Setting Up a Business in Bermuda

Choosing a form

There are several options for setting up a business in Bermuda. Which is right depends on the nature of your business activities, on whether you wish to conduct business in the local market, and on whether the owners have Bermudian status.

Two questions decide most of the answer.

Will the business trade in Bermuda, or from Bermuda? A local entity may trade in the domestic market, but must satisfy Bermudian ownership and control requirements or hold a licence from the Minister. An exempted entity is exempt from those ownership requirements, and in exchange is restricted in what it may do within Bermuda.

What liability do the owners wish to carry? Shareholders in a limited company, and members of a limited liability company, have limited liability. In a partnership the general partners are liable to an unlimited extent, while the limited partners have limited liability and are not liable for the debts of the partnership unless they take part in its management.

Limited companies

Bermuda limited companies are incorporated under the Companies Act 1981. A company is a separate legal person from the date of registration, with the capacity, rights, powers and privileges of a natural person. Shareholders have limited liability, but a company carries formalities, reporting duties and management responsibilities that other forms do not.

Companies may be limited by shares, limited by guarantee, or unlimited, and may be local or exempted.

Limited liability companies

Limited liability companies are formed under the Limited Liability Company Act 2016. An LLC is a separate legal entity with the capacity, rights, powers and privileges of a natural person. It is a hybrid: managed under an LLC agreement in the manner of a partnership, while giving its members limited liability in the manner of a company. That limitation is not lost if members take an active part in management.

Partnerships

The Registrar of Companies registers exempted partnerships and exempted limited partnerships. These are formed under the Exempted Partnerships Act 1992 and the Limited Partnership Act 1883, and are governed in addition by the Partnership Act 1902.

A partnership may be registered as an exempted partnership where one or more of its partners is an individual without Bermudian status, a company that is not a local company, or is otherwise not Bermudian. An exempted partnership may only conduct business outside Bermuda, from a principal place of business within Bermuda. It must have a registered office in Bermuda and a resident representative, both filed with the Registrar, and its partnership agreement must expressly provide that the law applicable to it is the law of Bermuda.

In an exempted limited partnership the general partners are liable to an unlimited extent and manage the business, while the limited partners contribute capital and have limited liability, and are not liable for the debts of the partnership unless they take part in its management.

A Bermuda partnership is a legal person only if it elects to be one. Section 4A of the Partnership Act 1902 allows a partnership to elect legal personality, by specifying a declaration to that effect in its certificate of exempted partnership or certificate of limited partnership. The election is irrevocable, and on registration the Registrar issues a certificate of registration stating that the partnership has legal personality.

Entities formed outside Bermuda

A company or partnership formed outside Bermuda that wishes to carry on trade or business in Bermuda requires a permit from the Minister. Such an entity is not created under Bermuda law and holds its legal personality, if any, under the law of its place of formation.

Alternatively, a foreign entity may be continued into Bermuda, becoming a Bermuda entity going forward. Continuance does not create a new legal entity: the same body corporate carries on, now governed by Bermuda law.

See the Article ‘Overseas Companies and Overseas Partnerships’.

What every formation involves

Whichever form you choose, the steps are broadly the same:

1. Reserve the name. Names may be reserved for up to three months.
2. Check whether the proposed business activity is restricted. Some activities require the consent of the Minister, and some are prohibited outright.
3. Disclose the proposed beneficial owners, with personal declarations where required. The Registrar verifies them before the entity is registered.
4. Prepare the constitutional documents: a memorandum of association and bye-laws for a company, a certificate of formation and an LLC agreement for a limited liability company, or a certificate and a partnership agreement for a partnership.
5. Choose a registered office in Bermuda, which may not be a post office box, and appoint the directors, officers, managers or resident representative that the form requires.
6. Make any licence or permit application required by the nature of the proposed business.
7. File with the Registrar and pay the government fees.

After you register

Every entity registered in Bermuda carries continuing obligations, including:

1. maintaining a registered office in Bermuda
2. keeping the statutory registers the relevant Act requires, and books of account
3. maintaining a beneficial ownership register, filing the required information with the Registrar, and updating it within fourteen days of being notified of a change
4. filing an annual declaration
5. paying annual fees

More information

Detailed guidance on each form is published in the following Articles:

1. Limited Companies
2. Limited Liability Companies
3. Partnerships
4. Overseas Companies and Overseas Partnerships

Bermuda legislation is published at www.bermudalaws.bm.
Forms are at www.gov.bm/services/registrarcompanies-forms.
Filings and searches are made at www.registrarofcompanies.gov.bm.
If you have questions, please contact the Registrar of Companies at helpcenter@rocbda.com.