E-Friendly Amendments Bring Most Significant Change to Bermuda Company Law in Half a Century
HAMILTON, Bermuda–LAWFUEL –The Bermuda International Business Association (BIBA) fully supported the amendments as proposed by the Minister of Finance during the House of Assembly Session on 13th December 2006 to “The Companies Amendment Act 2006”. The Act aims to assist companies, the Registrar and service providers in improving efficiency and convenience through the use of technology. The Act took effect on 29 December 2006.
BIBA Chief Executive Officer, Cheryl Packwood, commented, “The continued improvements that the Ministry of Finance is making to Bermuda’s business regulatory environment, such as ‘The Companies Amendment Act 2006’, continue to strengthen and improve Bermuda’s viability in the International business community. This ‘E-Friendly’ Act carries amendments that now authorize organizations to use electronic communications as a means of conducting business, significantly improving efficiencies and the cost of doing business in Bermuda, which is critical if we are to remain competitive as an international business jurisdiction.”
During its scrutiny of the proposed amendments, BIBA’s Legislative Change Committee, chaired by Anthony Whaley, partner of Conyers Dill and Pearman, and comprised of numerous members from the local international business community, took note of legal developments in Britain, continental Europe, the United States and Canada, and crafted what become know as the ‘A List’ of enhancements, which incorporated the best features of company law from around the world.
During the debate of the Amendments at a recent House of Assembly session on 13 December 2006, Minister of Finance, Paula Cox stated, “The purpose of the amendments to the Companies Act is to ensure that Bermuda based businesses operate within a legal and regulatory framework that promotes growth and investment. These changes will reduce unnecessary regulation and will be removing unnecessary provisions for compliance, thereby yielding direct savings for companies. By working closely with industry representatives, the Ministry of Finance is continually reviewing how best to facilitate the needs of business. As well the dynamic consultative process does ensure that Bermuda maintains its reputation as a well recognised international financial centre of excellence.”
“The Minister’s initiative and the passage of the Companies Amendment Act 2006 have definitely been well received by the Industry,” stated Anthony Whaley, BIBA’s Legislative Change Committee Chairman. “In our view, this is probably the most significant change to Bermuda company law in half a century. The Act significantly improves efficiency and will reduce the cost of doing business in Bermuda; the Bermuda Company will look radically different moving forward.”
“It is important to note,” he continued, “the process of reviewing Bermuda’s company laws is a continuing process and we intend to keep the needs of international business under constant review. We enjoy working with the Minister of Finance and her Team and look forward to our future collaboration to effect further enhancements.”
Highlights of the Bill
The Act will now permit the incorporation of companies with unrestricted objects and all the powers of a natural person.
Private trust companies may now incorporate as a company limited by guarantee. This structure will better facilitate the organization and operation of private trust companies.
The requirement for a minimum share capital has been repealed. The only requirements for minimum capital shall be those imposed by specific regulatory requirements.
To facilitate the carrying on of business by companies in jurisdictions with different language characters, the Act will now permit a company to register a secondary name with non-Roman script names.
Companies may now adopt procedures for executing documents without a seal but by hand.
Companies may agree not to exercise powers- This provision clarifies issues raised as to whether a company can agree not to exercise specific powers of members.
Companies may now have unrestricted objects and there is no requirement to detail the objects in the MOA. As well, companies will have all the powers as a natural person to carry out the objects.
The Act will now enable companies to hold their own shares in treasury.
Private offerings- clarification of the grounds for being exempted from filing a prospectus where the offering is of a private nature with clear exclusion of employee stock options.
The provide increased transparency and speedier delivery of information to shareholders, the Act will now permit notices an documents to be delivered via email and by way of publication on a website.
The Act will authorize written resolutions to be effective when the same majority as would be necessary for a physical vote has signed the written resolution.
Companies will now be authorized to give a wide variety of constitutional covenants.
About the Bermuda International Business Association
The Bermuda International Business Association (BIBA) is a business organization of Bermuda resident service providers who provide quality banking, legal, accounting, financial, trust, management and e-commerce services and products to the international client. BIBA works with the private sector and Government to develop and promote the island as one of the world’s foremost centers for international business.