BERMUDA Law and Practice Contributed by: E Scott Swainson, Katrina Dickson and Erik Gotfredsen, Wakefield Quin Limited
for a Limited Period of Time ), including service providers and attorneys (such notices suspend attorney/client privilege). The Bar’s AML-ATF regulations also contain reporting requirements for suspicious transactions and prevent tipping off. 5.6 Annual Entity Maintenance and Accounting Compliance A trust corporation normally charges a flat fee (with variance for extra time spent) or a fee based on a percentage of assets managed. The trustee will often provide trust accounting. Trus - tee fees tend to be at least USD5,000 annually. A company is generally administered by a licensed service provider, and annual running costs typically exceed USD3,000. A private company may waive audit, provided all share - holders agree. Individual trustees are most often (Bermudian) friends and family, and act without remuneration. 6. Commercial Leases 6.1 Types of Arrangements Allowing the Use of Real Estate for a Limited Period of Time Conditional Agreement Typically, parties will enter into an agreement to purchase or rent, and may agree tempo - rary rights of occupation whilst formalities are addressed. Fronting Heavy penalties (including USD1 million fines and prison terms) apply where a person is found to be fronting for a foreign national (fronting is assuming the rights of an owner without securing the required licence). Therefore, it is important
rules apply, which are inflexible. Most condo - miniums are formed with a company holding the freehold and main structure and the unit buyers holding 999-year leases of an “internal shell” . 5.3 REITs A real estate investment trust is not a commonly available investment vehicle for foreign inves - tors. There are restrictions on both ownership and control of property, including “anti-fronting legislation” that would typically disallow owner - ship via a trust structure. 5.4 Minimum Capital Requirement The minimum capital requirement at incorpora - tion could be as little as USD1. It is generally set at a number that reflects the likely number of shareholders, so that the capital can be easily divided without the need to reduce or increase. 5.5 Applicable Governance Requirements Non-Bermudian individuals must observe land licensing rules. An applicant for a land licence must show that they are fit and proper persons, and compliance checks and references are tak - en. Private trustees are fiduciaries for the beneficiar - ies but are not subject to formal oversight. Trust corporations are also fiduciaries and are heavily regulated and may be audited by the Bermuda Monetary Authority. Companies must remain in good standing and accounting practices are subject to audit (eg, payment of payroll taxes). Compliance Disclosure notices may be served on all per - sons suspected of “fronting” (see 6.1 Types of Arrangements Allowing the Use of Real Estate
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