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Aviation

There are currently almost 300 aircraft registered in Bermuda in both the public and private categories. Aircraft registered in Bermuda may be operated anywhere in the world. Bermuda has recently seen a significant number of registrations on behalf of Russian clients.

Banking

Sometimes a person is asked by a family member or friend to act as guarantor on a mortgage or personal or business loan from a bank or other lender. However, in a worst-case scenario, acting as a guarantor can lead to financial hardship or even bankruptcy. Although the safest option may be not to sign a guarantee agreement at all, a potential guarantor can take steps to minimize the risk.

A first mortgage transfers the legal estate to the secured lender. The borrower has the right to occupy the home and to have it transferred back when the mortgage loan is repaid with interest. Second and subsequent mortgages transfer a home subject to the first mortgage. The first lender will already hold the legal estate in a borrower's home. Thus, second and subsequent secured lenders are entitled only to the equity of redemption.

Capital Markets

The Bermuda Stock Exchange is celebrating its 40th anniversary this year. Due to the time-zone positioning of Bermuda, the exchange provides a trading venue in a Western time zone for securities of Asian, Latin American, North American and European issuers, as well as facilitating efficient fund raising in the United States by non-US issuers.

The Investment Funds Act makes new provision for the regulation of investment funds (formerly known as collective investment schemes) in Bermuda. Among other things, the act creates a new category of authorized fund and provides for a new licensing regime for fund administrators which ensures that licensed fund administrators have proper personnel and operating systems in place.

Commercial Property

Lease provisions bind tenants until the end of the lease period. If a tenant wishes to leave a premises before the lease term expires, there are three options: surrendering, transferring or sub-letting. Landlord and tenant are usually free to negotiate terms and conditions to allow for circumstances not accounted for by the lease. Such terms and conditions are decided by the negotiating abilities (or otherwise) of each party.

Homes in Bermuda are generally owned either by way of freehold ownership or condominium ownership. This update looks at long leasehold condominiums, where the condominium owner is the tenant and the condominium association is the landlord. The condominium long lease governs the relationship between owners and condominium associations.

Company & Commercial

The Bermuda Corporate Service Provider Business Act 2012 recently came into effect. This legislation establishes a new licensing and supervisory regime for professional corporate service providers, which act as agents for the formation of corporate entities and provide corporate secretarial services. The changes will facilitate the formation of new companies and partnerships.

Among other things, the Companies Amendment (No 2) Act 2011 provides for greater flexibility in corporate administration, simplifies the requirements for the electronic transfer of securities and introduces the previously unavailable concept of mergers as an alternative to other business acquisition models. It is hoped that these changes will enhance Bermuda's edge over rival offshore jurisdictions.

The Senate recently passed the Companies Amendment (Number 2) Act. The act updates and improves Bermuda's company law and provides, among other benefits, the opportunity for simplified management and operation of companies and an enhanced choice of corporate structures for mergers and acquisitions – all of which are aimed at making Bermuda a more attractive and competitive jurisdiction.

The Companies Act sets out specific requirements to which every Bermuda company must adhere, including requirements to have a local registered office address and to keep various statutory books at the registered office. While every Bermuda company must ensure that all requirements of the act are properly complied with, it may prove difficult without the assistance of an experienced corporate services provider.

A general meeting is under the control of the chairman, who must concentrate on the punctilious conduct of the meeting. The company bylaws usually provide for the appointment of a chairman. Generally, the chairman of the board of directors will act as chairman of the general meeting. If that person is absent, another director nominated by the board will normally assume the position.

The House of Assembly recently passed six bills which aim to improve the operations of businesses in Bermuda. It is anticipated that the bills will receive Senate approval within the next few months. The passage of these bills will greatly improve Bermuda's already high standing and increase its competitiveness with other offshore jurisdictions, thereby establishing Bermuda as a premier location in which to do business.

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Corporate Finance/M&A

The previously unavailable concept of mergers has been introduced to the Companies Act as an alternative to the existing amalgamation provision. The amendments have made significant beneficial changes to the act – conveying Bermuda's commitment to business and adaptation to the needs of the global marketplace, while maintaining high standards of corporate governance and reputation as a premier offshore jurisdiction.

Corporate Immigration

The Bermuda government has decided that its Measures to Inhibit Long-Term Residency policy (more commonly known as the 'term limit policy') is to be cancelled, effective immediately. Home Affairs Minister Michael Fahy called the policy a "barrier to job creation", and the government stated that ending the policy is intended to encourage economic growth and job opportunities for Bermudians.

Applying to the Immigration Department of the Ministry of Labour, Home Affairs and Housing for a work permit need not be complicated and burdensome. If the guidelines in the Work Permit Policy 2001 are adhered to the process can be smooth and timely. An incomplete application will be rejected by the department and returned to the sender.

Corporate Tax

Bermuda has taken a proactive approach to negotiating and developing tax information exchange agreements. It is vital that this continues in order to demonstrate that Bermuda is legally sound and well regulated, and to influence the direction of global political policy that could affect its international reputation.

Employment & Labour

It is unlawful for an employer to discriminate against a disabled employee on the basis of disability unless 'unreasonable hardship' on the part of the employer can be proved. The Human Rights (Unreasonable Hardship) Amendment Act 2011 has now amended the need for the relevant minister to issue specific rules to govern how 'unreasonable hardship' could be determined.

Employers must identify the areas of business that they intend to protect when drafting a non-competition clause. Under recent case law, the key would appear to be confidential and sensitive information. The fact that an ex-employee may be able to work elsewhere, having been exposed to highly significant, confidential and sensitive information, will prompt a court to protect the employer.

