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Investment Opportunities in Bermuda
Bermuda offers all of the standard offshore benefits for businesses, in an atmosphere that encourages excellence and integrity. There are a wide variety of Bermuda financial servicesavailable, backed by the country’s impeccable reputation as a major financial center.
Those who wish to establish a business in or from Bermuda are carefully screened by the Bermuda Monetary Authority. As a tax-neutral territory, Bermuda does not tax profits, income, dividends, or capital gains. Due to Bermuda’s relative isolation in the north Atlantic, it is not a suitable location for warehousing or distribution. It is well suited for financial services, though, and has become one of the top locations in the world for insurance and reinsurance. Other Bermuda financial services include securities and hedge-fund trading, trust management, and e-commerce financial services driven by the Internet, and maritime operations.
Organizations can use a variety of company and partnership structures in Bermuda. The most common is the exempted company and the most prevalent business is investment holding. Exempted companies also engage in insurance, investment, commercial trading, and shipping.
Trust Management
Bermuda's financial services include the opportunity to establish and manage a private trust. Trust companies need to obtain a license from the Finance Ministry and must meet certain requirements. However, a private trust company is exempt from the licensing requirement.
In order to establish a private trust, the settlor and all persons owning at least five percent of the shares of the private trust company must provide personal declarations and certified copies of their passports. Once incorporated, there is no obligation to file written reports or financial statements with any regulatory body.
Foreign inheritance laws are specifically excluded, and there is provision for non-recognition of foreign judgments. In general, only one trustee must reside in Bermuda, and the trust may include cash, land, securities, interests in property, or other trusts.
Bermuda Stock Exchange
The Bermuda Stock Exchange (BSX) is a fully electronic market with daily trading and centralized settlement. Trading memberships on the BSX are available to international brokers as long as BSX requirements are met.
BSX has pages on Bloomberg and Reuters on which investment fund prices are shown daily. BSX also maintains the Offshore Funds Network through its own web server on which each fund can have its own page.
There are at least two separate hedge fund trading operations in Bermuda, supported by the Stock Exchange, giving investors 24-hour access to non-U.S. domiciled hedge funds on a worldwide basis.
Bermuda Segregated Accounts Companies
Traditionally prevalent within the insurance industry, segregated accounts companies are also referred to as protected cell companies. They may also be found in e-commerce and umbrella mutual funds.
The Segregated Accounts Companies Act of 2000 outlines that an asset related to a segregated account is managed in a different fund, which has the account holder as the beneficiary. In addition, these assets are not included in the general funds of a company, protecting the assets from any liquidations or bankruptcy sales.
In this respect, the concept is similar to a trust, with the segregated account company acting as the trust manager.
Registered insurers in Bermuda may establish segregated accounts companies without the need for authorization from the Bermuda government. All other businesses must first be approved by the Minister of Finance.
In an effort to modernize the Companies Act, a Companies Amendment became effective on December 29th 2006, stating:
• Unrestricted objects clauses may now be utilized by companies
• There does not exist a minimum level of share capital
• Non-English secondary company names are now allowed
• A company can now hold its own shares
• Official documents and notices can be published on websites and delivered via email
• There is no longer a requirement for deeds to be sealed
• Company directors may purchase more extensive liability insurance
The enactment of these laws may be beneficial to many of the companies conducting business in Bermuda, but were specifically enacted to improve efficiency for Chinese companies.