GENERAL INFORMATION ON BERMUDA

Introduction
Bermuda, located in the mid-Atlantic, just 670 miles south-east of New York and 570 miles east of Cape Hatteras, North Carolina, has become the premier financial centre in the offshore world. Corporations and high net worth individuals have been attracted to Bermuda because of its links to the United Kingdom, its sophisticated banking and business infrastructure, its legal system which is largely based on British law, its tax neutrality, its complimentary regulatory environment and the quality of the Bermuda Stock Exchange.

Regulatory Environment
Bermuda-based international companies, partnerships and trusts operate in a regulatory environment that has evolved as a result of a partnership philosophy between the Bermuda Government and the private sector. Bermuda’s system of regulation is based on three primary goals: the protection of Bermuda’s integrity as an international financial centre; the maintenance of international standards; and the provision of an attractive business environment.

Essential to the integrity of any financial centre is the quality and effectiveness of its supervisory and regulatory environment. The Bermuda Monetary Authority (similar to the Federal Reserve Board, the FDIC and the SEC) acts as an international business supervisory body with responsibility for regulating banks, deposit companies,insurance companies, investment professionals, trust companies,mutual funds, unit trusts, other investment vehicles and the Bermuda Stock Exchange.

Confidentiality
The Bermuda Government and the Bermuda banks continue to afford a high level of confidentiality to all businesses or persons transacting business in or from Bermuda.

Banking and Investment Services
All banking services are available in Bermuda through Bermudian banks that, in the aggregate, operate in over fifteen different jurisdictions and have combined total assets or over $15 billion. The Bank of Bermuda, which is the largest of the four Bermuda banks, has total assets of US$7.4 billion fund assets.

International businesses that operate in Bermuda can obtain investment services from a broad range of institutions, including the Bermuda banks.

International Companies
International companies that conduct business from Bermuda have found that the legal, financial and business infrastructure of Bermuda is internationally respected and trusted and have proven over the many decades to be dependable. International companies in Bermuda can conduct a broad range of business activities, including – insurance, investments, manufacturing, trading, mutual funds,to name but a few.

Economy
Bermuda has developed one of the most successful economies in the world with gross per capita income of approximately $35,000 annually. The GDP stood in excess of US$3 billion for fiscal year 2002-2003. This success is largely due to the twin pillars of our economy: international business and tourism. The largest sector within the international business area of Bermuda’s economy is “insurance and reinsurance” which has a total capital and surplus base of approximately US$72 billion.

Political Stability
The Government of Bermuda is very stable and has elections every four to five years. There are two major political parties in Bermuda, one representing labor (Progressive Labor Party) and the other representing business interests (United Bermuda Party). Presently, the Progressive Labor Party formed the Government and the Premier is The Hon. Alexander Scott, J.P. The Minister of Finance is The Hon. Eugene Cox, J.P. and the Minister of Tourism is The Hon. Renee Webb, J.P.

DETAILS ON BERMUDA

Bermuda
Situated in the mid-Atlantic Ocean, 750 miles east of New York City; 3,350 miles from London, England; population about 63,400.

Capital City
Hamilton

Language
English

Time Zone
New York + 1 hour

Communications
Excellent: Telephone, facsimile, internet and email.

Accessibility Routes
Excellent: direct flight to most Eastern cities of the United States (New York, Boston, Washington D.C., Philadelphia, Charlotte, Atlanta) and Canada (Toronto and Halifax) and the U.K. (London).

Legal System
British: English common law applies including, the doctrines of equity and all English Acts of general application which were in force on 11 July 1612 subject to acts passed in Bermuda since that date repealing, modifying, or amending those pre-1612 statutes of the common law.

Judicial Structure
The Courts in Bermuda consist of a Magistrate’s Court, a Supreme Court, and a Court of Appeal, with a final appeal to the Judicial Committee of the Privy Council.

Political System
Very stable: Bermuda, a self-governing dependent Overseas Territory of the U.K., is a Parliamentary Democracy based upon the Bermuda Constitution which became effective on 8 June 1968 and provides for internal self-government through an elected Parliament and appointed Senate with responsibility for external affairs including civil aviation, defense, internal security and the police remains in the control of the U.K. Government (in the person of the Governor). Became an associate member of the OECD in April 1990.

Common Corporate Vehicles
Limited liability companies; unlimited liability companies; companies limited by guarantee; mutual companies; and permit companies (i.e., branches of foreign corporations).

