Bermuda is an overseas territory of the United Kingdom that has a strong international reputation as an innovative and business-friendly jurisdiction with a mature Westminster model of parliamentary self-governance, a fully developed legal framework based on statute and English common law, and an independent and progressive judiciary. The judiciary is established by the constitution as a separate and independent branch of government and carries out the responsibilities of the court. The Bermuda judiciary system is made up of the Magistrates' Court, the Supreme Court, the Court of Appeal and several tribunals.

Magistrates' Court

The main function of the Magistrates' Court is to decide on the summary judgment of criminal matters and civil disputes involving a claim for BMD25,000 or less. There is no jury, and the case is sent to the Supreme Court if the Magistrate decides that an offence is extremely serious. Appeals from judgments of the Magistrates' Court are heard by the Supreme Court.

The Supreme Court

As mentioned above, the Supreme Court entertains appeals from the Magistrates' Court, serious criminal offences and civil disputes involving claims of more than BMD25,000. Most common offences include robberies, burglaries, when a person seriously injures or kills someone, and business matters related to reinsurance, international business and the winding-up of companies, among other things. Criminal and civil trials are held in open court.

The Court of Appeal

The Court of Appeal entertains appeals from the Supreme Court. The Court sits three times a year, usually for three weeks at a time. It consists of the President and not fewer than two other Justices of Appeal, and has all the powers and duties conferred or imposed on the Supreme Court in the exercise of its original or appellate jurisdiction.

In certain cases, Bermuda's legal system also allows for a final appeal to be made to the Judicial Committee of the Privy Council in England, which is the highest appellate court for Bermuda.

The Exchange Control Regulations, 1973 (as amended) and the Companies Act, 1981 (as amended) set out various provisions in relation to the issue, transfer, redemption and repurchase of securities. Under the provisions of the Exchange Control Regulations, issues and transfers of shares in Bermuda companies involving non-residents for exchange control purposes must receive prior approval from the Bermuda Monetary Authority (BMA), except where general permission has been granted by the BMA as set out in the Notice to the Public of June 2005. Similar provisions apply to changes of general partners of partnerships and changes of membership interests of limited liability companies, which must also receive prior approval from the BMA.

Bermuda companies are incorporated and registered pursuant to the Companies Act, and fall into two main categories: local or exempted.

Local

Local companies are subject to the “60/40” rule, which requires them to be at least 60% owned and controlled by Bermudians (“Local Ownership Rule”). This means that at least 60% of the directors must be Bermudian and at least 60% of the shares must be held by Bermudians; no more than 40% of the directors and shareholders can be non-Bermudian.

A local company may apply to the Minister of Finance (the “Minister”) for a licence under Section 114B of the Companies Act, which, if granted, would allow the local company to carry on business in Bermuda even if it does not satisfy the Local Ownership Rule. When deciding whether or not to grant such a licence, the Minister will have regard to certain prescribed criteria, including:

• the economic situation of Bermuda and due protection of persons already engaged in business in Bermuda;
• the nature and previous conduct of the company;
• any advantages or disadvantages that may result from the company carrying on business in Bermuda; and
• the desirability of keeping the economic resources of Bermuda within the control of Bermudians.

Bermuda's restrictions on foreign investment were eased in 2012 by an amendment to the Companies Act. Provided the applicable business is a company listed on the Bermuda Stock Exchange (BSX) or other appointed stock exchange, or is a wholly owned subsidiary of such a listed company, this amendment allows foreign investment in certain local industries by removing the Local Ownership Rule. These industries include insurance, telecommunications, banking, international transport services by ship or aircraft, energy and hotel operations.

Exempted

Exempted companies are exempt from the ownership and control restrictions of the Local Ownership Rule. However, an exempted company cannot carry on business within Bermuda without a licence from the Minister under Section 129A of the Companies Act (in respect of which, the Minister will have regard to the same criteria as those considered in respect of an application under Section 114B, as described above).

Under the Companies Act, a company shall be deemed to engage in or carry on any trade or business in Bermuda if it occupies premises in Bermuda or if it makes known by way of advertisement or by an insertion in a directory or by means of letterhead that it may be contacted at a particular address in Bermuda, or is otherwise seen to be engaging in or carrying on any trade or business in or from within Bermuda on a continuing basis. A company will also be deemed to engage or carry on any trade or business in Bermuda if it makes known by way of advertisement or by any statement on a website or by an electronic record that it may be contacted at a particular address in Bermuda or if it uses a Bermuda domain name – ie, a “.bm” web address.

