Geography, Population, Languages
Bermuda is a group of about 150 small coral islands in the North West Atlantic. Its area is 53.3 sq. km. Bermuda’s climate is subtropical, humidity is moderate, and the landscape is low hills separated by fertile depressions. Bermuda has no rivers or fresh water lakes. The population of Bermuda is about 66,000, made up primarily of people of European and African origin. The official language is English.
History, Political Structure and Law
The Islands were discovered by the Spanish seafarer Bermudes in 1503.
Bermuda today remains the oldest British colony. An appointed Governor represents the power of the Crown. However, Bermuda has been self-governing with respect to its own affairs for over 300 years, while defence and foreign affairs are the responsibility of Britain. At the same time because of its strategic location in the North Atlantic (being much further north than is commonly believed and considerably closer to New York and Boston than the Caribbean) Bermuda benefits from being under the US defence umbrella. A locally elected House of Assembly governs Bermuda. The legal system is based on English Common law, modified and supplemented by Acts passed under the Bermuda Constitutional Order, 1968.
Economy and Infrastructure
Bermuda enjoys one of the highest per capita incomes in the world, though its only natural resource is limestone. Bermuda successfully exploits its location by providing luxury tourist facilities and financial services. The tourist industry attracts more than 80 per cent of its business from North America. The industrial sector is small, and agriculture is severely limited by the lack of land. 80 per cent of all food is imported.
Bermuda boasts excellent communications and travel connections. The Islands have attracted substantial insurance business and, after London and New York, Bermuda has become the third largest insurance centre. Bermuda is of special interest to Hong Kong businessmen wishing to establish an offshore company: the Hong Kong Stock Exchange has approved Bermuda Exempted Companies for listing purposes.
The official currency is the Bermudan Dollar, which is on a par with the US Dollar. There are exchange controls, but Exempt Companies, as non-residents, are exempted from Exchange Control provisions. However, an Exempt Company cannot use local currency other than for the purposes of paying local expenses.
The principal corporate legislation is The Companies Act adopted in 1981. A Company incorporated in Bermuda has all the powers of a natural person. The language of legislation and corporate documents is English.
The type of Company used for international trade and investment is an Exempt Company. All other Companies incorporated in Bermuda must be at least 60% owned by Bermudan residents.
The registered office must be maintained in Bermuda. Off-the-shelf companies are not available.
The incorporation procedure for Bermudan Companies is complicated. Initially an advertisement must be placed in a local newspaper announcing the intention to incorporate a Company. The name of the proposed company, together with the objects clause, must be disclosed in the advertisement, also whether the company is exempt or domestic. An application for consent to incorporate is made to the Bermuda Monetary Authority.
This application should contain the following information:
- The name of the company.
- The address of its registered office.
- The names, addresses, and nationalities of the proposed directors.
- The names, addresses, and nationalities of the proposed shareholders and their interest in the company.
- The Memorandum of Association detailing the share capital and classes of shares.
- Proposed bank account details; bank character references relating to the proposed beneficial owners.
- The appropriate registry fees.
The following restrictions apply to trading and business activities:
- A Bermuda Exempt Company may not trade within Bermuda.
- A Company may not own real estate within Bermuda.
- A Bermudan Exempt Company is not permitted to engage in banking, insurance, assurance, reinsurance, fund management, collective investment schemes, giving investment advice or any other activity which may suggest an association with the banking and insurance industries. All the above activities are prohibited unless licensed.
Company names are subject to the following restrictions:
- A name can be in any language that uses the Latin alphabet. If a non-English language name is used, the Registrar may request a certified English translation to satisfy him that the name is not restricted.
- Names identical to or similar enough to create confusion with existing companies or names that imply royal or government patronage are not permitted.
- Names that in the opinion of the Registrar are considered undesirable, offensive or obscene are prohibited.
- Names including words such as Bank, Building Society, Savings, Loans, Trust, Insurance, Assurance, Reinsurance, Fund Management, Investment Fund, Fiduciary, Broker or their foreign language equivalents require consent or a licence.
- A name must end with the suffix Limited or Ltd. to denote limited liability.
A company must have a minimum of two directors (or one secretary and one director, or one secretary and one ‘permanent representative’), who must be natural persons. There must always be sufficient Bermuda resident Directors to form a quorum in Bermuda. Directors who are not resident in Bermuda may be appointed. The directors must appoint a president and vice-president as officers, who need not necessarily be directors. A Bermudan company must appoint a resident company secretary, who must be a natural person. A minimum of one shareholder is required, and bearer shares are not permitted. The beneficial ownership of the company must be revealed to the Government at the time of incorporation but such details are given in confidence. The share register of the Company is open to inspection by the general public but anonymity can be retained through the use of nominees. NB – bank references must be provided for the proposed beneficial owners of all Bermudan companies. The references must be provided by a Bank where the individual has had a personal banking relationship for a minimum of three years.
The standard authorised share capital of a Bermudan exempt company is US$ 12,000; divided into 12,000 common voting shares of US$ 1, which is the maximum amount to qualify for the minimum capital duty payable on incorporation and annually thereafter. The minimum issued capital is US$ 1. The following classes of shares are permitted: registered shares, preference shares, redeemable shares and shares with or without voting rights. Bearer shares are not permitted.
Annual Taxation and Fees
Bermuda currently has no corporate or income tax. Exempt Bermudan companies receive a certificate of tax exemption and a Government assurance under the Exempt Undertakings Tax Protection Act 1966, confirming that in the event of Bermuda introducing a taxation system, exempt companies will be further exempted up to 2016. Bermuda is not a party to any double tax agreements. A Company with an authorised capital of up to US$ 12,000 pays a licence fee of US$ 1,780 per annum. Thereafter there is a sliding scale up to a maximum of US$ 27,825 on an authorised capital of more than US$ 500 million.
Although there is no statutory requirement to file accounts, there should be sufficient accounting records to enable the directors and shareholders to ascertain the financial position of the company. The accounting records should be kept at the registered office address. If they are kept outside Bermuda, copies of all accounting records should be available for inspection by the directors each quarter. All Bermudan companies should appoint an auditor, except where the directors and shareholders have unanimously agreed not to appoint one.