digital asset issuance act 2020 - bermudalaws.bm laws/digital... · table of contents part 1...

FA E R NAT F

TQUO U

BERMUDA

DIGITAL ASSET ISSUANCE ACT 2020

2020 : 18

TABLE OF CONTENTS

PART 1PRELIMINARY

CitationInterpretationMeaning of "director", "controller", "senior executive" and "associate"Conducting digital asset issuances in BermudaOffering digital assets to the publicQualified acquirersAuthority’s statement of principles and guidance provisionCodes of ConductRulesAuthority may exempt or modify Rules or take necessary actions

PART 2AUTHORISATION

Restriction on digital asset issuance without authorisationDigital asset issuance authorisation applicationGrant and refusal of applicationsPublication of authorisationFeesAuthorised undertaking shall publish an issuance documentUndertakings offering digital assets to the public via digital asset issuanceProviding a communication facilityCooling-off rightsRisk warningIdentification of persons in relation to issuance documentSecurity of digital assets, confidentiality, disclosure of information

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111213141516171819202122

1


Offences relating to an issuance documentCivil liability for misstatements in issuance documentWhen experts are not liableSeparate accountsLocal representativeLocal representative to report certain eventsMaterial change to businessRestriction of authorisationRevocation of authorisationWinding up on petition from the AuthorityNotice of restriction or revocation of authorisationRestriction in cases of urgencyDirections to protect interests of digital asset acquirersNotification and confirmation of directionsSurrender of authorisation

PART 3OBJECTIONS TO SHAREHOLDER CONTROLLERS

Notification of new or increased controlObjection to new or increased controlObjection to existing controllerContraventions by controllerRestriction on sale of shares etc.

PART 4DISCIPLINARY MEASURES

Power to impose civil penalties for breach of requirementsCivil penalties proceduresPublic censurePublic censure procedureProhibition ordersProhibition orders: proceduresApplications relating to prohibition orders: proceduresDetermination of applications for variation etc.Injunctions

PART 5RIGHTS OF APPEAL

Rights of appealConstitution of tribunalsDetermination of appealsCosts, procedure and evidenceFurther appeals on a point of law

PART 6NOTICES AND INFORMATION

Warning notices

232425262728293031323334353637

3839404142

434445464748495051

5253545556

57

2


Decision noticesNotices of discontinuancePublicationNotification of change of controller or officerPower to obtain information and reportsGeneral power to require production of documentsRight of entry to obtain information and documents

PART 7INVESTIGATIONS

Investigations on behalf of the AuthorityInvestigations of suspected contraventionsPower to require production of documents during investigationPowers of entryObstruction of investigations

PART 8CERTIFICATE OF COMPLIANCE

Certificates of compliance

PART 9RESTRICTION ON DISCLOSURE OF INFORMATION

Restricted informationDisclosure for facilitating the discharge of functions of the AuthorityDisclosure for facilitating the discharge of functions by other authoritiesInformation supplied to the Authority by relevant overseas authority

PART 10MISCELLANEOUS AND SUPPLEMENTAL

False documents or informationOffencesProhibition on use of words “digital asset issuance”NoticesService of notice on AuthorityCivil debt and civil penaltiesRegulations and Orders

PART 11FINAL PROVISIONS

Transitional and savingsConsequential amendmentsRepeals and revocationsCommencement

SCHEDULE 1Minimum Criteria for Authorisation

58596061626364

6566676869

70

71727374

75767778798081

82838485

3


SCHEDULE 2Consequential Amendments

SCHEDULE 3Repeals and Revocations

WHEREAS it is expedient to make provision for the Bermuda Monetary Authorityto regulate persons carrying on an offering of digital assets via a digital asset issuance andfor the protection of the interests of digital asset acquirers or potential digital assetacquirers; and for connected purposes;

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

PART 1

PRELIMINARY

CitationThis Act may be cited as the Digital Asset Issuance Act 2020.

InterpretationIn this Act, unless the context requires otherwise—

“Authority” means the Bermuda Monetary Authority established under theBermuda Monetary Authority Act 1969;

“accredited digital asset exchange” means a digital asset business licensed by theAuthority pursuant to the Digital Asset Business Act 2018 to carry on digitalasset business as an exchange;

“code of conduct” means a code of conduct issued by the Authority pursuant tosection 8;

“company” means a body corporate wherever incorporated;

“competent authority” means a regulatory authority that is empowered by the lawof an overseas jurisdiction to supervise digital asset issuances or some digitalasset issuances and that has standards that the Authority determines to beequivalent to those established by or under this Act;

“controller” has the meaning given in section 3(3);

“Court” means the Supreme Court;

“decision notice” means a notice prepared in accordance with section 58;

“digital asset” and “digital asset business” have the meanings given in section 2 ofthe Digital Asset Business Act 2018;

1

2 (1)

4


“digital asset acquirer” means a person who acquires, seeks to acquire or is solicitedto acquire a digital asset pursuant to a digital asset issuance;

“digital asset issuance” means an offer to the public to acquire digital assets or toenter into an agreement to acquire digital assets at a future date, and “offer, oroffering, via a digital asset issuance” shall be construed accordingly;

“digital asset issuance document” or “issuance document” means the documentprovided by the undertaking containing relevant information to facilitate a saleor acquisition of digital assets;

“digital asset issuance platform” in relation to a digital asset issuance, includes awebsite or an electronic database or other software platform for the purpose ofselling digital assets or providing information to the public with regards to adigital asset issuance or on boarding, processing or otherwise soliciting digitalasset acquirers;

“director” has the meaning given in section 3(2);

“documents” includes information recorded in any form, and in relation toinformation recorded otherwise than in legible form, references to itsproduction include references to producing a copy of the information in legibleform;

“electronic” means relating to technology having electrical, digital, magnetic,wireless, optical, electromagnetic or similar capabilities;

“exempted partnership” means an exempted partnership registered under theExempted Partnerships Act 1992;

“expert” includes a technologist, software engineer, valuer, accountant and anyother person whose profession, experience or education give authority to astatement made by him relating to a digital asset issuance;

“fit and proper person” has the meaning given in Schedule 1;

“limited liability company” has the meaning given in section 2 of the LimitedLiability Company Act 2016;

“limited partnership” means a limited partnership registered under the LimitedPartnerships Act 1883;

“local company” has the meaning given in section 2 of the Companies Act 1981;

“manager” and “member”, in relation to a limited liability company, have themeanings given in section 2 of the Limited Liability Company Act 2016;

“minimum criteria” means the minimum criteria for authorisation specified inSchedule 1;

“Minister” means the Minister of Finance;

“officer” in relation to an undertaking, means director, secretary or senior executiveof the undertaking by whatever name called;

5


“overseas partnership” means an overseas partnership registered under theOverseas Partnerships Act 1985;

“partnership” includes limited, exempted and overseas partnerships;

“project” includes the product, service and platform to be created or developed asset forth in the issuance document;

“promoter” has the meaning given in subsection (2);

“senior executive” has the meaning given in section 3(6);

“share” has the meaning given in section 2 of the Companies Act 1981;

“shareholder controller” has the meaning given in section 3(4);

“subsidiary” has the meaning given in section 86 of the Companies Act 1981;

“undertaking” means a company, limited liability company or partnership;

“warning notice” means a notice prepared in accordance with section 57.

“Promoter” includes—

any person who, acting alone or in conjunction with one or more otherpersons, directly or indirectly takes initiative in founding and organizingthe business of an offer via a digital asset issuance or; and

any person who, in connection with the founding and organizing of thebusiness of a digital asset issuance or, directly or indirectly receives inconsideration of services or property—

10% or more of any offering of digital assets of the digital assetissuance; or

10% or more of the proceeds from the sale of any class or series of suchdigital assets,

but a person who receives such digital assets or proceeds either solely asunderwriting commissions or solely in consideration of property shall notbe deemed a promoter within the meaning of this paragraph if such persondoes not otherwise take part in founding and organizing the business,

but does not include any person by reason only of his acting in a professional capacity forpersons engaged in procuring the formation of the company.

For the purposes of this Act, a statement included in an issuance documentshall be deemed to be untrue if it is false or misleading in the form and context in which itis included; and a statement shall be deemed to be included in an issuance document if itis contained therein or in any report or memorandum appearing on the face thereof or byreference incorporated therein or issued therewith.

Meaning of "director", "controller", "senior executive" and "associate"In this Act, “director”, “controller”, “senior executive” and “associate” shall be

construed in accordance with the provisions of this section.

(2)

(a)

(b)

(i)

(ii)

(3)

3 (1)

6


“Director”, in relation to an undertaking includes—

an alternate director and any person who occupies the position of director,by whatever name called; and

a member of a limited liability company; and

where it is used in subsections (6) and (7), a partner of a partnership.

“Controller”, in relation to an undertaking, means—

a managing director of the undertaking or of another undertaking of whichthe undertaking is a subsidiary;

in the case of a limited liability company, a manager;

in the case of an undertaking which is a partnership, the managingpartner;

in the case of an undertaking which is an unincorporated association, amember of the firm;

a chief executive of the undertaking or of another undertaking of which theundertaking is a subsidiary;

a person who falls within the definition of “shareholder controller” insubsection (4);

a person in accordance with whose directions or instructions—

the directors of the undertaking;

the directors of another company of which the undertaking is asubsidiary; or

persons who are shareholder controllers of the undertaking by virtueof paragraph (f),

or any of those persons are accustomed to act.

For the purpose of subsection (3)(f), a person is a shareholder controller inrelation to an undertaking if, either alone or with any associate or associates,—

he holds 10% or more of the shares in the undertaking or anotherundertaking of which it is a subsidiary company;

he is entitled to exercise or control the exercise of 10% or more of the votingpower at any general or members’ meeting of the undertaking or anotherundertaking of which it is such a subsidiary; or

he is able to exercise a significant influence over the management of theundertaking or another undertaking of which the undertaking is such asubsidiary by virtue of—

a holding of shares in it; or

(2)

(a)

(b)

(c)

(3)

(a)

(b)

(c)

(d)

(e)

(f)

(g)

(i)

(ii)

(iii)

(4)

(a)

(b)

(c)

(i)

7


an entitlement to exercise, or control the exercise of, the voting powerat any general or members’ meeting of the undertaking, or as the casemay be, the other undertaking concerned.

In this Act, "majority shareholder controller" means a shareholder controller inwhose case the percentage referred to in subsection (4)(a) or (b) is 50% or more.

“Senior executive” in relation to an undertaking, means a person (other than achief executive) who, under the immediate authority of a director, manager, senior partneror managing member or chief executive of the undertaking—

exercises managerial functions; or

is responsible for maintaining accounts or other records of theundertaking.

“Chief executive” in relation to an undertaking, means a person who, eitheralone or jointly with one or more persons, is responsible under the immediate authority ofthe directors for the conduct of the business of the undertaking.

“Associate” in relation to a person entitled to exercise or control the exercise ofvoting power in a undertaking, or in relation to a person holding shares in an undertaking,means—

if that person is an individual—

the spouse, child, step-child or parent of that person;

the trustees of any settlement under which that person has a lifeinterest in possession;

any company of which that person is a director;

any person who is an employee or partner of that person;

if that person is a company—

any director of that company;

any subsidiary of that company;

any director or employee of any such subsidiary company; or

if that person is a limited liability company, a member of that limitedliability company;

if that person is a partnership, a partner of that partnership;

if that person has with any other person an agreement or arrangement withrespect to the acquisition, holding or disposal of shares or other interestsin that undertaking or under which they undertake to act together inexercising their voting power in relation to it, that other person.

For the purpose of subsection (8)(a)(ii), “settlement” includes any disposition orarrangement under which property is held in trust.

(ii)

(5)

(6)

(a)

(b)

(7)

(8)

(a)

(i)

(ii)

(iii)

(iv)

(b)

(i)

(ii)

(iii)

(c)

(d)

(e)

(9)

8


Conducting digital asset issuances in BermudaFor the purposes of this Act and subject to section 13, an undertaking conducts

an offer via a digital asset issuance in Bermuda where—

the undertaking is incorporated or formed in Bermuda and conducts anydigital asset issuance in or from within Bermuda;

is incorporated or formed outside Bermuda and conducts a digital assetissuance in or from within Bermuda.

Notwithstanding subsection (1), a person shall be regarded as conducting adigital asset issuance in or from within Bermuda where such person has been specificallyregarded for such purposes in accordance with an order made by the Minister undersubsection (3).

The Minister, acting on the advice of the Authority, may make an orderspecifying the circumstances in which a person is to be regarded for the purpose of thissection as—

carrying on a digital asset issuance in Bermuda;

not carrying on a digital asset issuance in Bermuda.

