Bermuda company formation

Besides this, Bermuda lures businessmen and investors around the world due to its friendly business climate. The country has different avenues for setting up a company, with favorable tax laws and a sustainable economy. In this article, we will take a closer look at incorporation in Bermuda by understanding the process, step, requirements, and the benefits which the move may offer.

Choice of Company Type

The very first step in Bermudian company formation is the selection of the type of company. Under Bermuda law, there exist a variety of forms of business organisation, ranging from the so-called exempted company-hereinafter referred to-designed to conduct business outside Bermuda but enjoying tax advantages, to local companies tailored for domestic operations.

Application Once

The type of company has been selected, it has to be applied with the Bermuda Registrar of Companies. In the application, the name of the company has to be mentioned along with other information like articles of association, particulars of directors, shareholders, and undertaking of observation to the local laws and regulations.

Set up a corporate bank account

With a company in Bermuda, opening a bank account is a necessity when doing business. This opens up avenues for financial transactions that include paying taxes and fees, among others, and gives an added level of legitimacy and credibility to your business.

Licensing and Permits

Depending on the type of business that your company proposes to carry on, your company may be obliged to obtain specific licenses or permits. For instance, if your business involves financial services, insurance, or tourism, this would require the relevant licenses from the respective Bermuda regulatory authorities.

Advantages of setting up a company in Bermuda

• Tax incentives: Bermuda does not charge personal income tax, corporate tax, income tax, value added tax (VAT) or sales tax, making the islands an attractive destination for international business.
• Political and economic stability: With a stable government and a high standard of living, Bermuda offers a robust business environment.
• Strategic Location: Located on the Atlantic Ocean, Bermuda is at the crossroads between North America and Europe, providing easy access to both markets.

Summary: Establishing a company in Bermuda can offer significant advantages for international investors and entrepreneurs. It is important to thoroughly research all legal and regulatory requirements and consult with local specialists to ensure that your business establishment in Bermuda is successful and efficient.

Table showing the main aspects of taxation in Bermuda

Types of companies exist in Bermuda islands

There are different kinds of companies in Bermuda, which are suitable for certain business purposes and also have different characteristics. Following are the main kinds of companies that can be incorporated in Bermuda:

1. Exempt Companies: Such companies are allowed to conduct businesses outside Bermuda. They are exempt from the major types of tax in Bermuda, like corporation tax and income tax, and other local taxes. The important thing to note is that, for international operations, normally Exempt Companies are used.
2. Local Companies: These companies may do business either within or outside Bermuda. However, the management and control of the company must be from Bermuda. Local companies are usually set up to provide goods and services on the island itself.
3. Limited Liability Companies (LLC): Such form provides flexibility in management and distribution of profit sharing as well as limited liability of founders, similar to LLCs in other jurisdictions.
4. Limited Liability Partnerships (LLPs): These entities have the best fit for professional partnerships, like law firms and firms of accountants, which grant limited liability to the partners in the companies and also some flexibility in the management of the firm.
5. Segregated Accounts Companies (SAC): SACs allow segregation and protection of assets within one single company, therefore ideal for the set-up of insurance and investment funds.
6. Partnerships: Includes general partnerships, where all partners have unlimited liability, and limited partnerships, where one or more partners have limited liability.

The choice of the appropriate company type depends on many factors, including business objects, management structure, tax considerations, and confidentiality requirements. It is worth mentioning that it is advisable to seek advice from both legal and financial advisors prior to incorporating a company in Bermuda, selecting such form of business which will best serve your needs.

How much is the authorized capital of a company in Bermuda?

The amount of a company’s authorized capital in Bermuda can take many forms depending on the nature of the company and the particular case of the business. In the case of an exempted company-as is most common for international business-Bermuda law does not prescribe any minimum amount of authorized capital. The extent of the authorized capital is determined by the founders in the stage of the company’s registration and should be fully corresponding to the needs of the business as well as plans concerning its further development.

There are, however, some requirements with regard to state fees payable, related to the amount of the authorized capital. For example, the state fee of registration and the annual fee might increase according to the amount of the authorized capital. Such fees will, therefore, be in accordance with declared capital and can probably be used as a guideline in finding the optimal amount of authorized capital at the time of incorporation.

