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New Bermuda Companies Act Passed

by Robin Pilgrim,, London

29 December 2006

The Bermuda Companies Act 2006 is expected to come into force shortly. It incorporates a wide range of improvements to legislation which essentially dates from 1981, in response to a request from the Minister of Finance that the law should be updated 'to meet the demands of business in the twenty-first century'.

Key aspects of the new legislation are as follows:

  • Companies may now have unrestricted objects clauses;
  • There is now no longer a minimum level of share capital;
  • Secondary company names in languages other than English are permitted;
  • Companies may now own their own shares;
  • Notices and documents may now be sent by e-mail or displayed on a web-site;
  • The requirement for deeds to be sealed has been abolished;
  • Company directors are authorized to obtain more extensive liability insurance.

Currently, Bermudan companies are usually formed by registration under the Companies Act 1981 as amended, taking between two and five days depending on whether the Minister's approval is required. An application for registration is made to the Bermuda Monetary Authority, giving details of the proposed beneficial ownership and the proposed name is reserved with the Registrar of Companies; some sensitive words are not permitted, including 'bank'. When business requirements are unusual a company can be formed by Act of Parliament, which takes about two months.

Local companies must be 60% owned by a Bermudian and they can trade within the domestic economy. Two directors are required who cannot be corporate but need not be Bermudian; a secretary is required, does not have to be local, and can be corporate. At least one shareholder is required and nil-value shares are not permitted. The minimum capital was previously $12,000 and there is an annual fee related to the authorised capital, which does not have to be issued.

Accounts must be kept at a local registered office along with the share register and minutes of shareholders' and directors' meetings although the accounts are not open to inspection. The share register, register of directors and officers, certificate of incorporation and memorandum and articles of association are all publicly accessible. Shelf companies are not obtainable but old companies are available on occasion.

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