The Companies Act 1981
Bermuda companies may be formed by individuals, corporate entities or trusts who wish to operate a trade or business in or from Bermuda. Companies are incorporated either by registration or by Private Act. Most Bermuda companies are incorporated by registration, which takes approximately two business days. Private Act companies are established when a specific exemption from the Companies Act or another piece of general legislation is sought. Under Bermuda law, a company may have all the powers of a natural person. Company law differentiates between a local company (which carries on business domestically in Bermuda) and an exempted company (which conducts business internationally from Bermuda). The Companies Act, 1981 specifically permits the formation of the following types of companies:
- Companies limited by shares
- Companies without limited liability
- Companies of Limited Duration
- Companies incorporated by Private Act (when an exemption from some provision of statute is specifically required)
- Mutual funds
- Companies limited by guarantee (formed for a charitable or other socially useful purpose)
- Mutual insurance companies
A foreign entity or non-resident of Bermuda may establish a Bermuda exempted company to conduct business from Bermuda. Such companies are called “Exempted Companies” because they are exempt from the ownership restrictions that apply to local companies. Bermuda has been the jurisdiction of choice for a large number of Fortune 500 companies that establish a Bermuda exempted company for a broad spectrum of business activities ranging from holding assets to insurance, reinsurance, trading, manufacturing, inter-group financing, take-overs, collective investment schemes and, more recently, shipping, aircraft leasing and holding of intellectual property rights.
Attached is a more detailed Memorandum on the Incorporation of Ordinary Bermuda Exempted Companies, which applies to holding, trading, consulting and investment companies, all of which do not require registration under any other legislation.
A more detailed Memorandum is available upon request on the following other types of Bermuda companies, which are regulated by separate legislation:
- Incorporation of a Bermuda Insurance Company
- Incorporation of a Bermuda Mutual Fund and/or Fund Manager or Fund Administrator
- Incorporation of a Bermuda Investment Provider (Investment Broker, Investment Manager)
- Incorporation of a Licensed Trust Company
A Bermuda exempted company is generally formed by registration, which takes approximately two business days depending on the nature of the business and the licensing requirements involved). Each member of the company, holding 5% or more of it, is required to be approved by the Bermuda Monetary Authority.
Bermuda exempted companies, upon application, are granted an exemption from all forms of taxation (whether computed on income, capital appreciation or dividends) until the year 2035 or as further extended from time to time by amendment to the Exempted Undertakings Tax Protection Act. In addition, a Bermuda exempted company is not subject to exchange control restrictions or stamp duty on instruments executed by or on its behalf except with respect to stamp duty on “Bermuda Property.”
A company, trust or individual who is a Bermudian within the meaning of the Companies Act 1981 may incorporate a local Bermuda company to conduct business within Bermuda. Local companies must be controlled by Bermudians and ‘control’ is defined in the Companies Act 1981 as Bermudians holding sixty-percent of the shares, and Bermudians forming sixty percent of the Board of Directors. For further information on the formation of local companies download our Memorandum on the Incorporation of Local Companies. For legal assistance with forming and incorporating companies in Bermuda, please contact us.