It is important to note that the amount of share capital one decides on upon incorporation in Bermuda is a prudent one, since it may have implications on the cost of the company both at the initial stage and annually. For specific advice and determining the optimum amount of share capital for your business, it is useful to consult local corporate and tax professionals from Regulated United Europe.

Must an organization in Bermuda have a local director?

Yes, some kinds of companies incorporated in Bermuda have at least one local director appointed to the directors. This is particularly true for exempted companies, those registered to conduct their business principally outside the Islands but desiring a legal presence in Bermuda.

Having a local director allows for better knowledge of local laws and regulations, while liaison with local authorities and regulators is easily enhanced. It can assist in compliance with all corporate and tax requirements, something very important in maintaining a company’s reputation and legal status in Bermuda.

However, these requirements do vary, depending on the nature and type of company. For instance, in terms of composition, local companies operating directly in Bermuda may require additional requirements in terms of directors and incorporators.

Companies are advised to address for precise information and in order to be certain that all existing incorporation and business legislation in Bermuda is complied with the legal and international tax advisors at Regulated United Europe. This will ensure full compliance with local legislation and will avoid potential legal issues.

What are government fees for incorporating an organization in Bermuda?

The size of the Bermuda company formation fees depends on the company type, its capital, and the specific nature of the business. Since the structure and the fees are subject to amendment, it is always desirable to verify the recent information with official sources or consultants specialising in Bermuda corporate law.

As a rule, for the so-called exempted companies-meaning conducting the principal part of their business outside Bermuda and, therefore, exempt from certain local taxes-the amount of the state registration fee may depend upon the amount of the company’s authorized capital, ranging from several hundred up to several thousand Bermuda dollars. There will also be an annual government fee for maintaining the company in a state of registration, which can also change based on the amount of authorized capital and type of business alike.

Local companies-which refers to companies actually doing business within Bermuda-may experience different fees, as may other special types of entities, such as limited liability companies or segregated company accounts.

It is relevant to underline that the information about governmental fees might be amended or updated by the Bermudian authorities; therefore, it is relevant to get updated information from the Chamber of Bermuda Registration or through licensed legal and financial intermediaries in the jurisdiction of interest prior to the start of the company formation process.

How much does it cost on a yearly basis to maintain a company in Bermuda Islands?

The annual maintenance cost in Bermuda depends upon so many variables and requirements, such as the type of company proposed, size of share capital, and whether it intends to avail itself of local management services. The components that will determine the annual cost mainly include:

The annual cost of maintaining a company in Bermuda may start from a few thousand Bermuda dollars and grow depending on the factors above. It is best if you deal with professional advisors at Regulated United Europe who regularly practice Bermuda business and corporate law for actual cost estimates.

What are the primary advantages of registering a company in Bermuda?

Establishment of a company in Bermuda provides a number of advantages that make this jurisdiction attractive for international business. In this light, here are some of the key advantages:

• Tax incentives: Probably the single biggest advantage is the absence of so many types of taxes, including but not limited to: corporation tax, income tax, capital gains tax, dividend and interest tax; this makes Bermuda attractive as a place in which to set up companies looking to minimize their tax burden.
• Political and economic stability: Bermuda is known for its stable political system and a high level of development in terms of the economy. In this case, one will definitely find a solid and predictable enterprise environment.
• High level of privacy: The law of Bermuda supports a high level of privacy for owners and directors of any company, something highly appreciated by many investors and entrepreneurs alike.
• Reputation: In spite of all the tax privileges, Bermuda enjoys good international reputation and is not perceived as a “tax haven” in that negative meaning. The important ramification of this, therefore, is that companies incorporated in Bermuda can avoid negative stigmas and suspicions attached to companies incorporated in other low tax jurisdictions.
• Geographically Strategic Location: Having a unique geography, lying between North America and Europe, places Bermuda as a strategic location that ensures companies want to do business across both continents.
• Best Legal and Financial Services: To serve these needs for setting up operations in the country or region, Bermuda offers very good quality legal, financial, and corporate services provided by a pool of experienced professionals. This makes it relatively easy and efficient to set up and run companies.
• Advanced Regulation: In parallel, the regulatory environment of Bermuda offers certainty of compliance with international standards concerning financial reporting, anti-money laundering, and the financing of terrorism, while offering flexibility and ease of access for international business.