An order made under this section is subject to the negative resolutionprocedure.

This Act shall not apply to any entity owned by the Bermuda Government.

Offering digital assets to the publicAny reference in this Act to the offering of digital assets via a digital asset

issuance to the public shall, subject to any provision to the contrary contained herein, beconstrued as including a reference to offering to any section of the public; and referencesin this Act or in an undertaking’s bye-laws to invitations to the public to acquire digitalassets shall, subject as aforesaid, be similarly construed.

Subsection (1) shall not be taken as requiring any digital asset issuance orinvitation to be treated as made to the public if it is—

an offer which the board considers as not being calculated to result,directly or indirectly, in the digital assets becoming available to more than150 persons;

an offer to qualified acquirers; or

an offer which the board considers as not being calculated to result,directly or indirectly, in digital assets becoming available to persons otherthan persons whose ordinary business involves the acquisition, disposalor holding of digital assets, whether as principal or agent.

Undertakings relying on subsection 2(a), (b) or (c) shall file a digital assetplacement declaration form with the Authority in the specified format prior to entering intoany transaction.

4 (1)

(a)

(b)

(2)

(3)

(a)

(b)

(4)

(5)

5 (1)

(2)

(a)

(b)

(c)

(3)

9


In this section, “board” includes the managers of a limited liability company orthe partners of a partnership, as the case may be.

Qualified acquirersIn section 5(2)(b), “qualified acquirer” means—

a high income private acquirer;

a high net worth private acquirer;

a body corporate which has total assets of not less than $5,000,000, wheresuch assets are held solely by the body corporate or held partly by the bodycorporate and partly by one or more members of a group of which it is amember;

an unincorporated association, partnership or trust, which has total assetsof not less than $5,000,000, where such assets are held solely by suchassociation, partnership or trust or held partly by it and partly by one ormore members of a group of which it is a member;

a body corporate, all of whose shareholders fall within one or moreparagraphs of this subsection;

a partnership, all of whose members fall within one or more paragraphs ofthis subsection;

a trust, all of whose beneficiaries fall within one or more paragraphs of thissubsection;

limited liability companies, all of whose members fall within one or moreparagraphs of this subsection.

For the purposes of subsection (1)—

“high income private acquirer” means an individual who has had a personal incomein excess of $200,000 in each of the two years preceding the current year, orhas had a joint income with that person’s spouse in excess of $300,000 in eachof those years, and has a reasonable expectation of reaching the same incomelevel in the year in which he acquires a digital asset;

“high net worth private acquirer” means an individual whose net worth or joint networth with his spouse in the year in which he acquires a digital asset exceeds$1,000,000, excluding the value of his residence and benefits or rights undera contract of insurance; where “net worth” means the excess of total assets atfair market value over total liabilities.

Authority’s statement of principles and guidance provisionThe Authority shall, as soon as practicable after the coming into force of this

Act, publish in such manner as it thinks fit a statement of principles in accordance withwhich it is acting or proposing to act—

(4)

6 (1)

(a)

(b)

(c)

(d)

(e)

(f)

(g)

(h)

(2)

7 (1)

10


in interpreting the minimum criteria and the grounds for revocationspecified in section 31;

in exercising its power to grant, revoke or restrict an authorisation;

in exercising its power to obtain information and reports and to requireproduction of documents;

in exercising its powers—

under section 43 to impose a civil penalty;

under section 45 to censure publicly;

under section 47 to make a prohibition order; and

under section 60 to publish information about any matter to which adecision notice relates.

If the Authority makes a material change to the principles, it shall publish astatement of the change or the revised statement of principles in the same manner as itpublished the statement under subsection (1).

The Authority may from time to time give guidance on the application of thisAct and rules or regulations made under it.

Codes of ConductThe Authority may issue codes of conduct in connection with the manner by

which authorised undertakings shall carry on their digital asset issuance.

Without prejudice to the generality of subsection (1), the Authority may issuecodes of conduct for the purpose of providing guidance as to the duties, requirements andstandards to be complied with, and the procedures (whether as to identification, recordkeeping, internal reporting and training or otherwise) and sound principles to be observedby persons carrying on a digital asset issuance.

Before issuing a code of conduct, the Authority shall publish a draft of thatCode in such manner as it thinks fit and shall consider any representations made to it aboutthe draft.

Every authorised undertaking shall in the conduct of its digital asset issuancehave regard to any code of conduct issued by the Authority.

A failure on the part of an authorised undertaking to comply with the provisionsof such a code shall be taken into account by the Authority in determining whether thebusiness is being conducted in a prudent manner as required by paragraph 2 of Schedule1 (Minimum Criteria for Authorisation).

RulesThe Authority may make Rules in relation to certain matters including—

disclosures to digital asset acquirers;

(a)

(b)

(c)

(d)

(i)

(ii)

(iii)

(iv)

(2)

(3)

8 (1)

(2)

(3)

(4)

(5)

9 (1)

(a)

11


custody of digital asset acquirers’ assets;

information technology and cyber security;

risk management;

financial reporting;

verification of identity, enhanced due diligence and record keeping;

exemptions; and

any other matter where the Authority deems it appropriate to do so,

which shall be complied with by all authorised undertakings where applicable.

The Authority may in such Rules impose different requirements to be compliedwith by authorised undertakings in different situations or in respect of different activities.

An authorised undertaking shall file with the Authority any applicable returnor document required to be prepared by it under this section within the period prescribedin its authorisation.

An authorised undertaking shall keep a copy of the most recent return ordocument filed with the Authority at its local registered office or the office of its localrepresentative for a period of not less than five years, beginning with its filing date undersubsection (3).

An authorised undertaking that fails to file any applicable return or documentwithin the period specified in subsection (3) shall be liable to a civil penalty not exceeding$5,000 for each week or part of a week that it is in default.

Sections 6, 7 and 8 of the Statutory Instruments Act 1977 shall not apply toRules made under this section.

Authority may exempt or modify Rules or take necessary actionsThe Authority may where it has made a determination or on the application of

an authorised undertaking, exempt it from the requirement to comply with any standardapplicable to it under this Act or modify any such standard.

In granting an exemption or modification under this section the Authority mayimpose such conditions on the exemption or modification as it considers appropriate.

The Authority shall not grant an exemption or modification unless it is satisfiedthat it is appropriate to do so having regard to the obligations of the authorised undertakingtowards its digital asset acquirers.

The Authority shall not grant an exemption or modification unless it is satisfiedthat it is appropriate to do so having regard to the nature, scale, and complexity of theauthorised undertaking.

The Authority may revoke an exemption or vary any modification granted underthis section, and shall serve notice on the authorised undertaking of its proposal to revokeits approval and the reason for its proposal.

(b)

(c)

(d)

(e)

(f)

(g)

(h)

(2)

(3)

(4)

(5)

(6)

10 (1)

(2)

(3)

(4)

(5)

12


An authorised undertaking served with a notice under subsection (5) may,within a period of ten days from the date of the notice, make written representations to theAuthority, and where such representations have been made the Authority shall take theminto account in deciding whether to revoke its approval.

Without prejudice to its powers under subsection (1), the Authority where ithas made a determination that the circumstances warrant it to do so, may take any actionnecessary or desirable to protect the public, digital asset acquirers or potential acquirers ofthe authorised undertaking.

Before taking any such action under subsection (7), the Authority shall servenotice on the authorised undertaking giving its reasons therefor.

An authorised undertaking served with a notice under subsection (8) may,within a period of ten days from the date of the notice, make written representations to theAuthority; and where such representations are made, the Authority shall take them intoaccount in deciding whether to take the proposed action.

The Authority shall notify an authorised undertaking of any actions it hastaken.

The circumstances referred to in subsection (7) are such circumstances aswould cause the Authority to conclude that due to the nature, scale, complexity and riskprofile of the authorised undertaking, such action is necessary and in the interest of thepublic or is required to be taken for the protection of digital asset acquirers or potentialdigital asset acquirers.

PART 2

AUTHORISATION

Restriction on digital asset issuance without authorisationSubject to exemptions granted by the Authority pursuant to the requirements

of a Rule, a person shall not conduct a digital asset issuance in or from within Bermudaunless that person is for the time being an authorised undertaking specified in subsection(2).

The Authority may authorise an undertaking to conduct a digital assetissuance for the period specified in the authorisation.

A person who contravenes this section is guilty of an offence and liable—

on summary conviction, to a fine of $25,000 or to imprisonment for oneyear or to both such fine and imprisonment;

on conviction on indictment, to a fine of $100,000 or to imprisonment forfive years or to both such fine and imprisonment.

(6)

(7)

(8)

(9)

(10)

(11)

11 (1)

(2)

(3)

(a)

(b)

13


Digital asset issuance authorisation applicationAn application for authorisation to conduct a digital asset issuance may be

made to the Authority.

An application shall be made in such manner as the Authority may direct andshall be accompanied by—

a business plan setting out the nature and scale of the digital assetissuance which is to be carried on by the applicant;

a copy of the issuance document to be made available to digital assetacquirers;

particulars of the applicant’s arrangements for the management of theoffering via the issuance;

such other information and documents as the Authority may reasonablyrequire for the purpose of determining the application; and

the application fee set out in the Fourth Schedule to the BermudaMonetary Authority Act 1969.

An application may be withdrawn by notice in writing to the Authority at anytime before the Authority has determined the application.

Grant and refusal of applicationsSubject to this section, the Authority may on an application duly made in

accordance with section 12, and after being provided with all such information, documentsand reports as it may reasonably require under that section, grant or refuse the applicationfor an authorisation.

The Authority shall not grant an authorisation unless it is satisfied that theminimum criteria set out in Schedule 1 are fulfilled with respect to the applicant.

An authorisation issued under this section may be subject to such limitationson the scope of the digital asset issuance or the manner of conducting the digital assetissuance as the Authority may determine to be appropriate having regard to the nature andscale of the proposed offering via the issuance.

The Authority may where it has made a determination or on application madeby an authorised undertaking, vary or remove any limitation imposed on the scope of itsauthorisation.

An authorisation issued to a partnership shall be issued in the partnershipname, and shall not be affected by any change in the name of the partners.

The Minister, acting on the advice of the Authority, may by order amendSchedule 1 by adding new criteria or by amending or deleting the criteria for the time beingspecified in the Schedule.

12 (1)

(2)

(a)

(b)

(c)

(d)

(e)

(3)

13 (1)

(2)

(3)

(4)

(5)

(6)

14


Publication of authorisationThe Authority shall publish the following information in relation to authorised

undertakings—

a list of all authorised undertakings;

the minimum and maximum amount of capital the undertaking isintending to raise in or from within Bermuda in Bermuda dollarsequivalent;

the minimum and maximum number of digital assets to be offered via theissuance;

the beginning date of the authorisation;

the expiration date of the authorisation;

the address of the undertaking in Bermuda;

a digital copy of the signed issuance document and subsequent documentsas required under section 9;

any other information as required by the Authority.

FeesAn authorised undertaking shall pay such fee as may be determined by the

Authority and prescribed under the Bermuda Monetary Authority Act 1969—

on the grant of an authorisation under section 13;

at the time of making an application under section 10 in relation toexemption from or modification of, prudential rules or requirements;

at the time of making an application for variance of a condition undersection 30(4).

For each week or part of a week that an authorised undertaking fails to complywith a requirement imposed on it by subsection (1), it shall be liable to a civil penalty notexceeding $5,000.

Authorised undertaking shall publish an issuance documentSubject to subsection (2), no undertaking shall offer digital assets to the public

via a digital asset issuance unless—

prior to such offer it publishes in electronic form an issuance document;and

prior to, or as soon as reasonably practicable after, publication of suchissuance document, the undertaking shall file with the Authority (in suchform as the Authority may require), a copy signed by or on behalf of all ofthe directors of the undertaking.

14

(a)

(b)

(c)

(d)

(e)

(f)

(g)

(h)

15 (1)

(a)

(b)

(c)

(2)

16 (1)

(a)

(b)

15


It is not necessary to file an issuance document with the Authority undersubsection (1) at any time or in any circumstances where—

the digital assets are listed on an appointed stock exchange or on anaccredited digital asset exchange;

an application has been made for the digital assets to be so listed, and therules of the appointed stock exchange or accredited digital asset exchangedo not require the undertaking to publish and file an issuance documentat such time or in such circumstances;

the undertaking is subject to the rules or regulations of a competentauthority, and such rules or regulations do not require the undertaking topublish and file an issuance document at such time or in suchcircumstances, except where exemption from publication and filing of anissuance document is given by reason of the offer via the digital assetissuance being made only to persons who are resident outside thejurisdiction of the competent authority; or

an appointed stock exchange, accredited digital asset business or anycompetent authority has received or otherwise accepted an issuancedocument or other document in connection with the offering via the digitalasset issuance to the public.

