BERMUDA Law and Practice Contributed by: Natalie Neto, Rachel Nightingale and Tyson Oladokun, Walkers
Walkers 55 Par la Ville Road Hamilton, HM11 Bermuda Tel: +1 441 242 1500 Email: Madison.Petty@walkersglobal.com Web: walkersglobal.com
1. Corporate Structures, Residence and Tax Treatment 1.1 Corporate Forms and Their Tax Treatment There are several corporate structures that can be adopted in Bermuda, with the most common being the company limited by shares incorporated under the Companies Act 1981 (as amended) (the “Companies Act”) or, less commonly, directly by a private Act of the Bermuda legislature. Companies limited by shares are typically used for holding companies, operating companies, listed entities and investment vehicles. Shareholders’ liability on a winding up of the company is limited to the unpaid amount on their shares. It is also possible to form a company limited by guarantee under the Companies Act; these are used primarily for non-profit or quasi-public purposes (eg, charities, clubs and industry bodies). Members’ liability is lim - ited to a predetermined fixed amount on the winding up of the company. Under the Companies Act, companies may be either “exempted” or “local”. Exempted companies are the standard vehicle for international business and may carry on business outside Bermuda and with other exempted undertakings but not generally with the Bermuda public, unless they are licensed to do so by the Minister of Finance (the “Minister”). Local compa - nies must be at least 60% owned and controlled by Bermudians (or be licensed by the Minister to conduct business in Bermuda). Bermuda also permits limited liability companies (LLCs) under the Limited Liability Company Act 2016. LLCs are based on the Delaware limited liability com - pany and offer flexibility in terms of governance. They
are most commonly used for joint ventures, invest - ment holding structures and private equity entities, including general partners. Generally speaking, the liability of members of an LLC will be limited to their agreed capital contribution and any other obligations expressly assumed by them under the LLC agree - ment. Bermuda also has partnership legislation that enables the formation of exempted and local general partner - ships and limited partnerships, which can elect to have separate legal personality, giving them the abil - ity to hold property in the partnership’s name. General partners will have unlimited liability for the partner - ship’s obligations, whereas the limited partners in a limited partnership will not be liable for the partner - ship’s obligations, provided they do not take part in the management of it. It is possible to register branches or permanent estab - lishments of overseas companies and partnerships in Bermuda, which offers flexibility to those seeking to domicile outside of their country of jurisdiction for tax or commercial purposes. Bermuda also provides structures that provide statu - tory segregation for exposure to liabilities, under the Segregated Accounts Companies Act, 2000 and the Incorporated Segregated Accounts Companies Act, 2019. These structures enable the assets and liabili - ties of a particular segregated or incorporated segre - gated account to be ringfenced from the assets and liabilities of other segregated accounts or incorpo - rated segregated accounts, and from the company’s general operating accounts.
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