The Employment Act 2000 was a landmark piece of legislation which established minimum employment standards in Bermuda for the first time. Any employee who is employed wholly or mainly in Bermuda comes within the jurisdiction of the act, as do employers. The act provides minimum requirements; however, if individual contracts or collective bargaining agreements are more favourable, their standards will prevail.

Minimizing the legal risks associated with the dismissal of an employee is good business practice for any employer in Bermuda. This is particularly true since the entry into force of the Employment Act 2000, which provides aggrieved employees with statutory remedies for unjust dismissal. However, employers can minimize the legal risks associated with the dismissal of an employee by taking certain steps.

The Employment Amendment Act 2006 has introduced a new regime for employers and employees in the areas of termination and the winding-up of companies, but made no change to the provisions on overtime. Among other things, an employee's employment may be terminated only for a valid reason connected with the ability, performance or conduct of the employee or the operational requirements of the employer's business.

Information Technology

The highly debated Public Access to Information Act represents a monumental change in how information held by the Bermuda public authorities can be accessed and obtained. It is hoped that officials will consider carefully in each case whether the public would be better served by disclosure than the non-disclosure of the information requested.

Insurance & Reinsurance

Bermuda is emerging as a leader in the global insurance-linked securities market, just three years after such securities were first listed on the Bermuda Stock Exchange. The island will further make its mark on the world stage when it hosts the global insurance-linked securities conference in November 2013. Moreover, there are good reasons to anticipate that this market will continue to grow in Bermuda.

A draft report of the European Insurance and Occupational Pensions Authority has raised hopes that Bermuda's regime for commercial insurers will meet regulatory equivalence with the new Solvency II rules for the large commercial (re)insurance sector, but without having to impose the same complex rules on the captive insurance sector.

The Bermuda Monetary Authority has published its latest regulatory update which contains figures for the first quarter of 2011. Developments include the launching of a series of industry awareness sessions and technical workshops to ensure that the insurance market remains aware of new requirements resulting from the authority's regulatory enhancements.

New legislative amendments have increased many of the fees payable to the Bermuda Monetary Authority under the Insurance Act. The date and manner in which fees are to be paid under the Insurance Act have also been amended and new provisions have been included to introduce late penalty fees and to allow the authority to recover any fee or penalty as a civil debt.

A new law which came into force in December 2010 enhances the Bermuda Monetary Authority's current insurance regime and introduces changes to the classification of insurers carrying on long-term business, notification requirements in the event of a change in control, and group supervision, among other things.

The new Insurance Code of Conduct is part of continued reforms being implemented by the Bermuda Monetary Authority to further its objective of establishing a risk-based regulatory regime that meets or exceeds international standards. The code summarises existing best practices adopted by Bermuda insurers and is more a document of consolidation than one which creates new obligations.

More updates >

Litigation

Judicial review proceedings in Bermuda normally address decisions by regulatory bodies, tribunals and the immigration authorities. Judicial review is not concerned with the merits of a decision: the only question before the court is whether the public body has acted lawfully. A judicial review can be commenced based on matters that are illegal, irrational or procedurally improper.

When entering into a contract with a foreign party, Bermuda residents can maximize the likelihood that a future dispute will be heard in Bermuda by providing for it in the agreement. However, in many instances agreements do not address the issue of jurisdiction. In these situations the court will consider a number of factors in determining whether the proceedings should be heard in Bermuda or in another court.

Offshore Services

The previously unavailable concept of mergers has been introduced to the Companies Act as an alternative to the existing amalgamation provision. The amendments have made significant beneficial changes to the act – conveying Bermuda's commitment to business and adaptation to the needs of the global marketplace, while maintaining high standards of corporate governance and reputation as a premier offshore jurisdiction.

Bermuda is emerging as a leader in the global insurance-linked securities market, just three years after such securities were first listed on the Bermuda Stock Exchange. The island will further make its mark on the world stage when it hosts the global insurance-linked securities conference in November 2013. Moreover, there are good reasons to anticipate that this market will continue to grow in Bermuda.

The Bermuda Corporate Service Provider Business Act 2012 recently came into effect. This legislation establishes a new licensing and supervisory regime for professional corporate service providers, which act as agents for the formation of corporate entities and provide corporate secretarial services. The changes will facilitate the formation of new companies and partnerships.

The Bermuda government has decided that its Measures to Inhibit Long-Term Residency policy (more commonly known as the 'term limit policy') is to be cancelled, effective immediately. Home Affairs Minister Michael Fahy called the policy a "barrier to job creation", and the government stated that ending the policy is intended to encourage economic growth and job opportunities for Bermudians.

The Trusts Special Provisions Act gives Bermuda the ultimate competitive advantage, affording it almost unlimited opportunities to compete with other jurisdictions in providing unique trust solutions to fit complex requirements. All that is needed now is a return to legal creativity in the drafting and establishment of purpose trusts in order to realise that competitive advantage.

Bermuda has signed tax information exchange agreements with both Brazil and Singapore. The agreements seek to establish effective information exchange systems with the two countries with respect to tax matters. The agreements also support one of the key objectives of the Organisation for Economic Cooperation and Development: to promote the enforcement of tax laws.

More updates >
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Telecommunications

Frustrated consumers often blame service providers for their inability to offer bundled telephone, cable television and internet services, but it is actually the legislative framework that keeps the services separate. The minister has stated that imminent reform will benefit consumers by providing them with more service options, competitive pricing and licensees offering the latest telecommunications technology available.

White Collar Crime

Bermuda has longstanding obligations to maintain procedures on anti-money laundering and anti-terrorist financing. The Proceeds of Crime Regulations (Supervision and Enforcement) Act 2008 established a new regulatory regime, designating the Monetary Authority as the supervisory body for securing compliance with the regulations by relevant institutions and detailing the obligations and powers related to this duty.