The Authority shall not accept for filing a copy of an issuance documentunless—

it is accompanied by a certificate signed by an attorney or an officer of theundertaking certifying that the issuance document contains theparticulars required by rules made under section 9; or

the undertaking has filed its issuance document with an appointed digitalasset business accredited by the Authority for receiving and reviewing suchfilings.

The directors of any undertaking and promoters of any digital asset issuancethat fail to comply with this section shall each be liable to a civil penalty.

Undertakings offering digital assets to the public via digital asset issuanceWhere any undertaking offers digital assets to the public via a digital asset

issuance and any of the particulars in an issuance document published by that undertakingceases to be accurate in a material respect, the undertaking, as soon as reasonablypracticable after becoming aware of that fact, shall—

publish supplementary particulars disclosing the material changes; and

file a copy of the supplementary particulars with the Authority.

Each of the directors of any undertaking that fails to comply with this sectionshall be liable to a civil penalty.

(2)

(a)

(b)

(c)

(d)

(3)

(a)

(b)

(4)

17 (1)

(a)

(b)

(2)

16


Providing a communication facilityThe promoter shall at all times while the offer via the digital asset issuance is open

or suspended, provide an electronic facility that can be used for the following purposes—

for people who access the issuance document through the issuanceplatform—

to post messages relating to such offer;

to see messages relating to such offer made by others; and

to ask the authorised undertaking making the offer via the issuancedocument, or other service provider, questions relating to the offer; and

for the undertaking or other service provider, as the case may be, torespond to questions and messages.

Cooling-off rightsIf a person in relation to an offering via a digital asset issuance makes an

application pursuant to the digital asset issuance, the person may withdraw the applicationwithin three business days after the application is made.

The withdrawal of an application pursuant to subsection (1) can be made by amethod specified on the issuance platform or by any other means of correspondenceavailable to the digital asset acquirer, and the issuance platform shall include specificinstructions and a means to withdraw.

Risk warningThe promoter shall ensure that the risk warning appears in the issuance

document and prominently on the issuance platform at all times while the offer via theissuance document is open or suspended.

The risk warning is a statement that includes the following—

detailed information regarding any substantial risks to the project whichare known or reasonably foreseeable;

detailed information as to a person’s rights or options if the project whichis the subject of the offer via the digital asset issuance in question does notgo forward;

a description of any rights in relation to the digital assets that are beingoffered in the issuance document;

information regarding any disclaimer in respect of guarantees orwarranties in relation to the project to be developed or any other assetrelated to the offer via the digital asset issuance.

18

(a)

(i)

(ii)

(iii)

(b)

19 (1)

(2)

20 (1)

(2)

(a)

(b)

(c)

(d)

17


Identification of persons in relation to issuance documentAn authorised undertaking shall, in relation to an offering via a digital asset

issuance, ensure that it applies appropriate measures relating to identification andverification of the identity of persons participating in the digital asset issuance.

For the purposes of subsection (1), the Authority may make such rules orregulations as it considers appropriate.

Security of digital assets, confidentiality, disclosure of informationThe authorised undertaking shall ensure that appropriate mechanisms are in place

in respect of the security of digital assets offered via the digital asset issuance to recipients,confidentiality, disclosure of information and connected matters and that applicableBermuda laws are complied with in these respects.

Offences relating to an issuance documentA person commits an offence if he—

contravenes section 11; or

makes or authorizes the making of an untrue statement in an issuancedocument, a report or any other related information issued, unless heproves either that the statement was immaterial or that at the time he madethe statement he had reasonable grounds to believe it was true.

A person convicted of an offence under subsection (1), shall be liable—

on summary conviction, to a fine not exceeding $50,000 or toimprisonment for one year, or to both such fine and imprisonment;

on conviction on indictment, to a fine not exceeding $250,000 or toimprisonment for five years or to both, such fine and imprisonment.

Civil liability for misstatements in issuance documentWhere an issuance document invites persons to purchase digital assets of an

authorised undertaking, the following persons shall be liable to pay compensation to anyperson who proves that he purchased any digital assets in reliance to his detriment on theissuance document for the loss or damage he sustained by reason of any untrue statementincluded therein which is relevant to the offering via the digital asset issuance that is tosay—

every person who is an officer of the undertaking at the time of thepublication of the issuance document;

every person who has consented to be named and is named in the issuancedocument as an officer or as having agreed to become an officer eitherimmediately or after an interval of time; and

a promoter of the offer via the digital asset issuance.

No person shall be liable under subsection (1) if he proves—

21 (1)

(2)

22

23 (1)

(a)

(b)

(2)

(a)

(b)

24 (1)

(a)

(b)

(c)

(2)

18


that, having consented to become an officer of the undertaking, hewithdrew his consent before the issue of the issuance document, and thatit was issued without his authority or consent;

that the issuance document was issued without his knowledge or consent,and that on becoming aware of its issue he forthwith gave reasonablepublic notice that it was issued without his knowledge or consent;

that, after the issue of the issuance document and before any offering ofdigital assets offered via the issuance document, he, on becoming aware ofan untrue statement therein, withdrew his consent thereto and gavereasonable public notice of the withdrawal and of the reason therefor; or

that as regards—

every untrue statement not purporting to be made on the authority ofan expert or of a public official document or statement, he hadreasonable grounds to believe, and did believe up to the time of theoffering of the digital assets via the issuance document, that thestatement was true;

every untrue statement purporting to be a statement made by an expertor contained in what purports to be a copy of or extract from a reportor valuation of an expert, it—

fairly represented the statement, or was a correct and fair copy ofor extract from the report or valuation; and

he had reasonable grounds to believe and did up to the time of theissue of the issuance document believe that the person making thestatement was competent to make it and had not withdrawn oraltered it; and

every untrue statement purporting to be a statement made by an officialperson or contained in what purports to be a copy of or extract from apublic official document, it was a correct and fair representation of thestatement or copy of or extract from the document.

Where the issuance document contains—

the name of a person as an officer of the undertaking or as having agreedto become an officer of the undertaking thereof, and he has not consentedto become an officer, or has withdrawn his consent before the publicationof the issuance document, and has not authorised or consented to theissue thereof; or

a statement by an expert or containing what purports to be a copy of orextract from a report or valuation of an expert, which the expert haswithdrawn or altered,

the officers of the undertaking, except any without whose knowledge or consent theissuance document was issued, and any other person who authorised the issue thereof,

(a)

(b)

(c)

(d)

(i)

(ii)

(A)

(B)

(iii)

(3)

(a)

(b)

19


shall be liable to indemnify the person named as aforesaid or whose consent was requiredas aforesaid, as the case may be, against the matters set forth in subsection (4).

With respect to subsection (3), the officers of the undertaking referred to in thatsubsection shall indemnify any such person referred to in that subsection against alldamages, costs and expenses to which he may be made liable by reason of his name havingbeen inserted in the issuance document or of the inclusion therein of a statementpurporting to be made by him as an expert or, as the case may be, in defending himselfagainst any action or legal proceeding brought against him in respect thereof.

Notwithstanding subsection (2)(d), a person shall not be deemed for thepurposes of that subsection to have authorised the issue of an issuance document byreason only of the inclusion therein of a statement purporting to be made by him as anexpert.

When experts are not liableA person referred to as an expert in an issuance document shall not be liable under

section 23 or 24 if—

any untrue statement was not made by him; or

that as regards any untrue statement made by him he was competent tomake the statement and—

had reasonable grounds to believe and did believe up to the date of theissue of the issuance document that it was true; or

on becoming aware that the statement was untrue before thepublication of the issuance document he had given reasonable publicnotice of his disassociation from the issuance document and thereasons therefor.

Separate accountsAn authorised undertaking holding the assets of digital asset acquirer shall keep

its accounts in respect of such assets separate from any accounts kept in respect of anyother business until the latest of—

the time at which the offering via the digital asset issuance has reachedthe minimum stated in the issuance document;

any time specified in the issuance document for the use of proceeds; and

any time required by the Authority in its authorisation.

Local representativeEvery authorised undertaking shall appoint a local representative that satisfies

the requirements of subsection (2).

The local representative shall be appointed from the beginning date of theoffering via the digital asset issuance until 120 days after the end of the offering.

(4)

(5)

25

(a)

(b)

(i)

(ii)

26

(a)

(b)

(c)

27 (1)

(2)

20


The local representative shall be a person approved by the Authority to act insuch capacity on behalf of the authorised undertaking.

The local representative shall maintain an office in Bermuda.

The local representative shall maintain records of all complaints received fromdigital asset acquirers for a period of five years after the end of the offering via the digitalasset issuance.

At the time of authorisation the undertaking shall provide written notice to theAuthority of the—

location of the local representative’s office;

particulars of the local representative.

If any information required by notification in accordance with subsection (6) isaltered, the authorised undertaking shall give particulars of the alteration in writing within14 days of the date the alteration was made.

Without reason acceptable to the Authority—

an authorised undertaking shall not terminate the appointment of its localrepresentative; and

a local representative shall not cease to act as such, until it or he givesthirty days’ notice in writing to the Authority of the intention to do so.

If a local representative wilfully fails to give notice required in accordance withsubsection (8) to the Authority he commits an offence.

Local representative to report certain eventsA local representative shall forthwith notify the Authority, in such manner as

the Authority may direct—

on his reaching a view that there is a likelihood of the authorisedundertaking for which he acts becoming insolvent; or

on its coming to his knowledge, or his having reason to believe, that anevent to which this section applies has occurred.

Within 14 days of such notification, the local representative shall furnish theAuthority with a report in writing setting out all the particulars of the case that are availableto him.

As respects any local representative, this section applies to the following events,being events in which the authorised undertaking for which he acts as local representativeis involved, that is to say—

failure by the authorised undertaking to comply substantially with acondition imposed upon the authorised undertaking by the Authority;

(3)

(4)

(5)

(6)

(a)

(b)

(7)

(8)

(a)

(b)

(9)

28 (1)

(a)

(b)

(2)

(3)

(a)

21


failure by the authorised undertaking to comply with a modified provision,or with a condition, being a provision or condition specified in a directiongiven to the authorised undertaking by the Authority;

involvement of the authorised undertaking in any criminal proceedingswhether in Bermuda or abroad;

the authorised undertaking ceasing to conduct a digital asset issuance inor from within Bermuda;

a material misstatement has been made to the public in the issuancedocument.

Material change to businessAn authorised undertaking shall make an application in order to obtain the

Authority’s prior written approval for—

any plan or proposal to offer a new or additional digital asset or to make amaterial change to the authorised offering via the digital asset issuance;

amalgamation with or acquisition of another firm;

sale of a subsidiary;

acquisition of controlling interest in an undertaking;

outsourcing of the functions of the digital asset issuance;

any change to the most recent issuance document submitted to theAuthority.

An application under this section shall be in such form, shall contain suchinformation and shall be accompanied by such documents as the Authority may require.

Restriction of authorisationSubject to section 31, the Authority may restrict an authorisation—

if it is satisfied of the matters specified in paragraph (a), (b), (d) or (e) ofsection 29, but it appears to the Authority that the circumstances are notsuch as to justify revocation;

if it is satisfied that a person has become a controller of an authorisedundertaking in contravention of section 38 or has become or remains acontroller after being given a notice of objection pursuant to section 39 or40;

in connection with the revocation of an authorisation—

when giving the authorised undertaking notice that it proposes torevoke its authorisation; or

at any time after such notice has been given to the authorisedundertaking; or

(b)

(c)

(d)

(e)

29 (1)

(a)

(b)

(c)

(d)

(e)

(f)

(2)

30 (1)

(a)

(b)

(c)

(i)

(ii)

22


at any time after the authorised undertaking has served a noticesurrendering its authorisation with effect from a later date.

The Authority may restrict an authorisation by imposing such conditions as itthinks desirable for the protection of the authorised undertaking’s digital asset acquirersor potential digital asset acquirers and may in particular—

require the authorised undertaking to take certain steps or to refrain fromadopting or pursuing a particular course of action or to restrict the scopeof its offering via the digital asset issuance in a particular way;

impose limitations on the digital asset issuance;

prohibit the authorised undertaking from soliciting with regards to theirdigital asset issuance either the public generally or persons who are notalready its digital asset acquirers;

prohibit the authorised undertaking from offering additional digital assetswith respect to its digital asset issuance;

prohibit the authorised undertaking from entering into any othertransactions or class of transactions;

require the removal of any officer or controller;

specify requirements to be fulfilled otherwise than by action taken by theauthorised undertaking;

Any condition imposed under this section may be varied or withdrawn by theAuthority.

