- Bermuda has established itself as a world-class commercial center, with a business-friendly climate, a stable and rising economy, and an unrivaled pool of talent and intellectual capital in important industries such as insurance, financial services, and, more recently, electronic commerce. Bermuda’s government collaborates extensively with the island’s foreign business community to draft legislation and regulations that improve the business climate. Similarly, Bermuda’s telecommunications infrastructure and high-tech backbone give maximum bandwidth to the island with full redundancy, allowing Bermuda to support fast-developing worldwide electronic commerce and communication services.
- Bermuda’s Business Development Agency (BDA) actively promotes direct investment. Their objective is to create an atmosphere that encourages economic growth and employment generation. They accomplish this by assisting current Bermuda businesses and supporting new businesses in building themselves. No wonder they have been able to attract such a staggering amount of foreign investment. Before you rush to register company in Bermuda, Tetra Consultants is here to share the important things you need to know before you advance to Bermuda offshore company registration. Our team has outlined the article in three segments:
- Categories of companies in Bermuda
- Advantages of Bermuda company registration
- Requirements for Bermuda company registration
Categories of companies in Bermuda: Bermuda Exempted Companies and Local Companies
Companies can be separated into two categories: Local companies and exempted companies.
- Local companies: Bermuda differs between “local” and “exempt” companies (in all commercial vehicles). Local vehicles may operate in Bermuda if one of the following conditions is met:
- They are “dominated” by Bermudians (usually interpreted to indicate that Bermudians exercise 60% of voting rights, though the concept of “control” can extend beyond voting rights), or
- Despite not being managed by Bermudians, they have been permitted by the Minister of Finance to conduct business in Bermuda.
- Most frequently, native Islanders are the sole or joint owners of local companies. The only form of business that is allowed to conduct its operations inside the territory of Bermuda is this type of local business, such as conducting business with other companies based in Bermuda.
- Exempted company: Companies falling into this category are known as “exempted companies” and are so-called because they are exempted from the provisions of Bermuda law which stipulates having at least 60% of the equity be beneficially owned by Bermudians.
Each of the above types of companies can be categorized into different forms of commercial vehicles which can be as followed:
- Company Limited by Shares – the most common type of company that limits the liability of each shareholder to the amount that remains unpaid on the shares held.
- Company Limited by Guarantee – often used for charitable businesses. A memorandum limits the amount that shareholders might need to pay toward a company’s assets in the case of closing the activity
- Unlimited Liability Company – there is no limit on the liability a shareholder may face. This type of company has many of the standard traits, such as a Board of directors, etc
- Limited Duration Company – in contrast to focusing on capital, a limited duration company literally has an expiration date when the company will dissolve. This could be after a certain activity has been completed, or it could be set for an unspecific date, like the death of a shareholder
Advantages of Bermuda company registration
- Tax exemption: A Bermuda company or its shareholders are not subject to tax on any income, profits, or dividends received in Bermuda. Furthermore, there aren’t any estate, death, or capital gains taxes. Those who ordinarily reside in Bermuda are the only investors who must pay taxes. Within the company, profits may accumulate. The corporation is exempt from paying dividends under Bermuda tax legislation.
- Concept of reassurance for tax exemption: Under the Exempted Undertakings Tax Protection Act of 1966, Bermuda even allows exempted entities to get legal assurance from the Minister of Finance. This guarantee provides that if Bermudian legislation are to be changed to impose a tax on earnings, income, capital asset gains, or appreciation, exempted companies would not be subject to those taxes. The Ministry of Finance often grants such reassurance based on their discretion.
- No stamp duty: Regarding any document signed by an exempted firm, there is no stamp duty, which is a government fee on legal documents. These documents typically demonstrate the transfer of property or other assets from one party to another. An instrument pertaining to an interest in an exempt firm is likewise exempt from stamp duty. However, when buying or selling Bermuda-based property, the government may levy a stamp duty.
- Minimalist shareholder requirement: Under the Companies Act of 1981, businesses need only one director and one shareholder for incorporation. LLCs need only one member and manager. In each case, this may be the same person.
- Minimal formalities post-incorporation: The statutes only require the following items for exempted company incorporation in Bermuda:
- The memorandum of association of the company
- The certificate of incorporation
- The company’s registered address
- A list of the company’s directors
- The registrar of charges of the company
- Any prospectus filed with the registrar
- Further, The regulations only require Bermuda-exempted companies to make one annual filing. Regulators call this the Statutory Declaration. This filing lists the authorized share capital.
Requirements for Bermuda company registration
- Share Capital: The minimum share capital required to regsiter company in Bermuda is US$1, shares of no par value are not permitted and bearer shares are not permitted.
- Annual Government Licence Fees: An exempted company pays an annual government fee, the first payment of which is made immediately upon incorporation and subsequent payments of which are made in January of each year.
- Company Directors & Resident Representatives: Bermuda companies require only one director, which need not be a Bermuda resident. The Companies Act 1981 requires either one Bermuda Resident Director, Secretary, or Resident Representative, who can be individuals or companies.
- Company Secretary: A Bermuda company must appoint a resident company secretary which, we can supply.
- Shareholders: 100% foreign ownership is permitted with a Bermuda-exempt company, and only one shareholder is required, corporate shareholders are allowed.
- Registered Office: Companies incorporated in Bermuda must maintain a registered office within Bermuda, we can provide this additional service. The share register, register of directors, and minute book are kept at the registered office of your company in Bermuda. The registers are open for public inspection at the registered office.
Looking to register company in Bermuda?
- Bermuda is an attractive jurisdiction to set up business in, but there are a few things you must consider before you proceed to register company in Bermuda. Let Tetra Consultants take you through the whole process of Bermuda company registration, from company name registration to tax filing to additionally assisting with applying for various offshore financial licenses based on the business operation of the entity to be conducted in Bermuda.
- Contact us to find out more about our comprehensive suite of Bermudan company incorporation services and our team of experts will revert within the next 24 hours.