Advantages Of Free Flow Of Capital Sound Legal System Substantial Advantages of Bermuda Exempted Companies

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Substantial Advantages of Bermuda Exempted Companies

Bermuda is not only famous for shorts. It has earned a reputation as a world-class commercial hub. More than 8.000 “exempt” companies are registered in Bermuda, taking advantage of Bermuda’s favorable 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 enterprises.

Bermuda has historically been a very popular tax haven for the American glitterati, and today it is a stable, almost local tax haven for many American companies looking to minimize their tax liabilities. The legal system in Bermuda is similar to that used in the United States, and therefore many Americans feel comfortable in this particular jurisdiction. So to say, Bermuda is protected under the protection umbrella of the United States. Furthermore, it is attractive to Hong Kong citizens seeking a tax haven to set up an offshore company, as Bermuda exempt companies are recognized by the Hong Kong Stock Exchange for listing purposes.

The main law governing the formation and operation of Bermuda companies is the Companies Act 1981 as amended from time to time. Companies are generally incorporated with limited liability and perpetual existence. However, an exempt company may also take another form of company, such as: a company of limited duration, a company limited by guarantee, an unlimited liability company or a mutual company. Several recent amendments to the Companies Act 1981 have simplified the incorporation process and enabled the Bermudan Exempt Company to play an important role in the modern financial centre.

Features of an open company are as follows:

o Taxation. Exempt Bermuda companies are exempt from all forms of taxation in Bermuda (such as income tax, capital gains tax, inheritance tax or estate duty) until 2016 or such later date as Parliament may enact.

o Registered office. Every company must have a registered office in Bermuda, with an address registered with the Registrar.

o Director. An exempt company must have two persons resident in Bermuda, either as directors, or as a secretary and a director, or as a secretary and a ‘permanent representative’.

o Shareholders. At least one shareholder is required and bearer shares are not permitted. Beneficial ownership of the company must be disclosed to the government at the time of incorporation.

o Business activities. An exempt company may carry on business from Bermuda only in connection with transactions and activities outside Bermuda. The most common business activity of exempt companies is investment holding.

o Continuation. Bermuda law provides that companies can continue and wind up in Bermuda.

The Bermuda Registrar of Companies registers all limited liability companies, including local companies, foreign sales corporations, exempt companies and foreign companies, in accordance with the guidelines of the Companies Act 1981. It plays a vital role in the management and day-to-day operations of international and domestic businesses, and therefore all Bermudians are responsible for the success of the industry.

And it is natural that the cost of maintaining a good reputation for Bermuda company registration continues to rise. Thus recently a 6.5% hike in company levy was announced, effective from 1st April 2008. On the one hand, this is sad news for both local and international companies registered in Bermuda. On the other hand, this solution will ensure that the Government has the necessary financial resources to address reforms to the regulatory framework and thereby preserve Bermuda’s reputation as a leading jurisdiction in international financial services.

Bermuda’s success as a professional business center is due to its social and political stability, excellent communication, sound regulatory regime, progressive laws and high caliber of professionals.

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