The Authority may, where it has made a determination on its own or on theapplication of an authorised undertaking, vary any condition imposed on its authorisation.

The fact that a condition imposed under this section has not been compliedwith shall, where the restriction has been imposed pursuant to paragraphs (a) or (b) ofsubsection (1), be a ground for the revocation of the authorisation in question but shall notinvalidate any transaction entered into before the date of revocation.

Revocation of authorisationSubject to section 27, the Authority may revoke the authorisation of an authorised

undertaking if the Authority is satisfied that—

any of the minimum criteria is not or has not been fulfilled, or may not beor may not have been fulfilled, in respect of the authorised undertaking;

the authorised undertaking has failed to comply with any obligationimposed on it by or under this Act or is carrying on an offer via a digitalasset issuance in a manner not authorised by its authorisation;

a person has become a majority shareholder controller of the authorisedundertaking in contravention of section 38 or has become or remains such

(d)

(2)

(a)

(b)

(c)

(d)

(e)

(f)

(g)

(3)

(4)

(5)

31

(a)

(b)

(c)

23


a controller after being given a notice of objection pursuant to sections 39or 40;

the Authority has been provided with false, misleading or inaccurateinformation by or on behalf of the authorised undertaking or, in connectionwith an application for an authorisation, by or on behalf of a person whois or is to be an officer or controller of the undertaking; or

the interests of the acquirers or potential acquirers of the authorisedundertaking are in any way threatened.

Winding up on petition from the AuthorityOn a petition presented by the Authority by virtue of this section, the Court

may wind up an authorised undertaking which is a company, a limited liability companyor a partnership in respect of which an authorisation is revoked, if the Court is of theopinion that it is just and equitable that the undertaking be wound up.

Part XIII (Winding Up) of the Companies Act 1981, Part 13 (Dissolution) of theLimited Liability Company Act 2016 or section 35 of the Partnership Act 1902 (as the casemay be) shall apply to the winding up of an authorised undertaking under this section.

Notice of restriction or revocation of authorisationWhere the Authority proposes to—

restrict an authorisation under section 30(1);

vary a restriction imposed on an authorisation otherwise than with theagreement of the authorised undertaking concerned; or

revoke an authorisation under section 31(a) to (e),

the Authority shall give to the authorised undertaking concerned a warning notice undersection 57.

Where—

the ground for a proposal to impose or vary a restriction or for a proposedrevocation is that it appears to the Authority that the criterion in paragraph1 of Schedule 1 is not or has not been fulfilled, or may not be or may nothave been fulfilled, in the case of any person; or

a proposed restriction consists of or includes a condition requiring theremoval of any person as a controller or an officer,

the Authority shall give that person a copy of the warning notice but the Authority may omitfrom such copy any matter which does not relate to him.

After giving a notice under subsection (1) and taking into account anyrepresentations made under section 57(2), the Authority shall decide whether—

to proceed with the action proposed in the notice;

to take no further action;

(d)

(e)

32 (1)

(2)

33 (1)

(a)

(b)

(c)

(2)

(a)

(b)

(3)

(a)

(b)

24


if the proposed action was to revoke the undertaking’s authorisation, torestrict its authorisation instead; or

if the proposed action was to restrict the undertaking’s authorisation or tovary the restrictions on an authorisation, to restrict it or to vary therestrictions in a different manner.

Once the Authority has made a decision under subsection (3), it shall forthwithprovide either a decision notice under section 58 or a notice of discontinuance under section59, as the case may be.

The Authority shall publish in the Gazette, in such form as it thinks fit, noticeof every revocation of an authorisation under this Act.

Restriction in cases of urgencyNo notice need be given under section 33 in respect of the imposition or

variation of a restriction on an undertaking’s authorisation in any case in which theAuthority considers that the restriction should be imposed or varied as a matter of urgency.

In any such case, the Authority may by written notice to the authorisedundertaking impose or vary the restriction.

Any such notice shall state the reason for which the Authority has acted andparticulars of the rights conferred by subsection (5) and section 52.

Section 30(2) shall apply to a notice under subsection (2) imposing or varyinga restriction as it applies to a notice under section 30(1) in respect of a proposal to imposeor vary a restriction; but the Authority may omit from a copy given to a person by virtue ofthis subsection any matter which does not relate to him.

An authorised undertaking to which a notice is given under this section of theimposition or variation of a restriction and a person who is given a copy of it by virtue ofsubsection (4) may within the period of 14 days beginning with the day on which the noticewas given make representations to the Authority.

After giving a notice under subsection (2) imposing or varying a restriction andtaking into account any representations made in accordance with subsection (5), theAuthority shall decide whether—

to confirm or rescind its original decision; or

to impose a different restriction or to vary the restriction in a differentmanner.

The Authority shall within the period of 28 days beginning with the day onwhich the notice was given under subsection (2) give the undertaking concerned writtennotice of its decision under subsection (6) and, except where the decision is to rescind theoriginal decision, the notice shall state the reason for the decision.

Where the notice under subsection (7) is of a decision to take the actionspecified in subsection (6)(b), the notice under subsection (7) shall have the effect of

(c)

(d)

(4)

(5)

34 (1)

(2)

(3)

(4)

(5)

(6)

(a)

(b)

(7)

(8)

25


imposing the restriction or making the variation specified in the notice with effect from thedate on which it is given.

Directions to protect interests of digital asset acquirersThe Authority may give an authorised undertaking directions under this

section at any time, including after revocation, surrender or expiration of its authorisation,if it appears to the Authority that an authorised undertaking is or was in breach of anyprovision of this Act, regulations or rules applicable to it.

Directions under this section shall be such as appear to the Authority to bedesirable for safeguarding the interests of digital asset acquirers of the authorisedundertaking or potential digital asset acquirers.

An authorised undertaking which fails to comply with any requirement orcontravenes any prohibition imposed on it by a direction under this section shall be guiltyof an offence and liable—

on summary conviction, to a fine of $25,000;

on conviction on indictment, to a fine of $75,000.

Notification and confirmation of directionsA direction under section 35 shall be given by notice in writing and may be

varied by a further direction; and a direction may be revoked by the Authority by a noticein writing to the authorised undertaking concerned.

A direction under section 35(1), except one varying a previous direction,shall—

state the reasons for which it is given and give particulars of the authorisedundertaking’s rights under subsection (3) and section 52 whereappropriate; and

cease to have effect at the end of any period which may be set out by theAuthority in the notice.

An authorised undertaking to which a direction is given which undersubsection (2) may, within the period of 14 days beginning with the day on which thedirection is given, make written representations to the Authority; and the Authority shalltake any such representations into account in deciding whether to confirm the direction.

Surrender of authorisationAn authorised undertaking may, with the prior approval of the Authority,

surrender its authorisation by written notice to the Authority.

A surrender shall take effect on the date of the giving of approval by theAuthority.

The surrender of an authorisation shall be irrevocable, unless the Authority bynotice in writing allows it to be withdrawn.

35 (1)

(2)

(3)

(a)

(b)

36 (1)

(2)

(a)

(b)

(3)

37 (1)

(2)

(3)

26


PART 3

OBJECTIONS TO SHAREHOLDER CONTROLLERS

Notification of new or increased controlNo person shall become a 10% shareholder controller or a majority shareholder

controller of an authorised undertaking which is a company unless—

he has served on the Authority a written notice stating that he intends tobecome such a controller of the authorised undertaking; and

either the Authority has, before the end of the period of three monthsbeginning with the date of service of that notice, notified him in writing thatthere is no objection to his becoming such a controller of the authorisedundertaking, or that period has elapsed without the Authority havingserved on him under section 39 a written notice of objection to hisbecoming such a controller of the authorised undertaking.

Subsection (1) applies also in relation to a person becoming—

a member of an authorised undertaking which is a limited liabilitycompany or unincorporated association;

a partner in an authorised undertaking which is a partnership.

A notice under subsection (1)(a) shall contain such information as theAuthority may direct and the Authority may, after receiving such a notice from any person,by notice in writing require him to provide such additional information or documents as theAuthority may reasonably require for deciding whether to serve notice of objection.

Where additional information or documents are required from any person by anotice under subsection (3), the time between the giving of the notice and the receipt of theinformation or documents shall be added to the period mentioned in subsection (1)(b).

Objection to new or increased controlThe Authority may serve a notice of objection under this section on a person

who has given notice under section 38 unless it is satisfied—

that the person concerned is a fit and proper person to become a controllerof the description in question of the authorised undertaking;

that the interests of digital asset acquirers and potential digital assetacquirers of the authorised undertaking would not be in any mannerthreatened by that person becoming a controller of that description of theauthorised undertaking; and

without prejudice to paragraphs (a) and (b), that, having regard to thatperson’s likely influence on the authorised undertaking as a controller ofthe description in question, the criteria in Schedule 1 would continue tobe fulfilled in the case of the authorised undertaking or, if any of thosecriteria is not fulfilled, that that person is likely to undertake adequateremedial action.

38 (1)

(a)

(b)

(2)

(a)

(b)

(3)

(4)

39 (1)

(a)

(b)

(c)

27


Before serving a notice of objection under this section, the Authority shall servethe person concerned with a preliminary written notice stating that the Authority isconsidering service on that person of a notice of objection and that notice—

shall specify which of the matters mentioned in subsection (1) theAuthority is not satisfied with and, subject to subsection (5), the reasonsfor which it is not satisfied; and

shall give particulars of the rights conferred by subsection (3).

A person served with a notice under subsection (2) may, within a period of 28days beginning with the day on which the notice is served, make written representations tothe Authority; and where such representations are made the Authority shall take them intoaccount in deciding whether to serve a notice of objection.

A notice of objection under this section shall—

specify which of the matters mentioned in subsection (1) the Authority isnot satisfied with and, subject to subsection (5), the reasons for which it isnot satisfied; and

give particulars of the rights conferred by section 52.

Subsections (2)(a) and (4)(a) shall not require the Authority to specify anyreason which would in its opinion involve the disclosure of confidential information thedisclosure of which would be prejudicial to a third party.

Where a person required to give a notice under section 38 in relation tobecoming a controller of any description becomes a controller of that description withouthaving given the notice, the Authority may serve him with a notice of objection under thissection at any time within three months after becoming aware of his having done so andmay, for the purpose of deciding whether to serve him with such a notice, require him bynotice in writing to provide such information or documents as the Authority may reasonablyrequire.

The period mentioned in section 38(1)(b) (with any extension under subsection(4) of that section) and the period mentioned in subsection (6) shall not expire, if they wouldotherwise do so, until 14 days after the end of the period within which representations canbe made under subsection (3).

Objection to existing controllerWhere it appears to the Authority that a person who is a controller of any

description of an authorised undertaking is not or is no longer a fit and proper person tobe such a controller of the authorised undertaking, it may serve him with a written noticeof objection to his being such a controller of the authorised undertaking.

Before serving a notice of objection under this section, the Authority shall servethe person concerned with a preliminary written notice stating that the Authority isconsidering service on that person of a notice of objection and that notice shall—

(2)

(a)

(b)

(3)

(4)

(a)

(b)

(5)

(6)

(7)

40 (1)

(2)

28


subject to subsection (5), specify the reasons for which it appears to theAuthority that the person in question is not or is no longer a fit and properperson as mentioned in subsection (1); and

give particulars of the rights conferred by subsection (3).

A person served with a notice under subsection (2) may, within a period of 28days beginning with the day on which the notice is served, make written representations tothe Authority; and where such representations are made the Authority shall take them intoaccount in deciding whether to serve a notice of objection.

A notice of objection under this section shall—

subject to subsection (5), specify the reasons for which it appears to theAuthority that the person in question is not or is no longer a fit and properperson as mentioned in subsection (1); and

give particulars of the rights conferred by section 52.

Subsections (2)(a) and (4)(a) shall not require the Authority to specify anyreason which would in its opinion involve the disclosure of confidential information thedisclosure of which would be prejudicial to a third party.

Contraventions by controllerSubject to subsection (2), any person who contravenes section 38—

by failing to give the notice required by subsection (1)(a) of that section; or

by becoming a controller of any description to which that section appliesbefore the end of the period mentioned in subsection (1)(b) of that sectionin a case where the Authority has not served him with a preliminary noticeunder section 39(2),

shall be guilty of an offence.