These advantages make Bermuda an attractive jurisdiction to set up a company, especially for those seeking a secure and stable environment with a low tax burden.

What are the different ways to incorporate a company in Bermuda?

Setting up a company in Bermuda comes with a great deal of advantages, hence making Bermuda very attractive for international business. The advantages include, among others:

Must I have a registered office in Bermuda?

Yes, to incorporate a company in Bermuda, you are required to have a registered office in Bermuda. This address is used for the official address of the company for legal and official purposes, including receipt of correspondence, notices from the government, and as a registration address with government offices.

This provides transparency through a registered office and may also make the company comply with local corporate requirements. It is part of the mechanism to ensure that regulators, tax authorities, and other parties can communicate with the company.

The companies typically retain the services of a registered agent that provides a registered office, and perhaps ancillary services related to compliance with the laws and regulations concerning corporations, the preparation and filing of documents if so required, and service to act as liaison between the client company and the government’s local authorities.

It must be considered that a registered office in Bermuda simply means a company does not have to physically exist with an operating office within the islands, but it is only needed for a company that intends on retaining its status of being Bermuda-registered.

Can I open a branch office of a foreign company in Bermuda?

Yes, foreign companies can set up a branch office in Bermuda. The opening of a branch office of a foreign company in Bermuda provides for conducting business in the Islands and is an alternative to forming a separate legal entity, such as an exempt company. It includes the registration of the branch office of the foreign company with the Bermuda Registrar of Companies and follows certain requirements and regulations.

Following is normally the information and documents that are needed to be provided for setting up a branch office of a foreign company in Bermuda:

• Name and proof of legal registration of the foreign company in its country of origin, address of the registered office of the branch in Bermuda, and management details of the foreign company, including information about the directors and senior managers.
• A statement consenting to act as representative of a Bermuda branch office, executed by an appointed local representative or registered agent thereof.
• Certificate of incorporation of a foreign company and articles of association certified in accordance with the requirements of Bermuda.

It means that a branch of a foreign company in Bermuda will be subjected to the local legislation on taxation and reporting. It should also be noted that the foreign company fully bears the responsibility for the activity of its branch in Bermuda.

A foreign company could still expand into Bermuda opening a branch office and is not required to incorporate a separate legal entity locally. In any case, local attorneys and accountants advice will help make sure all the requirements will be fulfilled, and the business will be structured in an optimum way.

Can a foreigner open companies in Bermuda?

Yes, a foreigner is able to establish a company in Bermuda. The reasons Bermuda attracts international investors and businessmen are a stable economy, a high level of privacy, and appealing tax policies. A foreigner can set up different types of companies in Bermuda, among them an exempt company-one which does not pay local taxes and is intended for conducting business activity outside of Bermuda.

In incorporating a company in Bermuda, the incorporation process for a foreigner should comprise:

1. Naming the company and checking the uniqueness of the name being used.
2. Preparation and articles of incorporation, i.e., articles of association known as Memorandum of Association, and statutes, known as Articles of Association, to the Registry Office of Bermuda.
3. Appointment of directors and Company Secretary. Depending on the type of company, a local resident director or representative may be appointed.
4. Amount due as government fees and registration fees.
5. The name of the company’s registered office in Bermuda.

While incorporation is easy, compliance requirements include anti-money laundering regulations and financial reporting requirements. It is highly recommended that foreigners establishing a company in Bermuda consult with local legal and financial professionals to determine and meet all local and international requirements.

Can I get a residence permit when setting up a company in Bermuda?

Obtaining residency in Bermuda while establishing a company is a process subject to several conditions and various different requirements. Bermuda has its own immigration rules and policies, different from other countries and territories, and it should be noted that establishing a company in Bermuda alone does not automatically provide residency.

Nevertheless, there are certain ways to increase the chances of obtaining residency for investors and businessmen, including the following:

Work Permit: The foreigners who wish to work in their company in Bermuda should obtain a work permit. The owners of the company may apply for a work permit, which is the first step toward eventual residency in the islands.

