Bermuda: Types of Company
A comprehensive review of the Bermuda Companies Act 1981 (the “Companies Act”) was undertaken in 2005 by the Legislative Change Committee of the Bermuda International Business Association, in collaboration with the Ministry of Finance and resulted in the modernization of the Companies Act, which will specifically improve the efficiency of Chinese companies wanting to incorporate in Bermuda.
Key aspects of the Companies Amendment Act 2006, which became operative on 29th December of that year, 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.
Major changes were incorporated into the Companies Amendment (No 2) Act 2011 which came into effect on December 18, 2011.
Key aspects of the Amendment are as follows:
- Sole directors and corporate directors of Bermuda companies are now permitted;
- Annual general meetings may be waived;
- Paperless share transfers for listed companies.
- Solvency test amendments now allow Bermuda companies to declare dividends or distributions when recording a profit;
- A new process for mergers provides an alternative to the existing amalgamations procedure.
In January, 2009, the Bermuda Monetary Authority has asked for feedback on its proposals to implement an e-filing framework for corporate registrations. After a lengthy internal examination of the process currently in place the Authority underlined areas where attention was needed to make the process more efficient.
The Authority proposes to enhance the existing corporation registration regime through the adoption of an e-filing framework. This enhancement aims, through the leveraging of technology, to reduce the delays attributable to manual checking of paper documents. While the Authority’s current speed of registration is already competitive with other peer jurisdictions, the implementation of e-filing is expected to result in greater efficiency in the processing of incorporation and share transfer applications.
Under this proposal the Authority would retain responsibility for the Corporate Registration Process (CRP) in Bermuda. The Authority is of the view that the current CRP regime protects the reputation of Bermuda and with an e-filing enhancement, can permit even more timely registration of corporate entities.
Within its statement the Authority pointed out that a significant portion of the delay in approval of new corporate entities arises from the manual checking and rejection of applications by Authority staff. Incorrect and incomplete filings made to the Authority by applicants result in a delay in approval as the Authority awaits amended or further information in order to proceed with the applications. The processing of requests for amendments currently accounts for 20% of the work administered by the Authority.
Although the Authority has decided to revise its corporate registration process the Authority did stress that the current system was fulfilling client needs. A recent stakeholder survey conducted by the Authority that over 75% of respondents felt the Authority’s company incorporation and authorization processes were efficient and were meeting client needs. Although feedback on the CRP is mainly positive, Bermuda is eager to improve the system further stressing that improving its efficiency would make Bermuda a more desirable jurisdiction to incorporate in.
The Bermuda Monetary Authority is eager to receive feedback on the issue, and a consultation paper is available on its website.