About Bermuda
Constitutional Status
Bermuda is the oldest (and now the largest) self-governing British overseas territory. The Government of Bermuda follows the English “Westminster” system, and the Governor of Bermuda represents the Crown. The Senate (Upper House) consists of eleven appointed members and the House of Assembly (Lower House) consists of thirty six elected members. The Cabinet determines government policy and supervises the administration of the main government departments (Ministries). The Bermuda Constitution Order 1968 reserves power to the United Kingdom in the areas of external affairs, defence, internal security and the police.
Legal System
Acts of the UK Parliament are not applicable in Bermuda unless they have been extended to Bermuda (e.g. the Copyright (Bermuda) Order 1962). The courts apply general principles of English common law and equity and the common law of Bermuda. Our primary legislation consists of statutes passed by the Bermuda legislature. The UK Government has also provided for Bermuda to be a signatory to, and bound by certain international conventions, e.g. the United Nations Convention Against Illicit Trafficking in Narcotic Drugs and Psychotropic Substances (the “Vienna Convention”). Secondary legislation consists of statutory instruments made by Ministers with the approval of the Legislature.
Foreign Investment
All foreign investment involving the issue, transfer or purchase of shares in local companies is subject to the prior permission of the Bermuda Monetary Authority (“BMA”). Foreign investment in Bermuda is controlled by the Bermuda Immigration and Protection Act 1956, by the companies and partnership legislation and by the exchange control regulations.
Taxation
There are no Bermuda income, corporation or profits taxes, withholding taxes, capital gains taxes, capital transfer taxes, estate duties or inheritance taxes payable by an exempted company or its shareholders, other than shareholders ordinarily resident in Bermuda. An exempted company is not subject to stamp duty on the issue, transfer or redemption of its shares.
Companies, Partnerships and Trusts
The primary types of commercial vehicle available in Bermuda are exempted companies, partnerships and trusts, including special purpose trusts (which may be established for non-charitable business purposes), limited duration companies and private trust companies. Bermuda has a well established reputation in the fields of insurance, mutual funds and international commerce.
E-Commerce
The Electronic Transactions Act 1999 (ETA) established a platform for electronic transactions on a technology-neutral basis. The ETA is based substantially on the UNCITRAL model law and, among other things, provides greater legal certainty for electronic signatures, signature verification and for the recognition of electronic records in all areas of commercial activity.
Regulation of Financial Services
There are regulatory statutes governing the principal financial services, including banking and deposit taking, insurance, investment business, trust business and collective investment schemes.
The BMA regulates financial services in Bermuda.
Bank Secrecy and Money Laundering
Bermuda does not have bank secrecy statutes. The banker-customer relationship is confidential, but it is subject to the common law relating to disclosure. The Bermuda banks and regulators have maintained “Know Your Customer” rules for many years, and for the last 30 years the BMA has insisted on disclosure of the ultimate beneficial ownership of all Bermuda companies to the BMA, which is subject to strict secrecy rules. In 1998, Bermuda adopted anti-money laundering legislation based on the equivalent UK legislation. The Proceeds of Crime Act 1997 was amended in 2000 to make fiscal offences involving fraud indictable, and therefore “relevant offences” for the purpose of the legislation. The amendments came into force on June 1, 2001.
Stock Exchange
The Bermuda Stock Exchange (BSX) is the world's first fully electronic offshore securities market for the listing of securities and international investment funds. Trading is conducted through the Bloomberg Financial Markets System. As of 2006, the total market capitalisation of the equities, debt issues and depository programmes listed on the BSX was in excess of US$330 billion.
The BSX was incorporated in 1992, pursuant to the Bermuda Stock Exchange Company Act 1992, a Private Act of the Bermuda Legislature which established a largely self-regulatory regime for the Exchange. The BSX is subject to supervision by the BMA.
The BSX has been designated by the United States SEC as an approved “off-shore securities market”. The BSX is a full member of the International Federation of Stock Exchanges (the “FIBV”) and an affiliate member of IOSCO.