Almost every Bermuda entity type is either local or exempted. The distinction is about who owns it, and it determines what it may do in the domestic market.
What local means
A local entity is incorporated or formed to trade primarily in the Bermuda domestic market. A local company is defined by exclusion: any company incorporated in Bermuda other than an exempted company.
A local company may not carry on business of any sort in Bermuda unless it complies with Part I of the Third Schedule to the Companies Act 1981, or is a wholly owned subsidiary of a company that does; or is listed in Part II of that Schedule; or is licensed by the Minister, or is a wholly owned subsidiary of such a licensed company; or is a company whose shares are listed on a designated stock exchange and which is engaged as a business in a material way in a prescribed industry, or a wholly owned subsidiary of such a company.
What exempted means
An exempted entity is formed to conduct business outside Bermuda. It is called exempted because it is exempt from the sixty per cent Bermudian ownership requirement. In exchange, it is restricted in what it may do within Bermuda.
An exempted company may not acquire or hold land in Bermuda except under specified leases, and may not carry on business of any kind in Bermuda except within a list of permitted exceptions: business with persons outside Bermuda; business in Bermuda with another exempted undertaking in furtherance only of that undertaking's business conducted outside Bermuda; dealing in securities of exempted undertakings, local companies or partnerships; banking with a licensed bank; concluding contracts necessary for its external business; acting as manager, agent, consultant or adviser to an affiliated entity; reinsuring risks undertaken by a Bermuda insurer; and specified marketing and dealing activities relating to funds, limited partnerships and unit trusts.
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Which types can be either
- companies, under the Companies Act 1981. The memorandum must state which
- limited liability companies, under the Limited Liability Company Act 2016. The certificate of formation must state which
Exempted partnerships are exempted by definition. Overseas companies and overseas partnerships are neither, because they are not created under Bermuda law and operate here on a permit.
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Beneficial Ownership
Both are equally subject to the Beneficial Ownership Act 2025. Exempted status is an exemption from the ownership requirements, not from the beneficial ownership regime.
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