Bermuda is not only famous for the shorts. It has earned a reputation as a world-class centre of commerce. There are in excess of 8.000 “exempted” companies registered in Bermuda, taking advantages of Bermuda’s favourable corporate tax structure and its highly professional business environment. It is a highly respected jurisdiction with tax neutrality and no exchange controls for non-resident undertakings.
Historically Bermuda has been a very popular tax haven for the American glitterati and today it is a stable, almost local tax haven for many American companies seeking to reduce their tax liabilities. The legal system in Bermuda is similar to that used in America and so many Americans feel comfortable with this particular jurisdiction. So to say, Bermuda is protected under a United States defense umbrella. Furthermore it is attractive to Hong Kong citizens seeking a tax haven in which to establish an offshore company, as the Bermuda Exempted Companies have been approved by the Hong Kong stock exchange for listing purposes.
The principal statute governing the formation and operation of Bermuda companies is The Companies Act 1981 as from time to time amended. Companies are generally incorporated with limited liability and perpetual existence. However an exempted company may also take another form of company, as follows: limited duration company, company limited by guarantee, unlimited liability company or mutual company. The recent introduction of several amendments to The Companies Act 1981 has simplified the incorporation procedure and has enabled a Bermudan Exempt company to play a significant role within the modern financial centre.
The features of the exempt company are as follows:
o Taxation. Bermuda exempted companies are granted an exemption from all forms of taxation in Bermuda (such as income tax, capital gains tax, inheritance tax or estate duty) until the year 2016 or such subsequent date may be enacted by Parliament.
o Registered office. Every company must have a registered office in Bermuda, the address of which is registered with the Registrar.
o Directors. An exempt company must have two individuals resident in Bermuda, either as directors, or one as secretary and one as director, or one as secretary and one as ‘permanent representative’.
o Shareholders. A minimum of one shareholder is required and bearer shares are not permitted. The beneficial ownership of the company must be revealed to the Government at the time of incorporation.
o Business activity. An exempt company may carry on business from within Bermuda only in connection with transactions and activities external to Bermuda. The most common business activity of exempted companies is investment holding.
o Continuations. Bermuda law provides that companies may continue into, and discontinue out of, Bermuda.
Bermuda Registrar of Companies registers all Limited Liability Companies, which include Local Companies, Foreign Sales Corporations, Exempted Companies and Overseas Companies under the guidelines of The Companies Act 1981. It plays a significant role in the management and daily operation of international and domestic businesses, and therefore has a responsibility to all Bermudians for the industry’s success.
And it’s natural that the cost of maintaining the good reputation of Bermuda’s company registry continues to increase. Thus recently it was announced a 6.5% increase in company fees, applicable from 1 April 2008. On the one hand, it is sad news for both local and international companies registered in Bermuda. On the other hand, this measure will ensure that the government has the necessary financial resources to address improvements to regulatory framework and, in that way will protect Bermuda’s name as a premier jurisdiction in international financial services.
The success of Bermuda as a professional business center is due to its social and political stability, excellent communications, sound regulatory regime, progressive legislation, and high calibre of professionals.
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