A person shall not be guilty of an offence under subsection (1) if he shows thathe did not know of the acts or circumstances by virtue of which he became a controller ofthe relevant description; but where any person becomes a controller of any such descriptionwithout such knowledge and subsequently becomes aware of the fact that he has becomesuch a controller he shall be guilty of an offence unless he gives the Authority written noticeof the fact that he has become such a controller within 14 days of becoming aware of thefact.

Any person who—

before the end of the period mentioned in section 38(1)(b), becomes acontroller of any description to which that subsection applies after beingserved with a preliminary notice under section 39(2);

contravenes section 38 by becoming a controller of any description afterbeing served with a notice of objection to his becoming a controller of thatdescription; or

(a)

(b)

(3)

(4)

(a)

(b)

(5)

41 (1)

(a)

(b)

(2)

(3)

(a)

(b)

29


having become a controller of any description in contravention of thatsection (whether before or after being served with such notice of objection),continues to be such a controller after such a notice has been served onhim,

shall be guilty of an offence.

A person guilty of an offence under subsection (1) or (2) shall be liable onsummary conviction to a fine of $25,000.

A person guilty of an offence under subsection (3) shall be liable—

on summary conviction, to a fine of $25,000 and in respect of an offenceunder paragraph (c) of that subsection, to a fine of $500 for each day onwhich the offence has continued;

on conviction on indictment, to a fine of $50,000 or to imprisonment fortwo years or to both such fine and imprisonment.

Restriction on sale of shares etc.The powers conferred by this section shall be exercisable where a person—

has contravened section 38 by becoming a controller of any descriptionafter being served with a notice of objection to his becoming a controller ofthat description;

having become a controller of any description in contravention of section38, continues to be one after a notice has been served on him; or

continues to be a controller of any description after being served undersection 39 with a notice of objection to his being a controller of thatdescription.

The Authority may by notice in writing served on the person concerned directthat any specified shares to which this section applies shall, until further notice, be subjectto one or more of the following restrictions—

any transfer of, or agreement to transfer, those shares or, in the case ofunissued shares, any transfer of or agreement to transfer the right to beissued with them, shall be void;

no voting rights shall be exercisable in respect of the shares;

no further shares shall be issued in right of them or in pursuance of anyoffer made to their holder; and

except in liquidation, no payment shall be made of any sums due from theundertaking on the shares, whether in respect of capital or otherwise.

The Court may, on the application of the Authority, order the sale of anyspecified shares to which this section applies and, if they are for the time being subject toany restrictions under subsection (2), order that they shall cease to be subject to thoserestrictions.

(c)

(4)

(5)

(a)

(b)

42 (1)

(a)

(b)

(c)

(2)

(a)

(b)

(c)

(d)

(3)

30


No order shall be made under subsection (3) in a case where the notice ofobjection was served under section 39 or 40—

until the end of the period within which an appeal can be brought againstthe notice of objection; and

if an appeal is brought, until it has been determined or withdrawn.

Where an order has been made under subsection (3), the Court may, on theapplication of the Authority, make such further order relating to the sale or transfer of theshares as it thinks fit.

Where shares are sold in pursuance of an order under this section, theproceeds of sale, less the costs of the sale, shall be paid into the Court for the benefit of thepersons beneficially interested in them; and any such person may apply to the Court forthe whole or part of the proceeds to be paid to him.

This section applies—

to all the shares in the authorised undertaking of which the person inquestion is a controller of the relevant description which are held by himor any associate of his and were not so held immediately before he becamesuch a controller of the authorised undertaking; and

where the person in question became a controller of the relevantdescription as a result of the acquisition by him or any associate of his ofshares in another company, to all the shares in that company which areheld by him or any associate of his and were not so held before he becamesuch a controller of that authorised undertaking.

A copy of the notice served on the person concerned under subsection (2) shallbe served on the authorised undertaking or company to whose shares it relates and, if itrelates to shares held by an associate of that person, on that associate.

This section applies with the necessary modifications in relation to the transferof an interest in a limited liability company or partnership.

PART 4

DISCIPLINARY MEASURES

Power to impose civil penalties for breach of requirementsExcept as provided in sections 9, 15, 61 and 70, any person who fails to comply

with any requirement or contravenes any prohibition imposed by or under this Act shall beliable to a civil penalty not exceeding $10,000,000, as the Authority considers appropriate,for each such failure.

For the purposes of subsection (1), “appropriate” means effective, proportionateand dissuasive.

(4)

(a)

(b)

(5)

(6)

(7)

(a)

(b)

(8)

(9)

43 (1)

(2)

31


The Authority shall not impose a civil penalty where it is satisfied that theperson concerned took all reasonable steps and exercised all due diligence to ensure thatthe requirement would be complied with.

Civil penalties proceduresIf the Authority proposes to impose a civil penalty, it shall give the authorised

undertaking concerned a warning notice.

If the Authority decides to impose a civil penalty, it shall give the authorisedundertaking concerned a decision notice.

Public censureIf the Authority considers that an authorised undertaking has contravened a

requirement imposed on it by or under this Act, the Authority may publish a statement tothat effect.

After a statement under this section is published, the Authority shall send acopy of it to the authorised undertaking.

Public censure procedureIf the Authority proposes to publish a statement in respect of an authorised

undertaking under section 45, it shall give the authorised undertaking a warning notice.

If the Authority decides to publish a statement under section 45 (whether ornot in the terms proposed), it shall give the authorised undertaking concerned a decisionnotice.

Prohibition ordersSubsection (2) applies if it appears to the Authority that an individual is not a

fit and proper person to perform functions in relation to the digital asset issuance.

The Authority may make a prohibition order prohibiting the individual fromperforming a specified function, any function falling within a specified description, or anyfunction.

A prohibition order may relate—

to a specified digital asset issuance activity, any digital asset issuanceactivity falling within a specified description, or all digital asset issuanceactivities; and

to persons generally, or any person within a specified class of authorisedundertakings.

In exercising its discretion to make a prohibition order under subsection (2),the Authority shall have regard (among other things) to such factors, including assessmentcriteria, as the Authority may establish in a statement of principles.

(3)

44 (1)

(2)

45 (1)

(2)

46 (1)

(2)

47 (1)

(2)

(3)

(a)

(b)

(4)

32


An authorised undertaking shall ensure that no function performed in relationto the digital asset issuance is performed by an individual who is prohibited from performingthat function by a prohibition order.

The Authority may, on the application of the individual named in a prohibitionorder, vary or revoke the order.

The Authority shall publish a prohibition order that is in effect, and everyvariation of such order, in such manner as it considers appropriate to bring the order tothe attention of the public.

This section applies to the performance of functions in relation to an offeringvia a digital asset issuance carried on by a person who is an exempted person in relationto that activity as it applies to the performance of functions in relation to a digital assetissuance activity carried on by an authorised undertaking.

Any person who fails to comply with the terms of a prohibition order commitsan offence and is liable—

on summary conviction, to a fine of $50,000 or to imprisonment for twoyears, or to both such fine and imprisonment;

on conviction on indictment, to a fine of $200,000 or to imprisonment forfour years, or to both such fine and imprisonment.

“Exempted person” means a person who is exempted in accordance with anyRules made by the Authority under this Act.

Prohibition orders: proceduresIf the Authority proposes to make a prohibition order, it shall give the individual

concerned a warning notice.

If the Authority decides to make a prohibition order, it shall give the individualconcerned a decision notice.

Applications relating to prohibition orders: proceduresThis section applies to an application for the variation or revocation of a

prohibition order.

If the Authority decides to grant the application, it shall give the applicantwritten notice of its decision.

If the Authority decides to refuse the application, it shall give the applicant adecision notice.

Determination of applications for variation etc.The Authority may grant an application made under section 49 if it is satisfied

that the applicant is a fit and proper person to perform the function to which the applicationrelates.

(5)

(6)

(7)

(8)

(9)

(a)

(b)

(10)

48 (1)

(2)

49 (1)

(2)

(3)

50 (1)

33


In deciding that question, the Authority may have regard (among other things)to whether the applicant—

has obtained a qualification;

has undergone, or is undergoing, training; or

possesses a level of competence required in relation to persons performingfunctions of the kind to which the application relates.

InjunctionsIf, on the application of the Authority, the Court is satisfied—

that there is a reasonable likelihood that any person will contravene arelevant requirement; or

that any person has contravened a relevant requirement and that there isa reasonable likelihood that the contravention will continue or be repeated,

the Court may make an order restraining the contravention.

If, on the application of the Authority, the Court is satisfied—

that any person has contravened a relevant requirement; and

that there are steps which could be taken for remedying the contravention,

the Court may make an order requiring that person, and any other person who appears tohave been knowingly concerned in the contravention, to take such steps as the Court maydirect to remedy it.

If, on the application of the Authority, the Court is satisfied that any personmay have—

contravened a relevant requirement; or

been knowingly concerned in the contravention of such a requirement,

the Court may make an order restraining such person from disposing of, or otherwisedealing with, any of his assets which it is satisfied the person is reasonably likely to disposeof or otherwise deal with.

In subsection (2), references to remedying a contravention include referencesto mitigating its effect.

“Relevant requirement”, in relation to an application by the Authority, meansa requirement which is imposed by or under this Act.

PART 5

RIGHTS OF APPEAL

Rights of appealAn undertaking which is aggrieved by a decision of the Authority—

(2)

(a)

(b)

(c)

51 (1)

(a)

(b)

(2)

(a)

(b)

(3)

(a)

(b)

(4)

(5)

52 (1)

34


to restrict its authorisation, to restrict it in a particular manner, or to varyany restrictions of its authorisation;

to revoke its authorisation;

to impose a civil penalty under section 43; or

to publish a statement in respect of it pursuant to section 45,

may appeal against the decision to the tribunal constituted in accordance with section 53(the tribunal).

Where—

the ground or a ground for a decision within subsection (1)(a) or (b) is thatmentioned in section 30(2)(a); or

the effect of a decision within subsection (1)(a) is to require the removal ofa person as a controller or officer of an undertaking,

the controller or officer to whom the ground relates or whose removal is required may appealto the tribunal against the finding that there is such a ground for the decision or, as thecase may be, against the decision to require his removal.

Any person on whom a notice of objection is served under section 39 or 40 mayappeal to the tribunal against the decision of the Authority to serve the notice; but thissubsection does not apply to a person in any case in which he has failed to give a notice orbecome or continued to be a controller in circumstances in which his doing so constitutesan offence under section 41(1), (2) or (3).

Any individual in respect of whom a prohibition order has been made undersection 47 may appeal to the tribunal.

Any person in respect of whom a decision notice has been issued refusing arevocation or variation of a prohibition order may appeal to the tribunal.

The tribunal may suspend the operation of a restriction or a variation of arestriction pending the determination of an appeal in respect of the decision.

The revocation of the authorisation of an undertaking pursuant to a decisionagainst which there is a right of appeal under this section shall not have effect—

until the end of the period within which the appeal can be brought; and

if such an appeal is brought, until it is determined or withdrawn.

Constitution of tribunalsA tribunal shall be constituted in accordance with this section, where an appeal

is brought under section 52, to determine the appeal.

The tribunal shall consist of a chairman, or, in his absence, a deputy chairmanand two other members.

(a)

(b)

(c)

(d)

(2)

(a)

(b)

(3)

(4)

(5)

(6)

(7)

(a)

(b)

53 (1)

(2)

35


The chairman and the deputy chairman shall be appointed by the Minister fora term not exceeding three years, and shall be barristers and attorneys of at least sevenyears’ standing.

The two other members of the tribunal shall be selected by the chairman or, inhis absence, the deputy chairman, from a panel of members appointed by the Ministerunder subsection (6), who shall be persons appearing to the chairman or, as the case maybe, the deputy chairman, to have relevant experience.

During any period of time when the chairman or deputy chairman is absentfrom Bermuda or is for any other reason unable to act, the Minister may appoint anotherperson to act in his place for the period of his absence or inability to act.

The Minister shall appoint a panel of not less than nine persons with relevantexperience to serve as members of appeal tribunals.

A person shall not be eligible for appointment as chairman, deputy chairmanor member of the tribunal if he is or has at any time during the period of two years endingwith the date of his appointment been an officer, servant or agent of the Authority or of anyauthorised undertaking.

Determination of appealsOn an appeal made under section 52, the question for the determination of the

tribunal shall be whether, for the reasons adduced by the appellant, the decision wasunlawful or not justified by the evidence on which it was based.

On any such appeal, the tribunal may confirm or reverse the decision which isthe subject of the appeal but shall not have power to vary it except that—

where the decision was to impose or vary any restriction, the tribunal maydirect the Authority to impose different restrictions or to vary them in adifferent way; or

where the decision was to revoke an authorisation, the tribunal may directthe Authority to restrict it instead.

