Bermuda Corporate Restructuring and Redomiciliations
Companies with significant international operations have found Bermuda companies useful when restructuring their operations globally. A Bermuda company can hold certain assets or liabilities when it is desirable from the parent’s perspective to separate and insulate such assets or liabilities from the rest of the corporate group. This insulation structure has facilitated the granting of security interests to lenders, thereby protecting the assets from other lenders of the parent company. Separating out such assets or liabilities into a Bermuda company that operates in a sophisticated yet tax neutral environment, free from exchange controls, is attractive to banks and other lenders offering financing to corporations involved in restructuring their businesses or debt arrangements.
The added advantages offered by this structure are the ease in making share transfers of Bermuda companies in the event the Bermuda company or parent company is sold, and the fact that payments may be made from Bermuda to lenders without restrictions of any kind. In any corporate restructuring involving a Bermuda company, security interests may be registered in Bermuda on assets whether located in or outside of Bermuda and priority is granted from the date of registration of the security interest.
Continuation into Bermuda
Continuation into or from Bermuda is now permitted under the Companies Act, 1981. A foreign corporation may apply to the Minister of Finance for consent to be ‘continued’ into Bermuda as a Bermuda Exempted Company upon providing satisfactory proof that the foreign corporation has obtained all necessary authorizations required under the laws of the country in which it was incorporated, and the filing in Bermuda of its current financial statements.
Once the Minister’s consent is granted, the foreign corporation may, within twelve months of the grant or renewal of the consent, register the Memorandum or Continuance with the Registrar of Companies, who then issues a Certificate of Continuance, making the company subject to Bermuda law. The foreign corporation will become a company to which the Companies Act and any other laws of Bermuda shall apply as if it had been incorporated in Bermuda on the date of the registration.
The foreign corporation is required to adopt by-laws that conform to the requirements of the Companies Act and any other island law.
Continuation from Bermuda
The discontinuance of a Bermuda company from Bermuda and the continuation of it in another jurisdiction will require the consent of the island Minister of Finance and the vote of the majority of the members of each class of shares.
Upon continuance of a foreign corporation as a company under the Companies Act, the property of the foreign corporation continues to be the property of the Bermuda company, which continues to be liable for the obligations of the foreign corporation.
Download our Memorandum on Restructuring and Continuations for detailed information. If you would like legal assistance with Corporate Restructuring or Redomiciliation and wish to schedule an appointment, contact our office.