The Companies Act 1981 provides a strong legislative framework for governing the incorporation and operation of Bermuda companies.
In Bermuda "local companies" must be at least 60% beneficially owned by Bermudians and 60% of the total voting rights in the company must be exercisable by Bermudians. Local companies are permitted to carry on business in Bermuda.
A company predominantly owned by non-Bermudians can operate under ‘exempted company’ status. This is the most popular form of company used in Bermuda by foreign investors.
Exempted companies, although incorporated in Bermuda, are restricted from carrying on business in Bermuda – in the absence of a specific licence, they can only carry on business in connection with transactions and activities external to Bermuda. However, exempted companies are exempt from restrictive provisions of law applying to local companies such as limitation of the portion of share capital owned by non-Bermudians.
A company formed under the Act may be:
- A company limited by guarantee
- A company limited by shares
- An unlimited liability company
A company limited by guarantee can only be formed if it is:
- A mutual company
- A company exempted under Bermuda trust legislation
- For the promotion of a listed social or useful purpose with no dividends paid to the members
A company may protect itself from any future tax legislation by applying to the Minister of Finance of Bermuda, under the Exempted Undertakings Tax Protection Act 1966, for an assurance that, in the event of there being enacted in Bermuda any legislation imposing tax computed on profits or income or on any capital asset, gain or appreciation, the imposition of any such tax shall not be applicable to such undertaking or to any of its operations. The assurance may extend as far as 31 March 2035.
The formation of a Bermuda company takes place in four stages:
- Reservation of a name with the Registrar of Companies
- Application form to register a company
- Filing of memorandum of association with the Registrar of Companies
- Application for the consent of the Bermuda Monetary Authority (BMA) for the beneficial ownership and issue of share capital
Please contact us for comprehensive information on this process.