Bermuda - General Outline for Litigators and Legal System

Bermuda, in the North Atlantic Ocean lies approximately 508 miles due east of Cape Hatteras, North Carolina and is not to be confused with the Bahamas which are some 1,000 miles to the south, or the Caribbean in general. It is the second most isolated inhabited island in the world and in fact comprises a number of islands in a chain 22 miles long and 2 and a half miles wide at its widest part.

Originally volcanic, Bermuda is a delightful coral island with palm trees, pink sand, blue sea and colourful flowers much sought after by tourists and enjoyed by a population of about 68,500 in its 21 square miles.

Despite its relative isolation this self-governing British Colony has one of the highest standards of living anywhere and is attractive to international business with a long standing reputation as an international financial centre.

Banks and Business

Local currency is the Bermuda Dollar (BD$1.00), which is divided into 100 cents and is presently at par with the US Dollar. The Bermuda Monetary Authority,which has had responsibility for administering exchange control under the Exchange Control Act 1972 and related regulations, is an autonomous body responsible for various currency related activities.

Provided the consent of the Bermuda Monetary Authority is obtained, offshore operations can maintain and operate bank accounts in the currency and country of their choice. Foreign currency can be converted to Bermuda Dollars to meet local operating expenses.

There are four banks in Bermuda: Capital G Bank Limited, The Bank of Bermuda Limited, The Bank of N.T. Butterfield & Son Limited and The Bermuda Commercial Bank Limited. The banks offer a full range of commercial, trust and fiduciary services, and correspond with leading financial institutions around the world. Offshore banking is not permitted.

There are two main types of companies operating in Bermuda: Companies incorporated and controlled by Bermudians to conduct business in Bermuda, and companies incorporated by non-Bermudians to conduct business outside Bermuda from a place of business in Bermuda. Companies falling in this latter category are known as “exempted companies” and are so called primarily because they are exempted from those provisions of Bermuda law which restrict the portion of share capital which may be held by non-Bermudians. They may be incorporated by registration or by private act. The Companies Act 1981 (as Amended) amends and consolidates Bermuda company law (of which further mention will be made later in this article).

An exempted company is restricted by the 1981 Act from taking mortgages of land in Bermuda to secure any principal sum exceeding BD$50,000 without consent, from acquiring securities created or issued by, or any interest in, any local company or business, other than certain types of Bermuda Government Securities, and from trading in Bermuda with local persons except in furtherance of its business carried on outside Bermuda. An exempted company may, however, transact business (other than retail business) with and deal in securities created or issued by another exempted company, an exempted partnership or a corporation resident in Bermuda but incorporated abroad. It may also effect and complete contracts and exercise all of its powers in Bermuda to the extent necessary for the carrying on of its business outside Bermuda. No exempted company may acquire or hold land in Bermuda, other than land required for its business held by way of lease or tenancy agreement for not more than 21 years, without the express authorization of the Bermuda Legislature.

The minimum share capital of an exempted company is US$12,000 and must be subscribed and allotted although there is no legal requirement that it be fully paid. If the company writes insurance as its principal business, at least US$120,000 must be authorized and issued and must be fully paid in the case of (1) general business, (2) US$250,000 for long-term business, and (3) US$370,000 where both types of business is being written. A fourth class requires a minimum capital and surplus of US$100,000,000 where insurers are carrying on significant amounts of direct excess liability and/or property catastrophe risks. Our Insurance and Regulatory practice advises on all matters relating to offshore insurance, including the establishment, regulatory compliance and business operations of Bermuda-based insurance and reinsurance companies, insurance managers and brokers. We also assist non-Bermudian insurers who wish to carry on business in Bermuda or deal with Bermuda-based entities. Matters on which we advise our insurance clients include:

• formation of captives and ‘rent-a-captives’
• utilisation of segregated account structures to isolate risk
• risk swaps
• fixed and variable annuity policies
• policy and contract reviews
• insurance linked methods of alternate risk transfer

Quorum International Limited and Quorum Limited provide administrative services for incorporations and corporate administration.

Quorum group provides a full range of corporate management and secretarial services to local and exempted companies and partners;hips. Quorum’s service is dependable, efficient and focused on the needs and expectations of our clients. Quorum is headed by qualified professinals who ae committed to providing excellent service through a responsive and professional approach to corporate management. We also have a team of experienced and dedicated Corporate Administrators who work alongside the Corporate Department to provide a seamless service to the firm’s clients. Quorum’s services include:

• book-keeping services
• company administration
• nominee and shareholder services
• provision of registered offices for companies and partnerships
• provision of resident representatives for companiesd and partnerships
• statutory compliance for companies and partnerships