Notice of a tribunal’s determination, together with a statement of its reasons,shall be given to the appellant and to the Authority; and, unless the tribunal otherwisedirects, the determination shall come into operation when the notice is given to theappellant and to the Authority.

Costs, procedure and evidenceA tribunal may give such directions as it thinks fit for the payment of costs or

expenses by any party to the appeal.

The Minister may make regulations with respect to appeals and thoseregulations may in particular make provision—

as to the period within which and the manner in which such appeals areto be brought;

(3)

(4)

(5)

(6)

(7)

54 (1)

(2)

(a)

(b)

(3)

55 (1)

(2)

(a)

36


as to the manner in which such appeals are to be conducted, includingprovision for any hearing to be held in private and as to the persons entitledto appear on behalf of the parties;

as to the procedure to be adopted where appeals are brought both by anauthorised undertaking and by a person who is to be a controller or officerof an authorised undertaking, including provision for the hearing of theappeals together and for the mutual disclosure of information;

for requiring an appellant or the Authority to disclose or allow theinspection of documents in his or its custody or under his or its control;

for requiring any person, on tender of the necessary expenses of hisattendance, to attend and give evidence or produce documents in hiscustody or under his control and for authorising the administration ofoaths to witnesses;

for enabling an appellant to withdraw an appeal or the Authority towithdraw its opposition to an appeal and for the consequences of any suchwithdrawal;

for taxing or otherwise settling any costs or expenses which the tribunaldirects to be paid and for the enforcement of any such direction;

for enabling any preliminary or incidental functions in relation to an appealto be discharged by the chairman or, as the case may be, the deputychairman of the tribunal; and

as to any other matter connected with such appeals.

A person who, having been required in accordance with regulations madeunder this section to attend and give evidence, fails without reasonable excuse to attend orgive evidence, shall be guilty of an offence and liable on summary conviction to a fine of$10,000.

A person who without reasonable excuse alters, suppresses, conceals, destroysor refuses to produce any document which he has been required to produce in accordancewith regulations under this section, or which he is liable to be so required to produce, shallbe guilty of an offence and liable—

on summary conviction, to a fine of $25,000 or to imprisonment for sixmonths or to both such fine and imprisonment;

on conviction on indictment, to a fine of $50,000 or to imprisonment fortwo years or to both such fine and imprisonment.

Further appeals on a point of lawAn authorised undertaking or other person who has appealed to a tribunal may

appeal to the Court on any question of law arising from the decision on the appeal by thetribunal, and an appeal on any such question shall also lie at the instance of the Authority;and if the Court is of the opinion that the decision was erroneous in point of law it shallremit the matter to the tribunal for rehearing and determination by it.

(b)

(c)

(d)

(e)

(f)

(g)

(h)

(i)

(3)

(4)

(a)

(b)

56 (1)

37


No appeal to the Court of Appeal shall be brought from a decision undersubsection (1), except with leave of that court.

PART 6

NOTICES AND INFORMATION

Warning noticesA warning notice shall—

be in writing;

state the action which the Authority proposes to take; and

give reasons for the proposed action.

The warning notice shall specify a reasonable period (which may not be lessthan 14 days) within which the person to whom it is given may make representations to theAuthority; and where such representations are made, the Authority shall take them intoaccount in deciding whether to give a decision notice.

The Authority may extend the period specified in the notice.

A warning notice about a proposal to publish a statement under section 45shall set out the terms of the statement.

A warning notice given under section 47 shall set out the terms of theprohibition.

Decision noticesA decision notice shall—

be in writing;

give reasons for the Authority’s decision to take the action to which thenotice relates;

give its decision; and

give an indication of the right to appeal the decision to the tribunal undersection 52.

A decision notice shall be given within 90 days beginning with the day on whicha warning notice under section 57 was given; and if no decision notice under subsection (1)is given within that period, the Authority shall be treated as having at the end of that periodgiven a notice of discontinuance under section 59.

A decision notice about the imposition of a civil penalty under section 43 shallstate the date of payment.

A decision notice about public censure under section 45 shall—

set out the terms of the statement;

(2)

57 (1)

(a)

(b)

(c)

(2)

(3)

(4)

(5)

58 (1)

(a)

(b)

(c)

(d)

(2)

(3)

(4)

(a)

38


give details of the manner in which, and the date on which, the statementwill be published.

A decision notice about a prohibition order made under section 47(2) shall—

name the individual to whom the prohibition order applies;

set out the terms of the order; and

be given to the individual named in the order.

A decision notice shall state the day on which it is to take effect.

The Authority may, before it takes the action to which a decision notice (“theoriginal notice”) relates, give the person concerned a further decision notice which relatesto different action in respect of the same matter.

The Authority may give a further decision notice as a result of subsection (7)only if the person to whom the original notice was given consents.

If the person to whom a decision notice under subsection (1) is given had theright to refer the matter to which the original decision notice related to the tribunal, he hasthat right as respects the decision notice under subsection (7).

Notices of discontinuanceSubject to section 58(2), if the Authority decides not to take the action proposed

in a warning notice it shall give a notice of discontinuance to the person to whom thewarning notice was given.

A notice of discontinuance shall identify the action which is being discontinued.

PublicationSubject to sections 33, 45 and 47, the Authority may publish such information

about a matter to which a decision notice relates as it considers appropriate.

The Authority shall not publish a decision notice under subsection (1)—

before notifying the person concerned; and

pending an appeal under section 52.

Notification of change of controller or officerAn authorised undertaking shall give written notice to the Authority of the fact

of any person having become or ceasing to be a controller or officer of the authorisedundertaking.

A notice required to be given under subsection (1) shall be given before the endof the period of 14 days beginning with the day on which the authorised undertakingbecomes aware of the relevant facts.

An authorised undertaking which fails to give a notice required by this sectionshall be liable to a civil penalty calculated in accordance with subsection (4).

(b)

(5)

(a)

(b)

(c)

(6)

(7)

(8)

(9)

59 (1)

(2)

60 (1)

(2)

(a)

(b)

61 (1)

(2)

(3)

39


For each week or part of a week that an authorised undertaking fails to complywith a requirement imposed under subsection (1), it shall be liable to a civil penalty notexceeding $5,000.

Power to obtain information and reportsThe Authority may by notice in writing served on an authorised undertaking—

require the undertaking to provide the Authority (or such person acting onbehalf of the Authority as may be specified in the notice), at such time ortimes or at such intervals or in respect of such period or periods as may beso specified, with such information as the Authority may reasonablyrequire for ensuring that the undertaking is complying with the provisionsof this Act and any code of conduct, and for safeguarding the interests ofdigital asset acquirers and potential digital asset acquirers of theundertaking; and

require the undertaking to provide the Authority with a report, in such formas may be specified in the notice, by the undertaking’s auditor or by anaccountant or other person with relevant professional skill in, or on anyaspect of, any matter about which the Authority has required or couldrequire the undertaking to provide information under paragraph (a).

The person appointed by an authorised undertaking to make any reportrequired under subsection (1)(b) shall forthwith give written notice to the Authority of anymatter of which he becomes aware which is likely to be of material significance for thedischarge, in relation to the authorised undertaking, of the functions of the Authority underthis Act.

General power to require production of documentsThe Authority may—

by notice in writing served on an authorised undertaking require it toproduce, within such time and at such place as may be specified in thenotice, such document or documents of such description as may be sospecified;

authorise an officer, servant or agent of the Authority, producing suchevidence of his authority, to require it to provide to him such information,or to produce to him such documents, as he may specify, being suchinformation or documents as the Authority may reasonably require for theperformance of its functions under this Act.

Where, by virtue of subsection (1), the Authority or any officer, servant or agentof the Authority has power to require the production of any documents from an authorisedundertaking, the Authority or that officer, servant or agent shall have the like power torequire the production of those documents from any person who appears to be in possessionof them; but where any person from whom such production is required claims a lien ondocuments produced by him, the production shall be without prejudice to the lien.

(4)

62 (1)

(a)

(b)

(2)

63 (1)

(a)

(b)

(2)

40


The power under this section to require an authorised undertaking or otherperson to produce any documents includes power—

if the documents are produced, to take copies of them or extracts fromthem and to require that the undertaking or person, or any other personwho is a present or past controller or officer of, or is or was at any timeemployed by or acting as an employee of, the authorised undertaking inquestion, to provide an explanation of any of them; and

if the documents are not produced, to require the person who was requiredto produce them to state, to the best of his knowledge and belief, wherethey are.

If it appears to the Authority to be desirable in the interests of the acquirers orpotential acquirers of an authorised undertaking which is a company to do so, it may alsoexercise the powers conferred by section 62 and subsection (1) of this section in relation toany company which is or has at any relevant time been—

a parent company, subsidiary company or related company of thatundertaking;

a subsidiary company of a parent company of that undertaking;

a parent company of a subsidiary company of that undertaking; or

a company in the case of which a shareholder controller of thatundertaking, either alone or with any associate or associates, holds 50%or more of the shares or is entitled to exercise, or control the exercise of,more than 50% of the voting power at a general meeting.

Subsection (4) applies with the necessary modifications in relation to anundertaking which is limited liability company or partnership.

The Authority may by notice in writing served on any person who is or is to bea controller or officer of an authorised undertaking require him to provide the Authority,within such time as may be specified in the notice, with such information or documents asthe Authority may reasonably require for determining whether he is a fit and proper personto hold the particular position which he holds or is to hold.

Any person who without reasonable excuse fails to comply with a requirementimposed on him under this section shall be guilty of an offence and liable on summaryconviction to a fine of $10,000 or to imprisonment for six months or to both such fine andimprisonment.

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

Right of entry to obtain information and documentsAny officer, servant or agent of the Authority may, on producing if required

evidence of his authority, enter any premises occupied by a person on whom a notice hasbeen served under section 62(1) or 63(1) for the purpose of obtaining there the information

(3)

(a)

(b)

(4)

(a)

(b)

(c)

(d)

(5)

(6)

(7)

(8)

64 (1)

41


or documents required by that notice and of exercising the powers conferred by section63(3).

Any officer, servant or agent of the Authority may, on producing if requiredevidence of his authority, enter any premises occupied by any person on whom a noticecould be served under section 62(1) or 63(1) for the purpose of obtaining there suchinformation or documents as are specified in the authority; but the Authority shall notauthorise any person to act under this subsection unless it has reasonable cause to believethat if such a notice were served it would not be complied with or that any documents towhich it would relate would be removed, tampered with or destroyed.

Any person who intentionally obstructs a person exercising rights conferred bythis section shall be guilty of an offence and liable on summary conviction to a fine of$10,000 or to imprisonment for six months or to both such fine and imprisonment.

PART 7

INVESTIGATIONS

Investigations on behalf of the AuthorityIf it appears to the Authority desirable to do so in the interests of digital asset

acquirers or potential digital asset acquirers of an authorised undertaking, the Authoritymay appoint one or more competent persons to investigate and report to the Authorityon—

the nature, conduct or state of the undertaking’s business or digital assetissuance or any particular aspect of it; or

the ownership or control of the undertaking,

and the Authority shall give written notice of any such appointment to the undertakingconcerned.

If a person appointed under subsection (1) thinks it necessary for the purposesof the investigation he is appointed to carry out, he may also investigate the business ordigital asset issuance of any company which is or has at any relevant time been—

a parent company, subsidiary company or related company of theundertaking under investigation;

a subsidiary company or related company of a parent company of thatundertaking;

a parent company of a subsidiary company of that undertaking; or

a company in the case of which a shareholder controller of thatundertaking, either alone or with any associate or associates, holds 50%or more of the shares or is entitled to exercise, or control the exercise of,more than 50% of the voting power at a general meeting.

Subsection (2) applies with the necessary modifications in relation to anundertaking which is a limited liability company or partnership.

(2)

(3)

65 (1)

(a)

(b)

(2)

(a)

(b)

(c)

(d)

(3)

42


Where a person appointed under subsection (1) decides to investigate thebusiness or digital asset issuance of any company by virtue of subsection (2), he shall giveit written notice to that effect.

It shall be the duty of every person who is or was a controller, officer, employee,agent, banker, auditor or barrister and attorney of an authorised undertaking which isunder investigation (whether by virtue of subsection (1) or (2)), or any person appointed tomake a report in respect of that undertaking under section 62(1)(b)—

to produce to the persons appointed under subsection (1), within such timeand at such place as they may require, such documents, or documents ofsuch description, as may be specified, being documents the production ofwhich may be reasonably required for the investigation, which are in hiscustody or power;

to attend before the persons so appointed at such time and place as theymay require and answer questions relevant to the investigation as thepersons appointed under subsection (1) may require; and

otherwise to give the persons so appointed all assistance in connection withthe investigation which he is reasonably able to give, and those personsmay take copies of or extracts from any documents produced to themunder paragraph (a).

