Bermuda is a self-governing overseas territory of the United Kingdom and is world-class centre of commerce, featuring a business-friendly environment, modern infrastructure, a stable political and economic climate as well as an unmatched collection of talent and intellectual capital in key sectors. Bermuda’s main international business sectors include investment funds, (re)insurance, high-net-worth individual offices, asset finance and financial services, electronic commerce, telecommunications, shipping and aircraft. It is one of the top-three insurance centres, along with London and New York. The Bermuda Government and Regulator work closely with Bermuda’s international business community to develop laws and regulations that continuously enhance the business environment in Bermuda. Bermuda continues to attract investors to the jurisdiction and maintain its reputation as a leading blue chip offshore financial centre.
Bermuda remains at the forefront of transparency and global compliance standards through recent developments in this field. Bermuda is an early adopter of the OECD’s Common Reporting Standard (CRS) which means that financial institutions in Bermuda have been required to comply with the CRS regime from January 1, 2016.
In April 2016, Bermuda became the 33rd signatory of the Multilateral Competent Authority Agreement for Country-by-Country (CbC) reporting which is a component of the OECD’s Base Erosion and Profit Shifting (BEPS) Project. Bermuda was the first British Overseas Territory to adopt this regime.
Directors’ register and beneficial ownership
Under Bermuda company law, director and officer registers as well as shareholder registers are accessible to the public at a company’s registered office. However, due to recent amendments to Bermuda’s company legislation Bermuda companies are now required to also file current director information with the Registrar of Companies to be held in a central database that will be open to the public.
Bermuda can be credited with maintaining a beneficial ownership registry for about 70 years, long before the international community agreed that this should become a standard requirement in major business centres, and it continues to hone the regime. ‘Anonymous shell companies’ are not permitted in Bermuda.
Limited Liability Companies Law
The Limited Liability Company Act (LLC Act) was recently passed introducing the limited liability company (LLC) vehicle for the first time in Bermuda. The Bermuda LLC Act is modelled carefully on Delaware legislation and is more closely aligned with Delaware law than similar legislation in other offshore jurisdictions. The LLC is a hybrid entity which merges characteristics of both the limited partnership and a company limited by shares. It is an ideal business vehicle which has potential applications in a variety of areas including investment funds, asset holding, special purpose vehicles, joint ventures, general corporate transactions, venture capital and private equity structures and is a familiar vehicle for US clients to utilise.
Bermuda’s Limited Partnership legislation has undergone fairly recent updates. The amendments have benefitted Bermuda’s asset management sector and improved the jurisdiction’s product offering. The recent changes grant partnerships additional rights enjoyed by exempted companies. The changes include greater flexibility for internal governance, conversion to and from exempted limited companies, establishment of a register of charges for partnerships with separate legal personality, continuance and discontinuance procedures.
Rights of third parties
The Contracts (Rights of Third Parties) Act 2016 (Rights of Third Parties Act) was recently brought into force in Bermuda. The Rights of Third Parties Act was largely modelled on the UK equivalent and it allows parties to vary the common law doctrine of “privity of contract” such that third parties may enjoy the benefits and enforce the provisions of a contract if the third party is expressly identified in the contract and the contract expressly provides that the third party may enforce the contract’s terms. The Rights of Third Parties Act provides certain restrictions and specific contracts which are excluded from conferring rights on third parties such as, for example, promissory notes.
Personal Information Protection Act
Bermuda’s privacy and information rights are being developed with the introduction of the Personal Information Protection Act 2016 which is intended to protect personal information used by organisations (defined as any individual, entity or public authority that uses personal information) in Bermuda. Although Royal Assent was given in July 2016, the Personal Information Protection Act is not set to come into force until approximately the latter part of 2018. Organisations should nonetheless begin preparing given that it will introduce various requirements on organisations regarding the way they use personal information.
Anti-corruption, anti-bribery and anti-money laundering regimes
Bermuda’s anti-bribery and corruption laws are undergoing a process of modernisation with the introduction of the Bribery Act 2016, which was largely modelled on the United Kingdom (UK) bribery legislation, set to come into force in September 2017. The offences in the Criminal Code Act 1907 relating to official corruption, extortion by public officers, corrupt practices and other offences which will be superseded by the Bribery Act 2016 once it comes into force in Bermuda.
Bermuda has a robust anti-money laundering and anti-terrorist financing legislative framework which is constantly honed. The Bermuda Monetary Authority (BMA) has powers to monitor financial institutions for compliance with the Regulations under the Proceeds of Crime (Anti-Money Laundering and Anti-Terrorist Financing Supervision and Enforcement) Act 2008 which gives the BMA the capacity to impose substantial penalties for failure to comply with many provisions in the Regulations.