Investment programmes: Some of these may be available in Bermuda to foreign investors, even including purchasing real estate, which may facilitate the process of getting a residence permit. The terms and requirements for such programmes are subject to change, so it is important to familiarise yourself with the most up-to-date information.

Policy to attract high calibre individuals and investors: Special conditions may be provided by the Bermuda authorities for the facilitation of foreign entrepreneurs and investors who can make a valuable contribution to the islands’ economy.

Note that immigration policy is subject to change, and the residency application process can be complex, perhaps even requiring careful planning and advice from immigration attorneys or immigration specialists in Bermuda. It is essential that accurate and current information from official sources or qualified counselors is obtained in order to assure a successful and lawful residence in Bermuda.

What do the articles of association contain for a company incorporated in Bermuda?

The Memorandum of Association in Bermuda is the document dealing with stating the structural and other primary provisions concerning the company. This is a very important document required to be filed with the Registrar of Companies during the incorporation and registration of the company. Some of the key sections/information contained in the articles of association for companies in Bermuda are listed below:

These are supported by the Statutes, or more correctly known as the Articles of Association, which state the rules regarding how a company should be administered, to what extent the directors can exercise powers, holding shareholders’ meetings, and other internal procedures. These together create the legal framework on which a company can operate in Bermuda, subject, of course, to adherence to local statute law.

How long does it take on average to incorporate an Bermudian company?

Depending on the type of company, completeness, and accuracy of documentation provided, it may take various time to incorporate, considering the workload that the Bermuda Registrar of Companies is currently dealing with. On average, the whole process takes from a few days up to a few weeks.

Given below are the major steps involved in setting up a company that influence the overall duration of the process:

1. Preparation and filing of documents: The very first step is the preparation of the documents to be submitted to the Registration Chamber. It includes articles of association, i.e., the Memorandum of Association; statutes, i.e., Articles of Association; details of directors and shareholders; and proof of payment of the relevant government fees.
2. Verification and Approval: Once the documents are filed, the Registration Chamber has to verify their conformity with local law and regulations. This may take some days or even weeks. If there are discrepancies or deficiencies in the documentation, such may cause delays in the process while making the corrections and resubmitting the documents.
3. Certificate of Incorporation: Once the inspection is complete and the requirements have been satisfactorily met, the Registry Office will issue a certificate of incorporation, which provides official evidence that it has been registered in Bermuda.

To avoid delays, it is highly advisable that all documents be prepared in advance and, where appropriate, local legal and financial advisors who are familiar with the company registration procedure in Bermuda be engaged accordingly.

What can a company do in Bermuda?

Companies incorporated in Bermuda can conduct any type of activity that is not prohibited by the local legislation and for which they obtain the relevant licenses and permits, if any. Of course, not all activities are subject to licensing but may instead be under special regulation. Some of the activities and industries that companies can have in Bermuda are listed below:

While there are numerous business opportunities in the region, it is crucial to consider applicable laws and regulations that apply in Bermuda, especially those that require special licenses from their specific activities. Any investor has to consult native lawyers and accountants, such as Regulated United Europe, for advice on compliance with domestic legislation regarding all aspects of the business.

Does a firm necessarily have to employ people in Bermuda?

There is no Bermudian law requirement for companies to employ staff in Bermuda. Depending on the type and scale of a company’s operations, and specific business need, a company may be in a position whereby it does not have to employ any local or foreign staff. Examples could be when companies are incorporated in Bermuda for asset management, investment, or holding structures and do not require permanent staff in the Islands.

However, if the nature of the business in Bermuda requires the active operation of employees—for example, in the tourism, retail, or services industries—then the company would hire workers. Under these circumstances, the local employment laws and regulations would affect the company, including seeking work permits for foreign employees hired.

Hiring employees in Bermuda will also require the company to adhere to obligations in relation to local labour laws and standards with respect to the processing of social security and pension contributions, as well as requirements concerning work environment and working conditions.

Appointing a local director or representative may also be an obligation for some types of activities, and where applicable, depending on the company structure, in order to be fully compliant with the corporate requirements of Bermuda.

To avoid the risk of any misunderstanding about responsibilities and liabilities in terms of hiring employees, the advice of local lawyers and accountants specializing in employment law and corporate governance should be sought on site.

How do you name a Bermuda Company?