For the purpose of exercising his powers under this section, a person appointedunder subsection (1) may enter any premises occupied by an authorised undertaking whichis being investigated by him under this section; but he shall not do so without prior noticein writing.

A person exercising powers by virtue of an appointment under this sectionshall, if so required, produce evidence of his authority.

Unless the Authority otherwise directs, the authorised undertaking underinvestigation shall pay to the Authority all expenses of, and incidental to, the investigation.

Any person who—

without reasonable excuse, fails to produce any documents which it is hisduty to produce under subsection (5);

without reasonable excuse, fails to attend before the persons appointedunder subsection (1) when required to do so;

without reasonable excuse, fails to answer any question which is put tohim by persons so appointed with respect to an authorised undertakingwhich is under investigation or an entity which is being investigated byvirtue of subsection (2); or

intentionally obstructs a person in the exercise of the rights conferred bysubsection (5),

shall be guilty of an offence and liable on summary conviction to a fine of $10,000 or toimprisonment for six months, or to both such fine and imprisonment.

(4)

(5)

(a)

(b)

(c)

(6)

(7)

(8)

(9)

(a)

(b)

(c)

(d)

43


A statement made by a person in compliance with a requirement imposed byvirtue of this section shall not be used in evidence against him.


Investigations of suspected contraventionsThe Authority may conduct an investigation if it appears to the Authority

that—

a person may have contravened section 11;

any exempted person may have contravened any restriction or exemptionor condition given under an exemption;

an undertaking may have contravened a requirement imposed by or underthis Act, regulations or orders made thereunder;

an individual may not be a fit and proper person to perform functions inrelation to digital asset issuance activities.

The power conferred by subsection (1)(c) may be exercised in relation to aformer authorised undertaking but only in relation to—

the conduct of a an offering via a digital asset issuance at any time whenthe undertaking was authorised under this Act; or

the ownership or control of an undertaking at any time when it wasauthorised under this Act.

Power to require production of documents during investigationThe Authority may by notice in writing require the person who is the subject of

an investigation under section 66 (“the person under investigation”) or any personconnected with the person under investigation—

to provide, at such place as may be specified in the notice and eitherforthwith or at such time as may be so specified, such information as theAuthority may reasonably require for the purpose of the investigation;

to produce, at such place as may be specified in the notice and eitherforthwith or at such time as may be so specified, such documents, ordocuments of such description, as may be specified, being documents theproduction of which may be reasonably required for the investigation;

to attend at such place and time as may be specified in the notice andanswer questions relevant to the enquiry as the Authority may require.

The Authority may by notice in writing require every person who is or was acontroller, officer, employee, agent, banker, auditor or barrister and attorney of anundertaking which is under investigation by virtue of subsection (1)—

(10)

(11)

66 (1)

(a)

(b)

(c)

(d)

(2)

(a)

(b)

67 (1)

(a)

(b)

(c)

(2)

44


to produce to the Authority, within such time and at such place as theAuthority may require, such documents, or documents of suchdescription, as may be specified, being documents the production of whichmay be reasonably required for the investigation, which are in his custodyor power;

to attend before the Authority at such time and place as the Authority mayrequire and answer questions relevant to the investigation as the Authoritymay require; and

to take such actions as the Authority may direct in connection with theinvestigation.

The Authority or a duly authorised officer, servant or agent of the Authoritymay take copies of or extracts from any documents produced under this section.

Any officer, servant or agent of the Authority may, on producing if requiredevidence of his authority, enter any premises occupied by a person on whom a notice hasbeen served under subsection (1) for the purpose of obtaining there the information ordocuments required by the notice, putting the questions referred to in paragraph (c) of thatsubsection or exercising the powers conferred by subsection (3).

Any person who without reasonable excuse fails to comply with a requirementimposed on him under this section or intentionally obstructs a person in the exercise of therights conferred by subsection (4) shall be guilty of an offence and liable on summaryconviction to a fine of $10,000 or to imprisonment for six months, or to both such fine andimprisonment.

A statement made by a person in compliance with a requirement imposed byvirtue of this section shall not be used in evidence against him.


For the purposes of this section, a person is connected with the person underinvestigation if such person is or has at any relevant time been—

a member of a group to which the person under investigation belongs;

a controller of the person under investigation;

a partner of a partnership of which the person under investigation is amember.

Powers of entryA magistrate may issue a warrant under this section if satisfied on information

on oath that the Authority is conducting an investigation under section 66 and—

a person has failed to comply with a notice served on him under section67;

(a)

(b)

(c)

(3)

(4)

(5)

(6)

(7)

(8)

(a)

(b)

(c)

68 (1)

(a)

45


that there are reasonable grounds for suspecting the completeness of anyinformation provided or documents produced by the person in response toa notice served on him under section 67; or

that there are reasonable grounds for suspecting that if a notice wereserved on the person under section 67 it would not be complied with orthat any documents to which it would relate would be removed, tamperedwith or destroyed.

A warrant under this section shall authorise a police officer not below the rankof inspector, together with any other person named in the warrant and any other policeofficers—

to enter any premises occupied by the person under investigation whichare specified in the warrant, using such force as is reasonably necessaryfor the purpose;

to search the premises and take possession of any documents appearingto be such documents as are mentioned in subsection (1) or to take, inrelation to any such documents, any other steps which may appear to benecessary for preserving them or preventing interference with them;

to take copies of or extracts from any such documents;

to require any person named in the warrant to answer questions relevantfor determining whether that person is guilty of any such contravention asis mentioned in section 66.

A warrant under this section shall continue in force until the end of the periodof one month beginning with the day on which it is issued.

Any documents of which possession is taken under this section may beretained—

for a period of three months; or

until the conclusion of proceedings, if within the period of three monthsreferred to in paragraph (a), proceedings to which the documents arerelevant are commenced against any person for any such contravention asis mentioned in section 66.

Any person who intentionally obstructs the exercise of any right conferred bya warrant issued under this section or fails without reasonable excuse to comply with anyrequirement imposed in accordance with subsection (2)(d) shall be guilty of an offence andliable—

on summary conviction, to a fine of $25,000 or to imprisonment for sixmonths, or to both such fine and imprisonment;

on conviction on indictment, to a fine of $50,000 or to imprisonment fortwo years, or to both such fine and imprisonment.

(b)

(c)

(2)

(a)

(b)

(c)

(d)

(3)

(4)

(a)

(b)

(5)

(a)

(b)

46


Obstruction of investigationsA person who knows or suspects that an investigation is being or is likely to be

carried out—

into a suspected contravention of section 11 or a term or condition of anexemption made under any Rule made by the Authority under this Act; or

under section 66,

shall be guilty of an offence if he falsifies, conceals, destroys or otherwise disposes of, orcauses or permits the falsification, concealment, destruction or disposal of, documentswhich he knows or suspects are or would be relevant to such an investigation unless heproves that he had no intention of concealing facts disclosed by the documents from personscarrying out such an investigation.

A person guilty of an offence under this section shall be liable—

on summary conviction, to a fine of $25,000 or to imprisonment for sixmonths, or to both such fine and imprisonment;

on conviction on indictment, to a fine of $50,000 or to imprisonment fortwo years, or to both such fine and imprisonment.

PART 8

CERTIFICATE OF COMPLIANCE

Certificates of complianceEvery authorised undertaking shall deliver to the Authority—

within four months from the end of the offering via its digital assetissuance; and

within four months from the end of its financial year, if falling during theperiod of its authorisation under this Act,

a certificate of compliance, signed by an officer of the undertaking, certifying that theundertaking has complied with the minimum criteria and codes of conduct.

An authorised undertaking that fails to deliver a certificate as required bysubsection (1) within the time specified therein shall be liable to a civil penalty not exceeding$5,000 for each week or part of a week that the undertaking is in default.

PART 9

RESTRICTION ON DISCLOSURE OF INFORMATION

Restricted informationExcept as provided by sections 72, 73 and 74, no person who—

69 (1)

(a)

(b)

(2)

(a)

(b)

70 (1)

(a)

(b)

(2)

71 (1)

47


under or for the purposes of this Act, receives information relating to thebusiness or digital asset issuance or other affairs of any person; or

obtains information directly or indirectly from a person who has receivedit as provided under paragraph (a),

shall disclose the information without the consent of the person to whom it relates and (ifdifferent) the person from whom it was received as aforesaid.

This section does not apply to information which at the time of the disclosureis or has already been made available to the public from other sources or to information inthe form of a summary or collection of information so framed as not to enable informationrelating to any particular person to be ascertained from it.

Any person who discloses information in contravention of this section commitsan offence and is liable—


on conviction on indictment, to a fine of $100,000 or to imprisonment forfive years, or to both such fine and imprisonment.

Disclosure for facilitating the discharge of functions of the AuthoritySection 71 does not preclude the disclosure of information in any case in which

disclosure is for the purpose of enabling or assisting the Authority to discharge—

its functions under this Act; and

its functions under the Bermuda Monetary Authority Act 1969.

Without prejudice to the generality of subsection (1), section 71 does notpreclude the disclosure of information by the Authority to the auditor or accountant of anauthorised undertaking, or to the person appointed to make a report under section 62(1)(b) if it appears to the Authority that disclosing the information would enable or assist theAuthority to discharge the functions mentioned in that section, or would otherwise be inthe interests of digital asset acquirers or potential digital asset acquirers of an authorisedundertaking.

Disclosure for facilitating the discharge of functions by other authoritiesSection 71 does not preclude the disclosure of information to the Minister or

other authority in Bermuda in any case in which the disclosure is for the purpose ofenabling or assisting him to discharge his regulatory functions.

Section 71 does not preclude the disclosure of information for the purpose ofenabling or assisting a relevant supervisory authority in a country or territory outsideBermuda to exercise functions corresponding to the functions of the Authority under thisAct.

Subsection (2) does not apply in relation to disclosures to a relevant supervisoryauthority unless the Authority is satisfied that the authority is subject to restrictions on

(a)

(b)

(2)

(3)

(a)

(b)

72 (1)

(a)

(b)

(2)

73 (1)

(2)

(3)

48


further disclosure at least equivalent to those imposed by sections 71 and 72 and thissection.

Section 74 does not preclude the disclosure of information—

for the purpose of enabling or assisting a person to do anything which heis required to do in pursuance of a requirement imposed under section63(1)(b);

with a view to the undertaking of, or otherwise for the purposes of, anycriminal proceedings, whether under this Act or any other Act;

in connection with any other proceedings arising out of this Act.

Section 71 does not preclude the disclosure by the Authority to the Director ofPublic Prosecutions or a police officer not below the rank of inspector of informationobtained pursuant to section 66, 67 or 68 or of information in the possession of theAuthority as to any suspected contravention in relation to which the powers conferred bythose sections are exercisable.

Information which is disclosed to a person in pursuance of this section shallnot be used otherwise than for the purposes mentioned in this section.

Information supplied to the Authority by relevant overseas authoritySection 71 applies to information which has been supplied to the Authority for

the purposes of any relevant functions by the relevant supervisory authority in a countryor territory outside Bermuda.

Information supplied to the Authority as mentioned in subsection (1) shall notbe disclosed except as provided by section 71 or—

for the purpose of enabling or assisting the Authority to discharge itsfunctions under this Act; or

with a view to the undertaking of, or otherwise for the purpose of, criminalproceedings, whether under this Act or any other Act.

In this section and section 73—

“relevant functions”, in relation to the Authority, means its functions under thisAct;

“relevant supervisory authority” means the authority discharging in a country orterritory outside Bermuda functions corresponding to those of the Authorityunder this Act.

PART 10

MISCELLANEOUS AND SUPPLEMENTAL

False documents or informationAny person commits an offence if, for any purposes of this Act, he—

(4)

(a)

(b)

(c)

(5)

(6)

74 (1)

(2)

(a)

(b)

(3)

75 (1)

49


issues a document, or supplies information, which is false or misleadingin a material respect;

signs a document which is false or misleading in a material respect; or

takes part in the preparation or issue of a document, or the supplying ofinformation, which is false in a material respect.

A person who commits an offence under subsection (1) is liable—


on conviction on indictment, to a fine of $50,000 or to imprisonment forfour years, or to both such fine and imprisonment.