Certain activities are expressly excluded from the requirement for such a licence, including but are not limited to:

• doing business with other exempted undertakings in furtherance of the business of the exempted company that is being conducted outside Bermuda;
• dealing in securities of exempted undertakings, local companies or partnerships;
• carrying on business as manager or agent for, or consultant or adviser to, any exempted company or permit company that is affiliated;
• carrying on the business of reinsuring risks undertaken by any company incorporated in Bermuda and permitted to engage in insurance and reinsurance business; and
• in the case of mutual funds, the marketing of shares or dealing with holders of shares of an exempted company where the exempted company is a mutual fund.

Exempted companies are therefore typically international companies incorporated by non-Bermudians, which are conducting business outside Bermuda from a place of business in Bermuda.

Land

There are additional restrictions on foreign ownership of land, whether by individuals or companies.

Economic Investment Certificate

There are certain circumstances where non-Bermudian eligible high net worth individuals can invest in Bermuda, which would allow them to obtain permanent residency rights and the right to work in Bermuda. Such investments include (but are not limited to) investing at least BMD2.5 million into Bermuda's local economy by buying real estate or establishing a new business, purchasing Bermuda government bonds, donating to a Bermuda registered charity and contributing to Bermuda's Sinking Fund.

Overseas Permit Companies

Overseas companies that wish to carry on any trade or business in Bermuda must apply for a permit to do so from the Minister under Section 134 of the Companies Act. Permit fees are payable annually, and the Minister may impose any conditions he deems fit to the grant of the permit.

BMA approval (see 3.2 Incorporation Process regarding the process) is required for the ownership of any entity in Bermuda. Without BMA approval, the Bermuda Registrar of Companies (the “Registrar”) will not form or incorporate an entity.

If a company is already incorporated and the corporate service provider (CSP – see 3.1 Most Common Forms of Legal Entity) has transferred the shares to an entity although the transfer has not been approved by the BMA, the entity will be liable to fines, and the directors of the company may also be liable to fines. If the entity is a regulated entity, it could also result in the revocation of the relevant licence.

No specific commitments are required from foreign investors, other than in respect of the Economic Investment Certificate.

Outside of the normal judicial system, there is no specific legislative framework in place that gives investors the ability to challenge a decision of the BMA in its capacity as the Controller for foreign exchange purposes.

There are three main corporate vehicles available in Bermuda:

• companies limited by shares;
• partnerships; and
• Limited Liability Companies (LLCs).

Companies Limited by Shares

These can be local or exempted, as explained in 2.1 Approval of Foreign Investments. They are the most common entity and are governed by the Companies Act and must be registered with the Registrar.

Separate legal personality

A company limited by shares has a separate legal personality to its shareholders, meaning that the company has its own assets and liabilities and can sue or be sued in its own name. The liability of the shareholders is limited to the amount agreed to be paid by the shareholders for their shares in the company.

Constitution

The constitutional documents of a company limited by shares are its memorandum of association and by-laws. The memorandum of association sets out the following, among other things:

• the name of the company;
• the objects of the company or that its objects are unrestricted;
• the powers of the company;
• whether the company is an exempted company; and
• the amount and denomination of the company's authorised share capital.

The by-laws set out the “rules” for the administration of the company, including (but not limited to):

• making provision for the transfer or allotment of shares;
• the declaration of dividends;
• the keeping of its accounts and making available the financial statements;
• the duties of the secretary;
• the numbers of members or directors required to constitute a quorum under the respective meetings; and
• the conduct of the affairs of the company.

Minimum share capital

Generally, there is no minimum requirement for the share capital of a company limited by shares, unless such company is a BMA-regulated entity and is required to maintain a minimum paid-up share capital (eg, an insurance or digital assets business entity).

Minimum number of shareholders

The minimum number of shareholders for a company limited by shares is one, unless such company's by-laws prescribe otherwise.

Minimum number of directors

The minimum number of directors for a company limited by shares is one, unless such company's by-laws prescribe otherwise or the business activities of the entity are licensed or registered with the BMA, in which case a higher minimum may be prescribed by the applicable regulations.

Secretary

All companies limited by shares are required to appoint a secretary to the company, who shall hold office in accordance with the by-laws.

Every Bermuda exempted company is required to appoint a resident director, a resident representative or a resident secretary. Typically, a Bermuda exempted company will engage a licensed Bermuda CSP to provide administrative and registered office services to the entity; in some instances, the CSP can also provide a resident director, where this is required.

Partnerships

Partnerships can be local or exempted, and may be general or limited. Local partnerships must meet the Local Ownership Rule. They are not generally as common as companies limited by shares but are frequently used with fund structures. The following legislation is applicable to partnerships:

• the Partnership Act 1902 (applicable to all partnerships);
• the Limited Partnership Act 1883 (applicable to limited partnerships);
• the Exempted Partnership Act 1992 (applicable to exempted partnerships); and
• the Overseas Partnership Act 1995 (applicable to overseas partnerships who are carrying on business in Bermuda) (each a “Partnership Act”).

