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Bermuda passes company and partnership legislation

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The Bermuda government has passed a series of legislative amendments to improve the efficiency of international business in Bermuda. 

The Bermuda government has passed a series of legislative amendments to improve the efficiency of international business in Bermuda. 

Law firm Conyers Dill & Pearman expects the amendments will come into force in the next few weeks. 

The Companies Act 1981 has been amended to improve the process of delivering documents to shareholders via the internet. Previously, if a Bermuda exempted company wished to deliver documents to shareholders by posting them on a webpage, the shareholder was required to actively consent to receiving documents in this manner. For large public companies the requirement to ‘opt in’ to electronic delivery was inefficient and cumbersome.

With the amendments, an electronic record of a document will be deemed to have been delivered to a person if it is published on a website and the person to whom it is to be delivered has been advised of the address of the website, the place on the website where the document may be found, and how the document may be accessed. If the person wishes to receive the document in a physical form, he can notify the company of that wish and the company will be obliged to provide it to him.

Conyers Dill & Pearman says this procedure more closely parallels the ‘opt out’ electronic delivery method used by the US Securities and Exchange Commission and as such makes a welcome improvement in efficiency for Bermuda companies listed on US exchanges.

Bermuda exempted companies are subject to certain residency requirements. These have now been adjusted for greater flexibility. A Bermuda exempted company will now only require one director who is ordinarily resident in Bermuda, or a Bermuda resident secretary, or a Bermuda resident representative. The secretary and the resident representative may be individuals or companies.

Amendments have also been made to the Partnership Act 1902, the Exempted Partnerships Act 1992, the Limited Partnership Act 1883 and the Overseas Partnership Act 1995.

Registration requirements for the formation of Bermuda exempted and limited partnerships have been amended to improve efficiency. Conyers says partnerships will now be formed in a manner similar to the process followed for the incorporation of companies. The particulars required to be set out in the certificates of exempted and limited partnership have been trimmed down and it will no longer be necessary to file the articles of partnership (commonly known as the partnership agreement) upon formation.

Once the partnership is formed, any changes to the particulars in the certificates of exempted and limited partnership are not effective until the filing of the amended certificates. Any changes in the general partners must be approved by the Bermuda Monetary Authority in advance.

Limited partnerships are no longer required to state on the register of limited partners the value of the money and other property contributed by each limited partner as capital. Conyers believes this will significantly reduce the administrative burden on large limited partnerships and will be particularly welcomed by our investment fund clients.

Amendments to Overseas Partnership Act similarly streamline the application procedure and trim the content of the certificate of overseas partnership. A partnership fund is now exempt from the requirement to obtain a permit to carry on business in Bermuda if it engages a person in Bermuda to attend to any principal fund activities (such as accounting or administration). Such fund partnerships will be permitted to advertise, offer partnership interests for subscription, accept subscriptions, etc. in Bermuda. This reflects the existing situation with respect to funds that are overseas companies and is a welcome reconciliation of an inconstancy in the law.

Anthony Whaley, partner at Conyers Dill & Pearman, says: ‘Bermuda is committed to enhancing its attractiveness as a jurisdiction of choice through efficient and modernized legislation. We are pleased to have had a part in bringing this legislation forward, as its benefits will go a long way towards ensuring Bermuda’s continued role as a leader in the international business sector.’

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