Frequently Requested Services
A brief summary of the legal issues associated with some of the most frequently requested services our Firm provides
Article © 2007 Marshall Diel & Myers (http://www.law.bm/), All Rights Reserved.
Print Article(a) Incorporating an Exempted Company
Incorporating an exempted company with overseas shareholders usually takes three to five business days following submission of the requisite documentation. While this is longer than some other offshore jurisdictions, it is by no means a complex process and can usually be accomplished very efficiently with proper preparation. Approval of the Bermuda Monetary Authority (the “BMA”) is required for the issue (and subsequent transfer) of the shares of exempted companies.
The identity of all beneficial owners of more than 5% of the shares of the company must be disclosed to the BMA and a personal information form must be submitted. Bearer shares are not permitted in Bermuda. Viewed from a positive perspective, these requirements ensure that Bermuda continues to adhere to the high international standards in the areas of anti-money laundering, counter-terrorist financing and “know your client” protocols.
Exempted companies cannot carry on business in Bermuda, but they must have a registered office on the island. There are certain Bermuda residency requirements for directors, and corporate directors are not permitted. Charter Corporate Services Ltd. an affiliate of Marshall Diel & Myers provides a full range of corporate administrative services for a reasonable fee, including registered office and directors services
Although Bermuda law requires that an exempted company must appoint an auditor and the auditor must prepare a yearly audit report on the company financial statements, this requirement can be waived if all of the shareholders and directors agree. The company’s accounts are not public documents and do not have to filed with any government authority (except in the case of public companies).
(b) Establishing an Investment Fund
Establishing a Bermuda-based hedge fund, mutual fund and other investment vehicle follows a similar procedure to a Bermuda exempted company. New legislation, the Investment Funds Act of 2006 (in force as of March, 2007) has updated and modernized the funds regulatory scheme in Bermuda. Approval of the BMA is required for all new funds, which approval usually takes three to five business days following submission of all requisite documentation. Clients proposing to establish funds in Bermuda must be of “sound business integrity” and good financial standing, in addition to having top industry credentials.
There are three types of approved collective investment schemes, depending generally on the type of investor which is solicited (individual, institutional etc.). An authorized investment fund must prepare annual audited financial statements, appoint an investment manager and an administrator and entrust property to a licensed custodian.
Bermuda also offers the funds industry the ability to utilize a segregated accounts company as an efficient structural method of bringing products to market. The Segregated Accounts Companies Act 2000 (as amended), provides fund managers of multi-class funds with a corporate vehicle that can offer of range of sub-funds within one corporate entity while maintaining legal separation of assets and liabilities between the segregated accounts
Bermuda is home to a talented pool of fund administration professionals and Marshal Diel & Myers is fortunate to benefit from an associations with one of the Islands most experienced fund administrators, Nitin Aggarwal, principal of Offshore Fund Administration Services Ltd.
(c) Establishing an Insurance Company
Bermuda is a world class insurance and reinsurance jurisdiction, and many of the world’s leading insurance companies have a base of operations in Bermuda. Establishing an insurance or reinsurance company in Bermuda is generally a two-step process. The applicant first applies to establish an exempted company (see subsection (a) above, and once the new company has bee organized and capitalized, a separate application for registration is made under the Insurance Act 1978. The Insurance Act contemplates five separate classes of general business insurers, each of which is subject to its own ownership, capitalization and solvency requirements. For example, entry level Class 1 insurance companies require minimum issues share capital of $120,000 and must maintain a specified solvency margin of statutory assets over statutory liabilities. Special requirements under the Act apply to applicants for long-term insurance (e.g. life).
In addition, the Segregated Accounts Companies Act 2000 provides a platform for insurance and reinsurance companies to register as segregated accounts companies (“SAC’s). SAC’s are able to contract with a creditor or shareholder so that the assets injected by that person are held by the company in a segregated account and insulated from any claims of the general creditors of the company or the creditors of other segregated accounts.
(d) Airplane Leasing
Aviation finance and aircraft leasing is currently an area of worldwide growth and the Bermuda Department of Civil Aviation has announced plans to open an office in Moscow.
It is possible to set u a company in Bermuda to be utilized as a vehicle to facilitate funding and leasing arrangements in order to maximize tax, regulatory and capital restriction relief. The benefits in establishing a Bermuda entity is that it is a tax neutral jurisdiction that has internationally sound regulations that are not overly burdensome. The legal framework of Bermuda is based on common law principles with English common law being persuasive authority. In addition, Bermuda is a British Overseas Territory and has a stable political system which is very beneficial to those airlines that may be based in less regulated and stable jurisdictions.
A corporate vehicle may be beneficial in a particular structure or may be adapted to conform to the transactional needs and to comply with the regulations of the jurisdictions of the participant airlines, lessors or sub-lessors. The use of a Bermuda entity enables the aircraft to be registered on the Bermuda Register of Aircraft and the entity may act as owner and lessor or as lessee and sub-lessor of the aircraft. In addition the location of the company in a tax neutral and flexible jurisdiction may offer protection against the bankruptcy of other involved parties as well as allowing for multiple options in relation to the asset financing and tax implications of a transaction.
(e) Other types of corporate law work
The firm and its corporate attorneys also have a wealth of experience to tailor particular structures or framework of transactions that encompass the full cope of corporate legal requirements. These include schemes of arrangements, amalgamations, continuations, IPO’s, exempted partnerships, conversion and incorporation of segregated account companies, employee benefit schemes, permit companies, commercial property transactions, corporate trust work, nominee companies, purpose trusts and unit trusts.
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