The principal statute governing the formation and operation of Bermuda companies is The Companies Act 1981 (“the Act”) as from time to time amended. There are 4 types of Company that can be incorporated in Bermuda, each having different constitutional characteristics: A Company Limited by Shares -This is the most common type of company incorporated under Bermuda law, A Company Incorporated with Unlimited Liability, A Company Limited by Guarantee, Limited Duration Companies.
The most popular form of the company in Bermuda used by foreign investors is Bermuda exempted company. An exempted company is one which is exempted from provisions of Bermuda law applying to local companies which, among other things, restricts the portion of share capital which may be owned by non-Bermudians. Thus, exempted companies are predominantly owned by non-Bermudians and, although incorporated in Bermuda, may carry on business from within Bermuda normally only in connection with transactions and activities external to Bermuda. Under Section 129A of the Companies Act 1981 applications may be made to the Minister of Finance for permission to carry out business in Bermuda.
The proposed name of a company can be reserved with the Registrar of Companies, up to three months prior to incorporation. No company may be registered with a name which, in the opinion of the Registrar, is undesirable or which: is identical to or resembles the name by which another company is already registered or incorporated in Bermuda; contains the words “Chamber of Commerce” or suggests the patronage of Her majesty or any member of the Royal Family; contains the word “municipal” or “chartered”; contains the word “co-operative”; contains the words “building society”; contains the word “bank” (section 57 of The Banks and Deposit Companies Act 1999); does not contain the word “Limited” in the case of a company limited by shares; or ends with the word “Limited” where the company is formed with unlimited liability. If at any time after a company has been registered, it appears to the Registrar that a company’s name is undesirable the Registrar may notify and direct the company to change its name.
MEMORANDUM OF ASSOCIATION
A company is incorporated in Bermuda by application made to the Registrar of Companies. Memorandum of Association must be lodged with the Registrar. Memorandum specifies the activities in which the company may engage, share capital of the company, liability of shareholders,the rules governing the internal management of the company.
The formation procedure of a Bermuda Company is complex. Initially an advertisement has to be placed in a local newspaper announcing the intention to incorporate. The name of the proposed company, together with the objects clauses, has to be disclosed in the advertisement, confirming also whether the company requires being 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 proposed registered office address;
- The names and addresses and nationalities of the proposed directors;
- The names and addresses and nationalities of the proposed shareholders and their interest in the proposed 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.
A Bermuda exempted company must have at least one member (or shareholder), any nationality, individual or legal entity. Upon the issue of shares the names and addresses of the members must be entered on the share register. The share certificates may be denominated in any currency.
The minimum share capital of an exempted company is US$12,000; of an insurance company is US$120,000; or of a mutual fund is US$1 (or an equivalent amount in another currency). The authorized share capital may subsequently be increased by resolution of the company in general meeting. Shares of no par value and bearer shares are not permitted.
A company must have at least one individual director and need not be a resident of Bermuda. Corporate Directors are not permitted.
A list of directors must be maintained at the registered office. The names of directors and officers are not made public; however, the Bahamas Registry may require the information in some circumstances, such as if an official certificate is required. Changes in directors or officers need not be registered or reported.
REGISTERED OFFICE AND LOCAL REQUIREMENTS
A Bermuda exempted company must have a registered office in Bermuda. A Bermuda exempted company must appoint a President and a Vice President or a Chairman or Deputy Chairman. The foregoing positions must be filled by an individual who is a director of the company. The Directors must appoint a Secretary, which may be a company, provided that if the Secretary is a director it must be an individual. A Bermuda exempted company must have either: a) minimum of two directors ordinarily resident in Bermuda; or
b) secretary and director ordinarily resident in Bermuda; or
c) secretary ordinarily resident in Bermuda and a resident representative; or
d) resident representative where the company is listed on a Stock Exchange appointed by the Minister of Finance.
Where a secretary is also either a director or resident representative in paragraphs a) and c) above the provisions of the Companies Act 1981 will not be satisfied. A Bermuda exempted company must keep at its registered office its corporate records and the register of officers and directors.
Directors meetings may be held in or outside Bermuda. Notice of a meeting of the directors must be given to all directors. Shareholder meetings (AGM) must be held every calendar year and need not be held in Bermuda.
Usually it is 14 working days, but we need extra 7 working days for legalization of the documents and delivery by courier.
RECURRING MAINTENANCE FEES AS FROM 2ND YEAR
- Provision of registered office and registered address
- Provision of resident representative
- Provision of corporate administration and/or secretarial services
- Payment of annual government fee payable in January of each year