THE FORMATION OF LOCAL COMPANIES IN BERMUDA

 1.         Most local companies can be formed by registration within three weeks from the date when complete instructions are received at our offices.  To enable our office to accomplish registration on your behalf, we will require the following:

            (a)        the proposed name of the company, preferably with two alternative names.   The Registry is quite flexible and allows registration of names that are case sensitive (e.g. with certain letters or words in block capitals), or using plays on words or letters.  Accordingly, please insert the name as you want it to appear;

            (b)        a full description of the intended activities of the proposed exempted company (as opposed to its objects and powers); 

            (c)        the full names, including middle names (initials are not acceptable), residential addresses, occupations and nationalities of all beneficial owners and their proposed percentage of ownership of the proposed company;

                        and  

            (d)        Personal Declarations (as attached), completed and signed by each non-Bermudian proposed beneficial owner, for submission to the Bermuda Monetary Authority.   If the parent of the proposed company is listed on a recognized stock exchange, these are not necessary.

2.      Our standard fees for the formation and organization of a local company, incorporated by registration, are set out in the attached Form A.  They are minimum fees.  These fees do not include any additional work such as the drafting of special objects or bye-laws and also do not include disbursements in connection with the incorporation, which would be as follows:

Application Fee to Registrar - Consent                         BD$ 269.00

Filing Fee - Memorandum of Association                      BD$    80.00

Filing Fee - Annual Return of Shareholdings                  BD$    42.00

Annual Fee                                                                 BD$  650.00
($650.00 for full year: half ($325.00) after 31^st August)

Stamp Duty - Memorandum of Association                    BD$    12.50
(on suggested capital of BD$2,500.00)         

            NB: (a) The Annual Government Fee of BD$650.00 plus filing fee of BD$42.00 on issued share capital of less than BD$50,000.00 (see Schedule B) is payable to the Registrar of Companies by 31^st March of each year the company is in existence. The first payment is due upon application to incorporate the company.

                        If the company is formed between 1^st September and 31^st December the Annual fee for the balance of that year is reduced by half.

            (b)        A fee for incorporation of $269.00 is payable on application to the Accountant General, together with a filing fee of $80.00 and ad valorem Stamp Duty of 0.5% on the capital (for the Memorandum of Association) and a $42.00 filing fee for the Annual Return.

            (c)        Advertising costs, printing, corporate supplies, normally amount to approximately $300.00.

            (d)        Miscellaneous disbursements of approximately $50.00 (faxes, calls, photocopies, etc.).

3.         The annual running expenses of a local company will be as follows:

            (a)        The Annual Government Fee mentioned above (BD$650.00).

            (b)        Costs for the provision of directors, secretary and registered office of the corporate client. (The company must maintain a registered office at which the corporate and financial records must be maintained).

                        A local company must also have (a) a minimum of two 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.  Alexander Management Ltd. will be pleased to consider providing these services subject to negotiation.  It is necessary to supply the full names, residence addresses, occupations and nationalities of all intended directors and officers.

                        Our fees for the provision of some or all of these services depend upon the responsibility and activities involved, and are normally settled by negotiation.  Therefore, it is difficult at this stage to give a pre-estimate of such fees, although our minimum annual service fee is BD$1,500.00 for the provision of corporate secretarial services and registered office.   This is charged separately from the incorporation fees and is usually pro-rated to the end of the current year.

            (c)        Bermuda company law specifically requires a company to maintain at its registered office, records of its financial affairs sufficient so as to show a true accounting on a quarterly basis and further, that such accounts be audited each year (subject to deferral). There is no requirement that such audited accounts be filed with any governmental authority or body, although they may be required be made available for inspection in certain circumstances.

4.         Although the authorized capital for local companies must be issued, there is no legal requirement (other than in the case of those companies writing insurance) that the share capital be fully paid up.  The costs of incorporation can and usually are capitalized.  We insist that the share capital be fully paid up where we are requested to act as nominees for a beneficial owner or owners.

            Should the need arise; the capital can be increased by simple resolution of the shareholders.

5.         All local companies are normally designated by Foreign Exchange Control as “resident” for exchange control purposes.  While these companies are free to deal in any currency of their choosing, including Bermuda dollars, they are subject to any exchange control regulations which may be applied.

6.         In keeping with Bermuda Law and International requirements regarding Money Laundering and Proceeds of Crime, we are required to obtain satisfactory information regarding our clients before commencing a relationship.*   This information ensures that we are able to keep in close contact and provides protection for confidential arrangements.   Accordingly, we require the following information on the ultimate beneficial owners of accounts established with us:-

            (i)         A certified copy of a current photographic identification (e.g. photo page of passport or valid driver’s license).

            (ii)        Permanent and alternate addresses and contact numbers (i.e. street and mailing addresses, telephone, fax, pager, cellular phone, email).

            (iii)       A minimum of two references attesting to integrity and financial standing.   References relating to integrity will be accepted from professionals (e.g. lawyers or accountants) while letters relating to financial standing will usually be from a bank or financial institution.   They should include statements regarding the length of time of relationship which should preferably be over three years.   In the case of The Bank of N.T. Butterfield all references must be for relationships of over five years.  For those companies whose ultimate beneficial owners are publicly listed companies, references are not required.   In the case of non-public companies, background information is required on:

                        (a)        the source of monies being used to fund the client’s arrangements, and 

                        (b)        confirmation that professional tax advice on the proposed structure has been obtained in appropriate jurisdictions.

            (iv)       Biographical information such as a resume or curriculum vitae.

            N.B.     The above information is treated as confidential and would only be disclosed to third parties under process of law or in connection with required transactional procedures in connection with the client’s affairs (e.g. to support opening of bank accounts).

*This information is not required for publicly-listed companies except for opening bank accounts.

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