It shall be a defence for a person charged with an offence under subsection (1)to prove—

if an individual, that he had no knowledge of the falsity or misleadingcharacter of the document or information, and took every reasonableprecaution to ensure its accuracy; and

if not an individual, that every person acting on such person’s behalf hadno such knowledge, and took every such reasonable precaution, asaforesaid.

OffencesWhere an offence under this Act committed by an authorised undertaking is

proved to have been committed with the consent or connivance of, or to be attributable toneglect on the part of, any officer of the authorised undertaking, or any person who waspurporting to act in any such capacity, he, as well as the authorised undertaking, shall beguilty of that offence and be liable to be proceeded against and punished accordingly unlesssuch person shows that he took all reasonable steps to avoid the commission of an offence.

Where the affairs of an authorised undertaking are managed by its members,subsection (1) shall apply in relation to the acts and defaults of a member in connectionwith his functions of management as if he were a director of the authorised undertaking.

Prohibition on use of words “digital asset issuance”No person carrying on business in or from Bermuda shall use any name which

indicates or may reasonably be understood to indicate (whether in English or in any otherlanguage) that it is carrying on a digital asset issuance unless it is an authorisedundertaking under section 13 or an exempted undertaking under section 9.

Any person using a name in contravention of subsection (1) commits an offenceand is liable on summary conviction to a fine of $5,000.

(a)

(b)

(c)

(2)

(a)

(b)

(3)

(a)

(b)

76 (1)

(2)

77 (1)

(2)

50


NoticesThis section has effect in relation to any notice, direction or other document

required or authorised by or under this Act to be given to or served on any person otherthan the Authority.

Any such document may be given to or served on the person in question by—

delivering it to him;

leaving it at his principal place of business; or

sending it to him at that address by facsimile or other similar means whichproduces a document containing the text of the communication.

Any such document may in the case of a company be given to or served by—

delivering it to the company’s principal place of business or registered officein Bermuda; or

sending it by registered post addressed to the company’s principal place ofbusiness.

Service of notice on AuthorityNo notice required by this Act to be given to or served on the Authority shall be

regarded as given or served until it is received.

Subject to subsection (1), such notice may be given by facsimile or other similarmeans which produces a document containing the text of the communication.

Civil debt and civil penaltiesWhen a person is convicted of an offence under this Act, such person shall not

also be liable to a civil penalty imposed by or under this Act in relation to the same matters.

A civil penalty levied pursuant to this Act may be recovered by the Authorityas a civil debt.

Regulations and OrdersThe Minister may, after consulting with the Authority, make regulations

prescribing anything which may be prescribed under this Act and generally for theimplementation of this Act.

Without prejudice to the generality of subsection (1), regulations may inparticular provide with respect to any of the following matters—

any matter relating to the conduct of an offering via a digital asset issuance;

the requirement for any additional service or services to be deemed a digitalasset issuance;

the preparation, adoption and implementation of processes or proceduresrelating to a digital asset issuance.

78 (1)

(2)

(a)

(b)

(c)

(3)

(a)

(b)

79 (1)

(2)

80 (1)

(2)

81 (1)

(2)

(a)

(b)

(c)

51


Regulations made under subsection (1) may—

prescribe penalties not exceeding $10,000 for any breach of theregulations;

make such transitional, incidental or supplementary provision as appearsto the Minister to be necessary or expedient.

Regulations and Orders made under this Act shall be subject to the negativeresolution procedure.

PART 11

FINAL PROVISIONS

Transitional and savingsIn this section—

“initial coin offering” or “ICO” has the meaning given in—

section 2(1) of the Companies Act 1981 as relates to a company; or

section 2 of the Limited Liability Company Act 2016 as relates to a limitedliability company;

“ICO regime” means the provisions of the Companies Act 1981 and the LimitedLiability Company Act 2016, and regulations made under those Acts, whichprovide for a company or limited liability company to undertake an Initial CoinOffering, and which are amended, repealed or revoked by this Act;

“pre-commencement ICO application” means an application made before or duringthe transitional period under the Companies Act 1981 or the Limited LiabilityCompany Act 2016 by a company or limited liability company for registrationby the Registrar of Companies under that Act (as applicable) for authority toissue an Initial Coin Offering;

“transitional period” means the period starting with the date on which this Actreceives Assent and ending immediately before the date on which this Act isbrought into operation.

The ICO regime shall continue to apply to Initial Coin Offerings made pursuantto a pre-commencement ICO application without the amendments, repeals and revocationseffected by this Act.

Accordingly, this Act shall not apply to pre-commencement ICO applications.

Consequential amendmentsSubject to the savings in section 82, the consequential amendments in Schedule 2

have effect.

(3)

(a)

(b)

(4)

82 (1)

(a)

(b)

(2)

(3)

83

52


Repeals and revocationsSubject to the savings in section 82, the enactments listed in Schedule 3, which

are superseded by this Act, are repealed or revoked as indicated.

CommencementThis Act shall come into operation on such date as the Minister of Finance appoints

by notice published in the Gazette.

84

85

53


SCHEDULE 1

(Section 13)

MINIMUM CRITERIA FOR AUTHORISATION

Controllers and officers to be fit and proper personsA person who is, or is to be, a controller or officer of the authorised undertaking

shall be a fit and proper person to hold the particular position which he holds or is to hold.

In determining whether a person is a fit and proper person to hold anyparticular position, regard shall be had to his probity, to his competence and soundness ofjudgment for fulfilling the responsibilities of that position, to the diligence with which he isfulfilling or likely to fulfil those responsibilities, and to whether the interests of the acquirersor potential acquirers of the authorised undertaking are, or are likely to be, in any waythreatened by his holding that position.

Without prejudice to the generality of the foregoing provisions, regard may behad to the previous conduct and activities in business or digital asset issuances or financialmatters of the person in question and, in particular, to any evidence that he has—

committed an offence involving fraud or other dishonesty, or violence;

contravened any provision made by or under any enactment appearing tothe Authority to be designed for protecting members of the public againstfinancial loss due to dishonesty, incompetence or malpractice by personsconcerned in the provision of banking, insurance, investment or otherfinancial services, or the management of companies, or against financialloss due to the conduct of discharged or undischarged bankrupts;

engaged in any business practices appearing to the Authority to bedeceitful or oppressive or otherwise improper (whether lawful or not) orwhich otherwise reflect discredit on his method of conducting business;

engaged in or has been associated with any other business practices orotherwise conducted himself in such a way as to cast doubt on hiscompetence and soundness of judgement.

Digital asset issuance to be conducted in prudent mannerThe authorised undertaking shall conduct or, in the case of an undertaking

which is not yet conducting a digital asset issuance, will conduct its digital asset issuancein a prudent manner.

In determining whether an authorised undertaking is conducting its digitalasset issuance in a prudent manner, the Authority shall take into account any failure bythe undertaking to comply with the provisions of—

this Act;

any applicable law;

codes of conduct issued by the Authority pursuant to section 8.

1 (1)

(2)

(3)

(a)

(b)

(c)

(d)

2 (1)

(2)

(a)

(b)

(c)

54


An authorised undertaking shall not be regarded as conducting its digital assetissuance in a prudent manner unless it maintains or, as the case may be, will maintainadequate accounting and other records of its digital asset issuance and adequate systemsof control of its offering via a digital asset issuance and records, and has developed policiesand procedures pertaining to its obligations under this Act or any other Act.

Those records and systems shall not be regarded as adequate unless they aresuch as to enable the digital asset issuance of the authorised undertaking to be prudentlymanaged and the authorised undertaking to comply with the duties imposed on it by orunder this Act or other provisions of law.

Subparagraphs (2) to (5) are without prejudice to the generality ofsubparagraph (1).

Integrity and skillThe digital asset issuance of the authorised undertaking is or, in the case of an

undertaking which is not yet conducting a digital asset issuance, will be carried on withintegrity and the professional skills appropriate to the nature and scale of its activities.

Corporate governanceThe authorised undertaking shall implement corporate governance policies and

processes as the Authority considers appropriate given the nature, size, complexity and riskprofile of the digital asset issuance to be conducted by the undertaking.

Without prejudice to subparagraph (1), the authorised undertaking shall be—

effectively directed by at least two persons; and

under the oversight of such number of non-executive directors as theAuthority considers appropriate given the nature, size, complexity and riskprofile of the digital asset issuance to be conducted by the undertaking.

Consolidated supervisionThe position of the authorised undertaking within the structure of any group to

which it may belong shall be such that it will not obstruct the conduct of effectiveconsolidated supervision.

(3)

(4)

(5)

3

4 (1)

(2)

(a)

(b)

5

55


SCHEDULE 2

(Section 83)

CONSEQUENTIAL AMENDMENTS

Amends the Bermuda Monetary Authority Act 1969In the Fourth Schedule to the Bermuda Monetary Authority Act 1969 (fees), insert

the following new heading at the end of Part B and Part C—

“DIGITAL ASSET ISSUANCE ACT 2020

(1) Application fee pursuant to section 12 .............. $2,266

(2) Authorisation fee pursuant to section 15—

Size of the offering in adigital asset issuance

Direct offering in a digitalasset issuance

Offering in a digital assetissuance through an accredited

digital asset businessnot exceeding $20 million $5,000 $2,500Exceeds $20 million butnot $50 million $10,000 $5,000

Exceeds $50 million butnot $150 million $15,000 $7,500

Exceeds $150 million butnot 500 million $25,000 $12,500

Exceeds $500 million $50,000 $25,000

(3) Exemption or modification of rules or requirements pursuant to section 10....... $5,000

(4) Variation of a condition under section 30 ........ $5,000”

Amends Companies Act 1981In the Ninth Schedule to the Companies Act 1981 (restricted business activities),

in paragraph (aa) delete “Initial Coin Offerings” and substitute “Digital Asset Issuances (asdefined in the Digital Asset Issuance Act 2020)”.

Amends the Digital Asset Business Act 2018In section 7(1) of the Digital Asset Business Act 2018 (prudential and other

returns), after paragraph (f) insert—

accreditation of digital asset business;”.“(g)

Amends Banks and Deposit Companies Act 1999In the Third Schedule to the Banks and Deposit Companies Act 1999 (specified

persons Banking activities criteria)―

in paragraph 1―

1

2

3

4

(a)

56


in subparagraphs (a) and (b), delete the words “an initial coin offering”and substitute the words “a digital asset issuance”;

by inserting after subparagraph (a) the following―

has submitted an application, in such form as may be prescribed,to be registered as a partnership under the Limited PartnershipAct 1882, Exempted Partnerships Act 1992 or the OverseasPartnership Act 1995; and has indicated on such form theintention to conduct digital asset business or undertake a digitalasset issuance in Bermuda;”;

“(ba)

repeal and replace subparagraph (d) as follows―

has obtained the authorisation from the Authority to undertake adigital asset issuance under the Digital Asset Issuance Act2020;”

“(d)

in paragraph 2, delete the definition of “initial coin offering” and insert thefollowing in the appropriate alphabetical order―

“ “digital asset issuance” has the meaning given in section 2 of the DigitalAsset Issuance Act 2020;”.

(i)

(ii)

(iii)

(b)

57


SCHEDULE 3

(Section 84)

REPEALS AND REVOCATIONS

RepealsIn the Companies Act 1981, the following provisions are repealed—

in section 2—

in subsection (1), the definitions of “appointed digital asset exchange”,“civil penalty” and “Initial Coin Offering or ICO”; and

subsection (9);

section 4A(3A);

Part IIIA (sections 34A to 34P) (Initial Coin Offering);

Part XIVC (section 272F) (FinTech Advisory Committee).

In the Limited Liability Company Act 2016, the following provisions arerepealed—

in section 2, the definitions of “appointed digital asset exchange”, “civilpenalty” and “Initial Coin Offering or ICO”;

section 67(3A);

Part 10A (sections 85A to 85O) (Initial Coin Offering);

section 255(2A);

section 257(6) and (7).

Section 15 of the Companies and Limited Liability Company (Initial CoinOffering) Amendment Act 2018.

RevocationsThe following Regulations are revoked—

Companies (Initial Coin Offering) Regulations 2018;

Limited Liability Company (Initial Coin Offering) Regulations 2018;

in the Government Fees Regulations 1976—

in Head 16, paragraphs (39A) and (39B);

in Head 40, paragraphs (15A) and (15B).

[Assent Date: 19 March 2020]

[Operative Date: 06 May 2020]

1 (1)

(a)

(i)

(ii)

(b)

(c)

(d)

(2)

(a)

(b)

(c)

(d)

(e)

(3)

2

(a)

(b)

(c)

(i)

(ii)

58

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