BERMUDA Law and Practice Contributed by: Natalie Neto, Rachel Nightingale and Marah Smith, Walkers
and for the subsequent operation of the company. However, where the shares of the target are listed, the terms of the plan of merger or amal - gamation are often required to be fully laid out in the circular or other communication to the tar - get’s shareholders, which means that a separate “statutory” agreement is redundant. In addition, the notice of the general meeting of shareholders of each company must include: • a statement of the fair value of the shares, as determined by each amalgamating or merg - ing company; and • a statement that a dissenting shareholder is entitled to be paid the fair value for his or her shares. It is very likely that the target company’s share - holders will be provided with “fairness opinion” (or a summary of its contents) confirming the basis for the valuation of the shares and the price being offered. Section 97 of the Companies Act sets out the statutory duties of a director of a Bermuda com - pany and provides that every officer of a com - pany in exercising his or her powers and dis - charging his or her duties shall: • act honestly and in good faith with a view to the best interests of the company; and • exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. 8. Duties of Directors 8.1 Principal Directors’ Duties
Officers must also comply with the Companies Act, regulations and the by-laws of the company. In addition, Bermuda law is based on English common law, and Bermuda courts are very likely to be persuaded by the decisions of the English courts with respect to directors’ fiduciary duties. The directors owe fiduciary duties to the com - pany and not to the shareholders individually. These duties can be summarised as follows: • to act in good faith and in what the direc - tor considers to be the best interests of the company; • to exercise his or her powers for the purposes for which they are conferred; • to avoid conflicts of interest and of duty; • to disclose any personal interest in contracts involving the company; • not to make secret profits from the director’s office; and • to act with skill, care and diligence. The duty of care, skill and diligence comprises three main elements: • degree of skill – a director must exercise a degree of skill that a reasonably prudent person, with his or her knowledge and experi - ence, would exercise in similar circumstanc - es; • attention to the business of the company – in exercising his or her duties, a director must exhibit the “reasonable care an ordinary man may be expected to take in the same circum- stances on his own behalf” ; and • reliance on others – a director has the ability to rely on his or her co-directors and other company officers, and is not liable for their acts, provided that the reliance is honest and reasonable.
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