| Bermuda remains
one of the oldest colonies of the United Kingdom. It is strategically
located in the North Atlantic, closer to the United States
than the Caribbean. Bermuda is protected under a United States
defense umbrella. The legal system is based on English Common
Law but has been modified and supplemented by acts passed
under the Bermuda Constitution Order which took place in 1968.
The government is headed by a governor, who is appointed by
the Crown of England. The success of Bermuda as an international
financial center is due to its social and political stability,
excellent communications, sound regulatory regime, progressive
legislation, and high caliber of professionals.
Bermuda
has established itself as one of world’s leading jurisdictions
for international business. Bermuda has made great progress
developing a competitive environment for international financial
services with the development of the Bermuda Stock Exchange
(BSX). The international business community includes subsidiary
operations of more than three-quarters of the Fortune 500.
The history of Bermuda’s international business developed
out of the early successes of its insurance industry. Bermuda
has attracted substantial insurance business and boasts the
third largest premium flow of any insurance center in the
world.
There are variety of entities,
which can be incorporated in Bermuda. The most common type
of entity utilized is the exempted company. The exempt company
is popular to the people of Hong Kong as this entity was approved
by the Hong Kong Stock Exchange for listing purposes. 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. The features of the exempt company are
as follows:
Taxation
The Bermuda exempted Company will receive an undertaking from
the Mister of Finance that the company will not be subject
to any tax or duty on profits or income, capital gains, or
appreciation, and that no inheritance tax or estate duty will
be payable on shares debentures or other obligations of the
company. The exemption extends until 2016 but may be further
extended at a later date.
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.
Directors
A minimum of 3 directors is required and there must be sufficient
directors resident in Bermuda to allow for a quorum to be
present. Meetings of directors and of shareholders may be
held outside of the island. A register of directors and officers
must be kept at the registered office. The register is open
to inspection by the general public.
Annual
Reporting
An exempt company is not required to file a financial report
or tax return.
Local
Requirements
The local company law requires that an exempt company maintain
a registered office address within Bermuda. A minimum of 2
directors must be a resident in Bermuda.
Professionals
Professional standards are high in Bermuda. Major international
firms are represented in Bermuda.
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