An overseas partnership that intends to carry on business in or from within Bermuda must obtain a permit from the Minister and be registered under the Overseas Partnership Act 1995. Permit fees are payable annually, and the Minister may impose such conditions as he deems fit to the grant of the permit.

Limited liability

A general partner in a partnership will have all of the rights and powers and be subject to all the restrictions and liabilities in the partnership and, as such, will not have limited liability. In a limited partnership, the limited partners will only be liable to the extent of their unpaid capital commitments to the partnership, unless they are deemed to have taken part in the management of the limited partnership, in which case such liability status shall be lost and they will be liable on the same basis as a general partner.

Separate legal personality

A partnership can elect to have legal personality, which entitles the partnership to hold assets, enter into contracts and be sued in its own name.

Constitution

Partnerships are governed by the partnership agreement. The Partnership Acts set out the basic statutory provisions between the partners but such provisions may generally be overridden by the terms of the partnership agreement (except where expressly stated otherwise in the applicable Partnership Act).

Interests or voting rights

There is no minimum requirement for the number of interests or voting rights required for a partnership, but such interests or voting rights should be set out in the partnership agreement.

Limited Liability Companies

LLCs are less common than partnerships and companies limited by shares but they are increasing in popularity. LLCs are a hybrid between companies limited by shares and partnerships. Members are liable only to the extent of their agreed membership contributions. LLCs can be local (which are subject to the Local Ownership Rule) or exempted.

Constitution

Generally, LLCs are governed by the terms of their limited liability company agreement; if such agreement does not expressly provide for a particular situation, the Limited Liability Company Act 2016 (as amended) will apply.

Separate legal personality

An LLC can elect to have legal personality separate from its members in order to own and deal with its separate property in accordance with the terms of the limited liability company agreement. LLCs are very flexible and allow the members to actively participate in the management thereof while retaining limited liability.

Establishing an entity in Bermuda requires the assistance of a CSP.

The first step of incorporating an entity in Bermuda is to obtain a “no objection” response from the BMA. On incorporation, an entity is required to disclose to the BMA its direct, indirect and ultimate beneficial ownership. The BMA scrutinises the ownership of a Bermuda entity and must be satisfied that the persons who wish to own and control the Bermuda entity are persons of integrity and good standing.

The application for incorporation or formation is filed by the CSP through the BMA's electronic platform, called Integra. Depending on the complexity of the ownership structure, BMA approval is usually granted within 24–48 hours.

Once the BMA has provided its “no objection” response, the CSP will then proceed to register the Bermuda entity with the Registrar. This application is also submitted by the CSP to the Registrar through its electronic portal.

The application to the Registrar includes the following:

• the approved name reservation;
• the “no objection” response from the BMA;
• the memorandum of association and by-laws of the company;
• any licence or permit applications required, based on the nature of the proposed business activities;
• the address of the registered office in Bermuda;
• the appointment of directors, officers and the company secretary; and
• the payment of the annual government fees and disbursements.

If all documents are submitted in the appropriate form, the Certificate of Incorporation is usually provided to the CSP within 24–48 hours.

All entities registered in Bermuda are subject to annual reporting requirements and event-driven reporting disclosure requirements.

Beneficial Ownership – Companies Act

Since March 2018, all Bermuda companies, LLCs and partnerships are required to obtain information on their beneficial owners and maintain a beneficial ownership register at their registered offices (except where expressly exempted under the Companies Act). This information must also be filed with the BMA but is not publicly accessible.

Exceptions include:

• a company whose shares are listed on the BSX or an appointed stock exchange;
• a permit or overseas company;
• certain financial institutions – eg, a corporate service provider, open-ended investment fund, investment provider, fund administrator or trust company;
• a closed-ended investment vehicle managed by a licensed person, or registered, authorised or licensed by a foreign regulator recognised by the BMA; or
• any other type of company or entity that is exempted by order made by the Minister of Finance.

For the purposes of the applicable legislation, a “beneficial owner” is:

• any individual or individuals who own or control more than 25% of the shares, voting rights or interests in the company (directly or indirectly);
• if no such individuals exist or can be identified, any individuals who control a company by other means; and/or
• if no such individuals exist or can be identified, the individual who holds the position of senior manager of the company (such as a chief executive officer or president).

