Bermuda's chief justice recently handed down an important decision dealing with the power of the court to intervene in the administration of a trust to approve actions of improperly appointed trustees. This case is important because it confirms the court's inherent jurisdiction, on the appointment of trustees, to grant them leave to administer the trust on the basis that they were properly appointed on a prior date.
The Bermuda Monetary Authority recently published the Insurance Brokers and Insurance Agents Code of Conduct. The code was developed in consideration of the international standards set by the International Association of Insurance Supervisors and is intended to assist the authority in providing appropriate, effective and efficient supervision and regulation of Bermuda-registered brokers and agents.
A number of important updates to Bermuda's economic substance regime were introduced in June 2019. These include the recent enactment of the Economic Substance Amendment Act, which, among other things, excludes non-resident entities from the scope of the economic substance regime and modifies the provisions that govern the exchange of information. Further, the registrar of companies has issued guidance notes to help entities determine whether they fall within the economic substance regime.
In a judgment which is likely to have wide-ranging implications for local companies subject to the '60/40 rule', the Privy Council recently held that local companies may confer on non-Bermudians "de facto control by commercial arrangements", provided that non-Bermudians have no control over the manner in which directors and shareholders vote.
In a recent case, the Supreme Court delivered an important judgment in which it exercised its inherent supervisory powers over trusts to appoint protectors. The court also reaffirmed the wide breadth of its jurisdiction under Section 47 of the Trustee Act 1975 to grant trustees power to vary trusts when it is satisfied that it is expedient to do so.
Bermuda companies, limited liability companies and partnerships had until 30 April 2019 to update or verify their beneficial ownership information under Bermuda's beneficial ownership legislation. The guidance published in respect of Bermuda's beneficial ownership legislation may provide an aide to some extent, but provides no defence to non-compliance with the beneficial ownership legislation itself. As such, the legislation and Personal Information Protection Act must be carefully considered and complied with.
Bermuda is an excellent jurisdiction in which to establish private trust companies, trusts and underlying entities (including private funds and insurance vehicles) and family offices (or branches thereof). However, particular care must be taken with regard to a private trust company's initial structuring. It is critical that the rights, powers and responsibilities vested in particular parties are fully understood (particularly by the settlor both during their lifetime and in future).
Bermuda companies have until 30 April 2019 to comply with requirements introduced in 2018 to maintain a register of their beneficial owners. If a company is non-compliant with these requirements after this date, both the company and its directors and other officers may be subject to criminal sanctions.
In 2018 the Bermuda courts issued several important decisions in trust cases. Moreover, the Trust Law Reform Committee of the Bermuda Business Development Agency remains active and has recently proposed further legislative reform. Among the committee's recent reform initiatives, the amendment to the Perpetuities and Accumulations Act 2009 by the Perpetuities and Accumulations Amendment Act 2015 has resulted in significant interest among international advisers and local practitioners.
Bermuda has historically flown beneath the radar when it comes to promoting itself as the ideal location for the establishment of a family office. However, the overall value of the trust business to Bermuda is significant, with hundreds of billions of trust assets under management on the island. New legal developments bode well for the family office sector and should help to make the Bermuda trust fit for purpose for the next generation of ultra-high-net-worth families.
Bermuda's reinsurance market has not been immune to changes in the world's economic market. A rise in mergers and acquisitions has led to an increase in redundancies within the Bermuda workforce. Employees should be aware of their rights when made redundant and should always seek legal advice to ensure that their redundancy is both lawful and fair.
This article considers how recent changes to the regulation of financial services in Bermuda have affected private trust companies. Among other requirements, directors and administrators of private trust companies should determine whether they fall within the definition of an 'anti-money laundering/anti-terrorist financing regulated financial institution' and ensure that they comply with the new record-keeping requirements and pending beneficial ownership regime.
Many offshore financial centres, including Bermuda, laboured to meet the EU Council's end-of-year deadline to impose economic substance requirements on entities that carry on 'geographically mobile' business activities. For jurisdictions subject to the deadline, failure to introduce substance laws may result in being placed on the EU Council's list of non-cooperative jurisdictions for tax purposes. Bermuda's substance laws ensure that the country maintains its stellar reputation as an international financial centre.
Since its election, the current government has enthusiastically embraced the fintech sector and the potential that it offers and has repeatedly expressed its intention for Bermuda to be a significant centre for this industry. In furtherance of this goal, a significant part of the government's legislative programme for 2018 has been, among other things, the implementation of a comprehensive regulatory regime. The central pillar of this regime is the Digital Asset Business Act, which came into force on 10 September 2018.