Ministerial Statement by the Minister of Economic Development, Dr. the Hon. E. Grant Gibbons, JP, MP
Mr. Speaker, I am pleased to introduce the Bill entitled “Registrar of Companies (Compliance Measures) Act 2017” which seeks to increase the Registrar of Companies’ monitoring and enforcement powers in respect of registered entities that operate from within Bermuda in order to maintain Bermuda’s overall OECD (Organization for Economic Co-operation and Development) rating which is currently a favourable “largely compliant”.
Mr. Speaker, the OECD is a monitoring group whose stated goals include fostering economic development and cooperation. The OECD maintains a “black list” of countries it considers uncooperative in the drive for transparency of tax affairs and the effective exchange of information. Bermuda is currently undergoing several OECD assessments, one of which is concerned with empowering the Registrar of Companies to make proactive inspection of Bermuda registered entities.
The expansion of the Registrar of Companies’ powers and responsibilities is therefore a necessary measure to ensure compliance with OECD recommendations and to protect Bermuda’s current favourable rating.
Mr. Speaker, by way of background, members of the Assessment Team of the OECD visited Bermuda and conducted a peer review of Bermuda’s legal and tax system, financial sector as well as legislation governing legal entities and legal arrangements regarding exchange of information request. The Assessment Team made several recommendations one of which was to enhance the powers of the Registrar of Companies allowing him to conduct proactive inspection of Bermuda registered entities to ensure that such entities are fully compliant with the requirements of their governing legislation.
Mr. Speaker, Bermuda is globally respected for its leadership and proven record for compliance and transparency. Until now, the Registrar of Companies has been a depository for Bermuda registered entities, however its role has to shift to a more regulatory body in order to adapt to an ever changing global regulatory environment. What this means in practice, is that the Registrar of Companies will have the power to make proactive inspection of Bermuda registered companies.
Accordingly, this Bill seeks to confer powers on the Registrar of Companies to monitor, inspect and enforce and otherwise regulate Bermuda registered entities to ensure compliance with their governing legislation.
Bermuda registered entities are required to maintain books and papers which include financial statements, accounts, records of account, deeds and minutes and will now be required to produce such documents at the request of the Registrar. The Registrar will be able to enter and inspect the premises of a registered entity as well as inspect, take copies of or make extracts of any recorded information found on those premises. The Registrar will also be able to ask for an explanation of any recorded information or where requested documents may be found.
Mr. Speaker, these powers are accompanied by compliance measures. Registered entities that are in default will be subject to a minimum default fine per day of $100 that will not exceed $500. Failure to comply with any requirements or contravention of any prohibition by or under this Bill or the Act that governs the registered entity will result in a maximum penalty of $250,000.00.
Mr. Speaker, natural justice rights are embedded in this Bill as the Registrar must give notice to a registered entity or other person (affiliated with the registered entity) to comply and afford them the opportunity to be heard. Likewise, if the Registrar decides to impose a penalty on a registered entity or person, notice must be given with the opportunity for the registered entity or person to make representations. The Registrar must give reasons for his decisions on any representation made to him. There is a right of appeal to the Supreme Court of the Registrar’s decision regarding default fines and civil penalties.
Mr. Speaker, other protections in this Bill include offences for disclosing information that is gathered in the course of the Registrar’s inspection powers.
These protections strike a balance in Bermuda’s ability to maintain its favourable rating with the OECD and the interests of the registered entities.
In closing, I would like to thank the Registrar of Companies, the Attorney General’s Chambers, the Treaties Unit of the Ministry of Finance, Bermuda Monetary Authority and the National Anti-Money Laundering Committee for their hard work and invaluable assistance in the formulation of policy and speedy drafting of this legislation.
Thank you, Mr. Speaker.