liability in accordance with the terms of any relevant governing instrument or contract.

(2) The remuneration to be paid to the liquidator shall be apportioned by the liquidator to each segregated account and the general account in such amounts as would best reflect the duties performed by the liquidator and approved by the court.

(3) The liquidator, or any person affected by a decision of the liquidator, may apply to the court for directions in relation to the remuneration of the liquidator. [Section 25 subsections (1) and (2) amended by 2002:10 s.26 effective 14 June 2002]

PART IVA — GENERAL APPLICATION OF COMPANIES ACT 1981, LIMITED LIABILITY COMPANY

ACT 2016, ETC.

25A. General application of Companies Act 1981

(1) Subject to this Act and any other enactment, the Companies Act 1981 applies with respect to a segregated accounts company that is a company within the meaning of section 2 of the Companies Act 1981, and such segregated accounts company shall comply with the provisions of that Act.

(2) To the extent possible, where they relate to a segregated accounts company that is a company to which the Companies Act 1981 applies, the provisions of this Act shall be construed consistently with the relevant provisions of the Companies Act 1981.

(3) In the event of an irreconcilable conflict between this Act and the Companies Act 1981, the provisions of this Act shall prevail. [Section 25A inserted by 2021 : 44 s. 19 effective 8 November 2021]

25B. General application of Limited Liability Company Act 2016

(1) Subject to this Act and any other enactment, the Limited Liability Company Act

2016 applies with respect to a segregated accounts company that is a limited liability company and such segregated accounts company shall comply with the provisions of that Act.

(2) To the extent possible, the provisions of this Act, where they relate to a segregated accounts company that is a limited liability company, shall be construed consistently with the provisions of the Limited Liability Company Act 2016.

(3) In the event of an irreconcilable conflict between this Act and the Limited Liability Company Act 2016, the provisions of this Act shall prevail. [Section 25B inserted by 2021 : 44 s. 19 effective 8 November 2021]

Application of Economic Substance Act 2018

25C The provisions of the Economic Substance Act 2018 and the Regulations made thereunder shall apply to a segregated accounts company as they apply in relation to entities under that Act. [Section 25C inserted by 2021 : 44 s. 19 effective 8 November 2021]

Application of Registrar of Companies (Compliance Measures) Act 2017

25D The Registrar of Companies (Compliance Measures) Act 2017 applies for the purposes of this Act. [Section 25D inserted by 2021 : 44 s. 19 effective 8 November 2021]

PART V — GENERAL

26. Directions of Minister to modify the provisions of this Act

(1) The Minister may, on the application, or with the consent in writing, of any segregated accounts company or any company intending to file a notice pursuant to section 5, direct that—

(a) any or all of the provisions of sections 5, 7, 11 and 16 shall not apply to such company; or

(b) those provisions or any of them shall apply to it subject to such modifications as may be specified in the direction.

(2) A direction under this section may be made subject to conditions.

(3) A direction under this section may be revoked by the Minister at any time provided that the company shall be given an opportunity to make representations to the Minister before the revocation takes effect.

(4) An application for a direction under this section shall be supported by a statutory declaration made by—

(a) in the case of a company to which the Companies Act 1981 applies, at least one director; and

(b) in the case of a limited liability company, at least one LLC manager, to the effect that no creditor of the company or of any segregated account thereof shall be prejudiced by the effect of the direction, if given, or that each creditor has consented in writing to the giving of such direction.

(5) A direction under this section is a public document available for inspection on the records maintained by the Registrar in respect of the company.

(6) A direction under this section is not a statutory instrument having legislative effect.

(7) Where a direction is given under subsection (1), the relevant provision shall have effect subject to the direction. [Section 26 subsections (1) and (4) amended by 2002:10 s.27 effective 14 June 2002; Section 26 subsection (4) repealed and substituted by 2021 : 44 s. 20 effective 8 November 2021]

26A. Rules

(1) The Minister may make rules for the purposes of this Act.

(2) Rules made under this section shall be subject to the negative resolution procedure. [Section 26A inserted by 2021 : 44 s. 21 effective 8 November 2021]

27. Minister may make regulations

(1) The Minister may make regulations for the better carrying out of the provisions of this Act.

(2) The negative resolution procedure applies to regulations made under subsection (1).

Effect on transaction and interests in a segregated account of infringement of this Act

27A Subject to subsections 17(4) and (8), no transaction or interest in a segregated account shall be void or voidable by reason only that at the relevant time the segregated accounts company fails to comply with, or is in breach of, any provision of this Act. [Section 27A inserted by 2002:10 s.28 effective 14 June 2002]

28. Suits and actions against Registrar and Official Receiver

(1) No suit or action shall lie against the Registrar or Official Receiver or any person acting on their behalf in respect of anything done or omitted to be done in their official capacity in good faith without negligence.

