Business Structures

Businesses in Bermuda are typically structured in one of the following ways:

Exempted Companies

Exempted companies are typically incorporated by non-Bermudians for the purpose of conducting business outside Bermuda. Exempted companies are so called because they are exempted from those provisions of Bermuda law that stipulate that at least 60 percent of a company’s equity must be beneficially owned by Bermudians. Exempted companies may have limited liability (e.g. by shares or by guarantee) or unlimited liability.

Permit Companies

Permit companies are companies incorporated outside Bermuda that have received a permit from the Minister of Finance to engage in or carry on a trade or business in Bermuda. Typically, the overseas company establishes a branch office in Bermuda, although some overseas companies seek permission to establish their principal place of business on the Island.

Limited Duration Companies

A limited duration company is a company that has provided in its Memorandum of Association that the winding-up of the company will automatically be triggered upon passage of a specified period of time lapsing or the occurrence of an event. Such companies are often used for investment holding.

Segregated Accounts Companies

A segregated accounts company is a company which is permitted to create “segregated accounts” in order to separate the assets and liabilities attributable to a particular segregated account from those attributable to others and from the company’s general account. A segregated account is not a separate legal entity but a record or collection of records detailing transactions related or linked to each other.

Within the investment funds industry, the ability to use a segregated accounts company is particularly beneficial for fund managers wishing to establish master-feeder fund structures, structures providing for multiple classes of shares, or any structure where the statutory segregation of assets is desired. These types of companies are also useful in the insurance industry, being a sensible vehicle for ‘rent-a-captives’ and for legally separating reserves among different insurance products, particularly long-term business such as life and disability programs.

Partnerships

Offshore clients often use a Bermuda partnership as an alternative to incorporating a company. A Bermuda partnership may elect to have a separate legal personality. In the absence of such election, a partnership is not a legal entity but merely a relationship between the parties. A partnership is commonly used as a vehicle for a substantial speculative investment or for an investment fund. Bermuda partnership law closely follows the principles of English partnership law.

Exempted partnerships are formed by non-Bermudians to carry on business outside Bermuda from a place of business on the Island. General exempted partnerships are those where all partners have management rights and all assume unlimited liability for any debts or obligations of the partnership. Corporate entities acting as general partners can take measures to mitigate their unlimited liability. Limited exempted partnerships have one or more general partners and one or more limited partners. The general partners may be corporate bodies, or general or limited partnerships, whether formed under the laws of Bermuda or another jurisdiction. The limited partners are not, subject to the satisfaction of certain requirements, liable for the debts and obligations of the partnership beyond the amounts they have agreed to contribute to the partnership. The liability of the general partners of such a partnership is not limited. Overseas exempted partnerships are overseas partnerships registered in Bermuda pursuant to a permit issued by the Minister of Finance.