Other Business Vehicles
Exempted limited and general partnerships; unit trusts; and discretionary trusts and settlements.

Normal Time to Form Company or Partnership
Approximately seven to ten days.

Currency
United States dollars widely circulated; Bermuda dollars (on par with U.S. dollars) for residents only.

Exchange Controls
None: non-residents (including exempted companies, partnerships and trusts) can operate their business dealings in any foreign currency other than Bermuda dollars, free from any exchange control restrictions.

Major Banks
The four banks in Bermuda are: The Bank of Bermuda Limited, The Bank of N.T. Butterfield & Son Ltd.; The Bermuda Commercial Bank; and Capital G Bank; all locally owned; All banking services available; accounts can be maintained in any foreign currency.

Bank Confidentiality
Very strict: English common law rule of confidentiality prevails; See U.S.A./Bermuda Tax Treaty for mutual assistance in certain tax matters.

Capital Requirements
Yes:

(i) Ordinary Company: A minimum of US$12,000 or its equivalent in another foreign currency; if not fully paid, the shareholders are liable for the unpaid capital.
(ii) Insurance Company: A minimum of US$120,000 fully paid-up, if writing general business or US$250,000 fully paid-up if writing long-term business; or US$370,000 if writing both.
(iii) Partnerships: A minimum of US$12,000 or its equivalent in another currency. Partnership capital may include assets other than cash.

Taxes and Duties
(a) Withholding taxes: No
(b) Capital Gain Taxes: No
(c) Income Taxes: None
(d) Death Duties: No
(e) Stamp Duties: No: as of 1 April 1990, stamp duty was eradicated on all instruments executed by or on behalf of international businesses.

Tax Convention
USA/Bermuda Tax Convention – special provisions on U.S. excise tax relating to premium from a U.S. source paid to Bermuda Insurers; Bermuda approved for foreign sales corporations of U.S. manufacturers,distributors and retailers; and mutual assistance on U.S. tax matters.

Residency Requirements for Bermuda Exempted Companies
It is also a requirement of Bermuda law that an exempted company incorporated in Bermuda shall meet any one of the following residency requirements:
(a) a minimum of two directors, other than alternate directors, ordinarily resident in Bermuda; or
(b) a secretary who is ordinarily resident in Bermuda and a director, other than an alternate director, who is ordinarily resident in Bermuda; or
(c) a secretary who is ordinarily resident in Bermuda and a Resident Representative; or
(d) in the case of a company the shares of which are listed on an appointed stock exchange, have a Resident Representative.

A Resident Representative shall be an individual ordinarily resident in Bermuda.

Directors and Officers
President and Vice President or Chairman and Deputy Chairman must be directors; Secretary need not be a director.
The provision of Directors, the Company Secretary and Resident Representative as well as the provision of the Company’s registered office can be provided by a service company such as Richmond Corporate Services Ltd.

Meeting requirements
Yes: Annual General Meeting required every year, Telephonic Board meetings permitted.

Shareholders
(a) Nationality Requirement: No
(b) Government Screening: Yes: Beneficial owners must submit bank references or Annual Reports for Bermuda Monetary Authority. References are held in strict confidence by BMA.
(c) Proxies: Only other shareholders may act as a proxy unless a mutual fund or exempted by Private Act.
(d) Corporate Representative: Need not be a shareholder.
(e) Nominative Shares: Yes: shares must have a par value.
(f) Bearer Shares Available: No

Registered Office Required
Yes: Share Register, Register of directors/officers, minute book and company seal kept at registered office in Bermuda. Both Registers are open for public inspection at the registered office.

Must Company Publish Accounts
No: only annual declaration on assessable capital, directors and registered office filed with Registrar of Companies with payment of annual fee.

Local Auditor
Yes: auditor is appointed at Annual General Meeting; annual audits may be waived upon consent of all shareholders and directors.

Redomiciliation
Yes: redomiciliation of companies is permitted in general company law. Bermuda trusts can contain clause authorizing transfer of trust to another jurisdiction.

Stock Exchange
Yes: The Bermuda Exchange; In addition, the Minister of Finance has approved a number of foreign Appointed Stock Exchanges and Competent Regulatory Authorities for listing of Bermuda-based securities.

Regulators
(i) The Minister of Finance
(ii) The Bermuda Monetary Authority
(iii) The Registrar of Companies
(iv) The Registrar of Shipping
(v) The Director of Civil Aviation

For further information on Unit Trusts, please contact lmw@richmond.bm.