(2) Nothing in subsection (1) shall be deemed to interfere with applications or references to the court under Part XIII of the Companies Act 1981 or Part 13 of the Limited Liability Company Act 2016 (which relate to winding up). [Section 28 subsection (2) amended by 2021 : 44 s. 22 effective 8 November 2021]

Registrar and Official Receiver to be indemnified in respect of foreign suits

29 Neither the Registrar nor the Official Receiver shall be required to prosecute, defend or take part in any proceedings outside the jurisdiction of the court unless he is indemnified by or on behalf of the person who wishes him to act against any judgment, order or costs that may be awarded against that person by deed, guarantee or deposit, as he may require.

Offences

30 Any person who—

(a) for any purpose under this Act makes a statement or declaration that he knows or has reasonable grounds to believe to be false, deceptive or misleading in a material particular;

(b) fails to comply with a condition or requirement under section 6(3) or section 9; or

(c) being a segregated account representative, fails to perform his duty under section 10(3), is guilty of an offence and is liable on summary conviction to a fine of $5000 or imprisonment for 12 months, or both. [Section 30 para (b) amended by 2002:10 s.29 effective 14 June 2002]

30A. Offences by bodies corporate

(1) Where an offence under this Act is committed by a body corporate and it is proved that an officer of the body authorised, permitted, participated in, or failed to take all reasonable steps to prevent the commission of the offence, the officer, as well as the body corporate, commits the offence.

(2) In this section “officer” includes—

(a) a director or LLC manager (as the case may be) or the secretary;

(b) a person purporting to act as a director or LLC manager (as the case may be) or the secretary;

(c) if the affairs of the body corporate are managed by its members, the members. [Section 30A inserted by 2021 : 44 s. 23 effective 8 November 2021]

30B. Application for directions

(1) A director or an LLC manager, as the case may be, of a segregated accounts company may apply to the court for directions as to how the director or LLC manager should or might act in any of the affairs of the segregated accounts company, and upon such an application the Court may make such order as it thinks fit.

(2) An application under subsection (1) may be made ex parte.

(3) The court hearing an application under this section may direct that the whole or any part of the application be heard in camera, and an application for a direction under this section is to be heard in camera unless the court directs otherwise. [Section 30B inserted by 2021 : 44 s. 23 effective 8 November 2021]

31. Fees

(1) The prescribed fees shall be payable in respect of matters as provided under this Act.

(2) A registered segregated accounts company—

(a) that is a company to which the Companies Act 1981 applies, shall pay the fee payable in respect of that company according to Part II of the Fifth

Schedule to the Companies Act 1981;

(b) that is a limited liability company shall, in addition to the annual fee or tax otherwise payable under the Limited Liability Company Act 2016, pay an annual fee of $295 in respect of each segregated account operated by the company, subject to a maximum annual fee of $1,180 in the aggregate.

(3) The fee referred to in subsection (2) shall be paid to the Registrar—

(a) at the time of filing of the notice for registration; and

(b) thereafter on or before 31 January in each year.

(4) Where no fee is prescribed under the Government Fees Regulations 1976 for a function performed by the Registrar under this Act, the fee to be imposed by the Registrar shall be the applicable fee prescribed for that function under the Government Fees Regulations 1976 in relation to the Companies Act 1981 or the Limited Liability Company Act 2016, as the case may be. [Section 31 repealed and substituted by 2021 : 44 s. 24 effective 8 November 2021]

31A. Confidentiality

(1) Except in so far as may be necessary for the due performance of his functions under this Act or any other Act, the Registrar and any officers or other persons who are acting as an officer, a servant, an agent or an adviser of the Registrar shall preserve and aid in preserving confidentiality with regard to all matters relating to information or documents that may come to his knowledge in the course of the performance of his duties under this Act.

(2) Compliance by a person with any requirement under this Act to disclose or provide information is an absolute defence to any claim brought against that person in respect of any act done or any omission made by him in good faith in compliance with this Part.

(3) Nothing in this section shall preclude the disclosure of information for the purpose of enabling the Minister to exercise any functions conferred upon him by this Act or any other Act. [Section 31A inserted by 2021 : 44 s. 25 effective 8 November 2021]

31B. Application of Public Access to Information Act 2010

(1) Notwithstanding any provision of the Public Access to Information Act 2010, this section shall have effect.

(2) For the purposes of this Part, no person who—

(a) obtains information relating to any application, registration or other matter under this Act;

(b) obtains information pursuant to this Act; or

(c) receives a request under the Public Access to Information Act 2010 relating to information, shall disclose the request or such information so requested. [Section 31B inserted by 2021 : 44 s. 25 effective 8 November 2021]

Application of Personal Information Protection Act 2016

31C Nothing in this Act authorises a disclosure in contravention of any provision of the Personal Information Protection Act 2016 of personal information (as defined by that Act). [Section 31C inserted by 2021 : 44 s. 25 effective 8 November 2021]

Commencement

32 This Act comes into operation on such day as the Minister may appoint by notice published in the Gazette.

[Assent Date: 22 August 2000]

[Operative Date: 1 November 2000]

[Amended by:

2002 : 10

2004 : 30 BR 5 / 2011

2021 : 44]