Bermuda is not only famous for shorts. It has earned a reputation as a world-class center of commerce. There are over 8,000 “exempt” companies registered in Bermuda, which benefit from Bermuda’s favorable corporate tax structure and highly professional business environment. It is a highly respected jurisdiction with tax neutrality and no exchange controls for non-resident companies.

Historically, Bermuda has been a very popular tax haven for famous Americans and today it is a stable, quasi-local tax haven for many US companies looking to reduce their tax liabilities. The legal system in Bermuda is similar to that used in the United States, and many Americans are comfortable with this particular jurisdiction. So to speak, Bermuda is protected under the defense umbrella of the United States. Furthermore, it is attractive to Hong Kong citizens seeking a tax haven in which to set up an offshore company, as the Bermuda Exempt Companies have been approved by the Hong Kong Stock Exchange for listing purposes.

The primary statute governing the formation and operation of Bermuda companies is the Companies Act 1981 and its periodic amendments. Businesses are generally incorporated with limited liability and perpetual existence. However, an exempt company may also take another form of company, as follows: limited duration company, company limited by guarantee, unlimited liability company or mutual society. The recent introduction of several amendments to the Companies Act 1981 have simplified the incorporation procedure and allowed a Bermuda exempt company to play an important role within the modern financial centre.

The characteristics of the exempt company are the following:

or Taxation. Exempt Bermuda companies are granted exemption from all forms of taxes in Bermuda (such as income tax, capital gains tax, estate tax, or inheritance tax) up to the year 2016 or such later date as may be enacted by Parliament.

or registered office. Every company must have a registered office in Bermuda, the address of which is registered with the Registrar.

or Directors. An exempt company must have two natural persons resident in Bermuda, either as directors, or one as secretary and one as director, or one as secretary and one as ‘permanent representative’.

Shareholders. A minimum of one shareholder is required and bearer shares are not allowed. The beneficial ownership of the company must be disclosed to the Government at the time of incorporation.

or business activity. An exempt company may conduct business within Bermuda only in connection with transactions and activities outside of Bermuda. The most common business activity of exempt companies is holding investments.

or Continuations. Bermuda law provides that businesses may continue and discontinue from Bermuda.

The Bermuda Registrar of Companies registers all limited liability companies, which include local companies, foreign sales corporations, exempted companies, and overseas companies under the guidelines of the Companies Act 1981. It plays an important role in the day-to-day management and operation of international and national business, and therefore has a responsibility to all Bermudians for the success of the industry.

And it’s only natural that the cost of maintaining the good reputation of the Bermuda company registry will continue to rise. Thus, a 6.5% increase in company fees was recently announced, applicable from April 1, 2008. On the one hand, this is sad news for local and international companies registered in Bermuda. On the other hand, this measure will ensure that the government has the necessary financial resources to address improvements to the regulatory framework and, in this way, will protect Bermuda’s name as a premier jurisdiction in international financial services.

Bermuda’s success as a professional business center is due to its social and political stability, excellent communications, strong regulatory regime, progressive legislation, and high-level professionals.