After the Bermuda law has prescribed some rules and regulations regarding naming any company in Bermuda, one must try to follow it. Hereby, some essential aspects regarding choosing a company name are given below:

After naming, it is advisable that a thorough availability check should be performed through the Chamber of Registration, in order to ensure the selected name fits all the criteria and is not taken up by any other company. If approved, the company name gets reserved for a certain period of time until the completion of its registration process.

It would be prudent for you to investigate, and seek the advice of local lawyers practicing corporate law in respect of your name of choice to ensure it meets the full requirements and regulations within Bermuda.

Business Registry in Bermuda

The Bermuda Business Registry is regulated by the Bermuda Registrar of Companies. This authority is under mandate to register companies, partnerships, and other entities doing business in Bermuda. The Registrar of Companies is also entrusted with updating information about the registered companies and providing the same to the public.

The main functions of the Bermuda Business Registry include:

• Companies and organisations registration: this is about the incorporation of new companies, including but not limited to exempted companies, local companies, limited companies, and whatever other form of business organization.
• Maintenance of the Register: to keep, at all times, an updated registry with information about the registered companies, their directors, shareholders, and articles of association.
• Provision of information to public authorities and the public: Making available access to the registration information to public authorities and to the public, under the terms of the current legislation.
• Compliance monitoring: Third-party verification that company operations are in conformity with local corporate laws and regulations.

Access to the business register:

Persons wishing to obtain such information can approach the Chamber of Registration, as far as companies registered in Bermuda are concerned. Information basic in nature and summarily provided on the Chamber’s website, or any other information that may be voluminous in nature, can be made available upon formal application, by paying the applicable fees.

Note that although the Business Register gives a lot of information about activities and structure in much detail, some data is not available due to privacy and confidentiality rules.

It is advisable to seek specific information or the conduction of a business registry search through the services of local legal advisors specialized in Corporate Law, or by you directly with the contact of the Registry Office in Bermuda.

How to register an investment fund in Bermuda?

Registration of an investment fund in Bermuda will entail a number of significant steps and follow a certain set of rules and regulations. Different forms or structures of investment funds exist in Bermuda, including open-end and closed-end funds, limited liability funds, segregated company accounts, and trusts. Major steps to register include:

1. Determining the structure of the fund: The first thing to do is selecting an investment fund structure, based on investment objectives and target audiences, considering related legal requirements. Different investment structures affect the requirements that would be necessary for a vehicle, since often various requirements regarding its registration, management, and regulation apply.
2. These documents will be prepared and given to the Bermuda Registrar of Companies for registration in their legal nature. These will include the Memorandum of Association and Articles of Association, among other documents that may be required.
3. Applying for licence: The BMA requires that investment funds in Bermuda apply for a license. This consists of an application submission accompanied by supporting documentation showing that the fund satisfies the requirements imposed by the BMA in respect to, amongst other things, governance, auditing and reporting.
4. Appointing investor relations and other service providers: Appoint a fund administrator, custodian – custodian of assets, auditor, and an investment manager, if required. All service providers shall be adhering to the regulatory requirements as stipulated by Bermuda.
5. Compliance with regulatory requirements: The investment funds shall adhere to all the regulatory requirements in Bermuda, including AML and KYC stipulations. This includes preparation and maintenance of appropriate policies and procedures.
6. Registration of fund products: On obtaining a license and completing the formalities, the fund may register its investment products and begin to raise its investment capital.

The establishment of an investment fund in Bermuda is very complex and requires very careful planning with an eye toward meeting a variety of legal requirements at both the domestic and international levels. Professional services from legal and financial advisors specializing in fund regulation and investments in Bermuda are strongly advised to ensure the successful registration and management of your investment fund.

How do I register a hedge fund in Bermuda?

Hedge fund registration generally involves multi-step processes and meeting some regulatory standards put forth by the BMA, besides adherence to local laws. Thus, hedge fund registration in Bermuda may be done in the following ways:

The hedge fund registration in Bermuda is quite a complicated process with the necessary compliance both according to the local and international legal and regulatory requirements. It is recommended to get consulting assistance from professional legal and financial advisors from Regulated United Europe that specialises in the registration and management of investment funds in Bermuda for offering full conformity with all requirements and optimum simplification of the procedure of registration.