Key definitions and initial provisions

The Act begins by defining key terms and concepts, such as “affiliated company”, “exempted company”, “local company”, and “mutual company”, among others. It establishes the roles and responsibilities of the Registrar, outlines the application of the Act, and sets restrictions on certain business activities. The incorporation process is detailed, including the requirements for a company’s memorandum and bye-laws, the naming conventions for companies, and the procedures for registration. Companies are also provided with the ability to alter their structure, such as re-registering as unlimited liability companies or vice versa.

Regulations on public offerings and prospectuses

Public offerings and prospectuses are addressed extensively, with the Act mandating that companies offering shares to the public must publish a prospectus containing specific information. It also outlines the liabilities of officers and experts in relation to misstatements in prospectuses and the conditions under which shares can be allotted.

Share capital, debentures, and dividends

The regulations surrounding share capital, debentures and dividends are equally detailed, including provisions for issuing redeemable preference shares, purchasing a company’s own shares and maintaining a share premium account. The Act ensures that dividends are only declared when a company is solvent and able to meet its liabilities.

Management and administration of companies

The management and administration of companies are governed by strict rules, requiring companies to maintain a registered office, keep a register of members and convene general meetings. Directors and officers are subject to duties of care, honesty and good faith, with provisions for their indemnification and liability. The Act also mandates the appointment of auditors, their roles and the standards they must adhere to, ensuring transparency and accountability in financial reporting.

Beneficial ownership and corporate restructuring

Beneficial ownership is another critical area, with companies required to identify and maintain a register of beneficial owners. The Act also provides for arrangements, reconstructions, amalgamations, and mergers, offering a framework for corporate restructuring. The protection of minority shareholders and the investigation of company affairs are addressed to ensure fairness and compliance with the law.

Regulations for local and exempted companies

Local companies are subject to specific regulations, including restrictions on business activities and ownership to preserve Bermudian control over economic resources. Exempted companies, on the other hand, are generally restricted from conducting business within Bermuda, except under certain conditions. These companies must comply with requirements such as appointing a resident representative and submitting annual declarations.

Continuance and discontinuation of companies

The Act also facilitates the continuance of foreign corporations in Bermuda and the discontinuation of Bermudian companies to other jurisdictions. Overseas companies require permits to operate in Bermuda, with the Minister considering the economic impact and conduct of such companies before granting approval.

Mutual companies and mutual funds

Mutual companies, defined as those operating on a mutual principle without share capital, are required to maintain a reserve fund and adhere to specific membership criteria. The Act also regulates mutual funds, allowing them to redeem or purchase their own shares under certain conditions.

Winding-up and liquidation processes

The winding-up process is comprehensively covered, detailing the circumstances under which a company may be wound up, the roles of liquidators, and the rights and obligations of creditors and members. The Act provides for the management of company assets during liquidation, the disposal of books and records and the handling of unclaimed assets.

Receivers, managers, and general provisions

Receivers and managers are also regulated, with provisions for their appointment, duties, and liabilities. The Act includes general provisions on the maintenance of registers, the inspection of books, and penalties for non-compliance. It grants the Minister powers to inspect and investigate company affairs and provides avenues for appeals to the Supreme Court.

Further reading

• Bermuda Companies Act