Bermuda Exempt Company Formation

Company Type	Time to Incorporate	Cost
Exempt	3-5 days	£5820

By virtue of the Companies Act 1981 an Exempt Company enjoys substantial advantages, it is not subject to currency controls or capital controls. The most outstanding characteristic of an Exempt Company in Bermuda is that it is free from all forms of taxation. Recent amendments to the Companies Act have simplified the incorporation procedure.

Exempted companies are predominantly owned by non-Bermudians and, although incorporated in Bermuda, may carry on business from within Bermuda normally only in connection with transactions and activities external to Bermuda.

Bermuda has earned a reputation as a world class centre of commerce. There are in excess of 10,000 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.

Bermuda ia a popular tax haven for the American companies seeking to reduce their tax liabilities, the legal system in Bermuda is similar to that used in America. 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.

Features of the Exempt company

• 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
• 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
• 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
• 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

Exempt Company - Requirements of Bermuda Law

• Must have a registered office in Bermuda.
• Must appoint a President and a Vice President or a Chairman or Deputy Chairman.
• The Directors must appoint a Secretary, which may be a company
• If the Secretary is a director it must be an individual
• Corporate records and the register of officers and directors must keep at its registered office
• Auditors must be appointed by exempted companies unless all shareholders agree by resolution to waive such appointment
• A Bermuda exempted company must have at least one shareholder.
• Upon the issue of shares the names and addresses of the shareholders must be entered on the share register
• The share certificates may be denominated in any currency
• Each exempted company must, within one month of incorporation, and thereafter in January of each year, send to the Registrar of Companies a declaration of the principal business of the company and pay an annual registration fee

A Bermuda exempted company must have either:-

• A minimum of two directors ordinarily resident in Bermuda
• A secretary and director ordinarily resident in Bermuda
• A secretary ordinarily resident in Bermuda and a resident representative

Unless authorised by its incorporating Act, or any other Act, or its memorandum, an exempted company is not permitted to have power to:

• Acquire or hold land in Bermuda other than land required for its business held by way of lease or tenancy agreement for a term not exceeding 50 years
• Take a mortgage or mortgages of land in Bermuda to secure a principal sum exceeding BD$50,000 unless the consent of the Minister of Finance has been obtained; if any land is possessed by a company as mortgagee it must be sold within five years of possession being obtained or within such further period as the Minister of Finance may specify.
• Acquire any bonds or debentures secured on any land in Bermuda other than those issued by the Government of Bermuda or a public authority.
• Carry on business of any kind in Bermuda either alone or in partnership except business with persons outside Bermuda or business with exempted undertakings in Bermuda to be performed outside Bermuda or banking business with Bermuda banks.

An exempted company may effect and complete contracts and exercise all of its powers in Bermuda to the extent necessary for the carrying on of its business outside Bermuda.

An exempted company may buy, sell, or otherwise deal in shares, bonds debenture stock obligations mortgages or other securities issued or created by an exempted undertaking or local company or any partnership which is not an exempted undertaking.

An exempted company may act as manager, agent or adviser to other exempted undertakings operating in Bermuda and may re-insure the risks of any company incorporated in Bermuda that is permitted to engage in insurance and reinsurance business provided that any appropriate permissions have been received.

The Bermuda Exempt Company

Taxation

The Exempted Company will receive an undertaking from the Minister of Finance that the company will not be subject to any tax or duty on profits or income capital, gains or appreciations and that no inheritance tax or estate duty will be payable on shares debentures or other obligations of the company. Currently the exemption extends until 2016 but it may be further extended at a later stage.

Company Shareholders

A minimum of one shareholder is required and bearer shares are not permitted. Shareholders owning a 5% or more beneficial interest in the company are required to complete personal declarations. These declarations are disclosed in confidence to the Bermuda Monetary Authority only. The share register of the company is open to the inspection by the general public but anonymity can be retained through the use of nominees.

Directors

A minimum of two directors are required. A resident representative or local resident director is required. Meetings of directors and shareholders may be held outside of Bermuda, a register of directors and officers must be maintained and this register is open to inspection by the general public.

Annual Reporting

No annual return of shareholders is made although underlying beneficial interests are disclosed to the Government at time of incorporation. The requirement to have annual audited accounts may be dispensed with by unanimous decision of the directors and shareholders.

Share Capital

An issued capital of US$12,000 is required for exempted companies.

Local Requirements

As a matter of local company law the company must maintain a registered office address within Bermuda, must appoint a Bermuda resident company secretary and must also appoint a Bermuda resident director. We can provide all these services as part of our domiciliary service.

Licences to conduct business in Bermuda

An exempted company may apply to the Minister of Finance for a licence to carry on, in Bermuda, a business or activity prohibited. Retail trade with any person in Bermuda will not be licensed.