BERMUDA Law and Practice Contributed by: Natalie Neto, Rachel Nightingale and Marah Smith, Walkers
Appraisal actions are typically long, complex and expensive. The cost of discovery is par - ticularly burdensome for the company because the company holds all of the material relevant to valuation. In addition, both parties must engage costly valuation experts and, in some cases, industry experts. Corporate Income Tax On 1 January 2025, the Corporate Income Tax Act, 2023 (the “CIT Act” ) became fully operative in Bermuda. The CIT Act was passed as part of the implementation of a corporate tax regime within the scope of the OECD’s and G20’s inter - national tax agreement on Pillar Two of the Base Erosion and Profit Shifting (BEPS) project known as the Global Anti-Base Erosion Model Rules (Pillar Two) (GloBE). Under the CIT Act, Bermuda corporate income tax will be chargeable in respect of fiscal years beginning on or after 1 January 2025 for Ber - muda entities that are part of multinational enter - prise (MNE) groups with EUR750 million or more in annual revenues in at least two of the four fis - cal years immediately preceding the fiscal year in question ( “Bermuda Constituent Entity Group” ). Where corporate income tax is chargeable to a Bermuda Constituent Entity Group, the amount of corporate income tax chargeable for a fiscal year shall be 15% of the net taxable income of the Bermuda Constituent Entity Group minus tax credits applicable to the Bermuda Constitu - ent Entity Group under Part 4 of the CIT Act, or as prescribed. The CIT Act introduces certain “qualified refundable tax credits” to incentiv - ise companies to support Bermuda residents through investments in key areas such as edu - cation, healthcare, housing and other projects to help develop Bermuda’s workforce. The CIT Act is subject to change as a result of further devel -
opments of the concepts therein, and revisions are expected. 3.2 Significant Changes to Takeover Law There have not been any significant changes to takeover law in the past 12 months, and no sig - nificant changes to the legislation are anticipated in the coming 12 months. 4. Stakebuilding 4.1 Principal Stakebuilding Strategies The majority of transactions in Bermuda are negotiated transactions between parties and do not involve a buyer building a stake in the target prior to the transaction. However, in a hostile takeover scenario it is com - mon for the bidder to have acquired a minority stake in the company in order to pursue litigation against the target in an attempt to get as much information as possible on the potential target and also to make it a less attractive proposition for other bidders to acquire it. It is customary for many public companies to have restrictions on shareholders holding above certain thresholds (eg, 10%), as a defensive measure that is often implemented to prevent stakebuilding. For further information on how acquisitions occur in Bermuda, see 2.1 Acquiring a Com- pany . 4.2 Material Shareholding Disclosure Threshold As stakebuilding is not specifically regulated in Bermuda, the restrictions that may apply are those under the Exchange Control Rules (if applicable), or under the relevant regulatory act where the entity is regulated by the BMA, or
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