Every company to which the above applies must obtain the following from every registrable person:

• their full name and any other names;
• their residential address, address for service, nationality and date of birth if the person is an individual;
• the address of the registered/principal office, the date and place of registration, the form of legal entity, and the name of the exchange on which it is listed, if applicable, if the person is a relevant legal entity;
• the effective date each person was entered on the register as a registrable person;
• a statement of the nature and extent of the interest held;
• the size, in respect of a class of beneficial owners; and
• where applicable, the date each person ceased to be a registrable owner.

The beneficial ownership register must be kept up-to-date and current, and any notification of any change must be filed with the BMA as soon as practicable, but not later than 14 days after the company is aware of the change.

Annual Return/Declaration

All local and exempted entities are required to deliver an annual return or an annual declaration, respectively, with the prescribed fee to the Registrar or on or before 31 January for exempted entities and on or before 31 March for local entities. The annual return or annual declaration includes certain information, including the entity’s main activity, the financial year end and the assessable share capital (where applicable), as well as confirmation on whether the entity is conducting a relevant activity for the purposes of Bermuda's economic substance laws (as described further below).

Economic Substance Declarations

Like other British Overseas Territories and Crown Dependencies, Bermuda has enacted economic substance legislation in compliance with the Organisation for Economic Co-operation and Development's Inclusive Framework on Base Erosion and Profit Shifting (BEPS). These trigger reporting requirements for in-scope Bermuda registered entities (see 5.7 Anti-evasion Rules for more detail).

Where an entity is conducting a “relevant activity” in a “relevant financial period” for the purposes of Bermuda's economic substance laws, the entity will be required to file an economic substance declaration with the Registrar no later than six months from the last day of the entity's financial year-end. Entities that are not in scope of Bermuda's economic substance laws because they are claiming to be a “non-resident entity” are also required to file an economic substance declaration in respect of each “relevant financial period” and must include evidence to demonstrate its tax residency in the relevant jurisdiction in that filing.

Certain Event-Driven Reporting

There are also event-driven filing requirements for all entities registered in Bermuda. For an exempted company, which is the most common type of entity, the following non-exhaustive list of reporting events must be filed with the Registrar, pursuant to the Companies Act:

• changes to the name of the company;
• any increase in the authorised share capital;
• a change of currency denomination of the company's share;
• any reduction in share capital;
• a change of directors;
• a change in the registered office;
• amendments to certain provisions of the by-laws; and
• changes to the Beneficial Ownership Register of the company.

Change in Beneficial Ownership – BMA Reporting

As noted in 2.1 Approval of Foreign Investments, any change in the direct ownership of a Bermuda entity must be approved by the BMA for exchange control purposes, unless a particular exemption applies, which includes entities that are listed on an appointed stock exchange. If there is a change in the ultimate beneficial ownership of an entity, the BMA must be notified of such change within 14 days of the company becoming aware of the change. In addition, if a company is regulated by the BMA, certain event-driven reporting requirements arise under the applicable regulatory acts.

Financial Statements

All companies must lay annual accounts and an auditor's report before their shareholders (unless all directors and all shareholders agree to waive this requirement). There is no requirement under Bermuda law to file accounts with the Registrar or any other governmental body. Under the regulatory acts, regulated entities may be subject to requirements to prepare and file audited financial statements with the BMA annually.

Companies

The governance and management of a company are generally the responsibility of its board of directors. Directors may exercise all powers of a company other than those required by the Companies Act or expressly reserved by the shareholders in accordance with the memorandum of association and by-laws of the company. Decisions reserved for the shareholders by the Companies Act include:

• the appointment and removal of directors (also in accordance with the by-laws);
• changing the name of the company;
• amending the memorandum of association or by-laws;
• approving a merger, amalgamation or scheme of arrangement in relation to the company;
• altering the company’s share capital;
• approving a discontinuation to another jurisdiction; and
• winding up the company on a voluntary basis.

The board of directors is a unitary board structure forming one tier of both executive and non-executive directors.

Management of the company is typically the responsibility of the board of directors. Subject to the by-laws, directors manage the operation and strategies of the company, and may delegate the day-to-day management of the company’s business to executive officers (such as a chief executive officer or chief financial officer). Directors who specialise in key areas of the company, such as finance, marketing or executive management, often lend their expertise to specific management decisions of the company.

The process by which the board of directors convenes and conducts board meetings and makes decisions is typically set out in the by-laws. Generally, decisions of the board are decided by way of a simple majority. However, the by-laws may specify the following:

• matters where an increased majority or unanimous vote is needed;
• circumstances in which the consent of independent directors is necessary;
• guidance regarding the casting vote of the chair; and
• provisions requiring a director’s declaration of material interests that may prevent them from voting on particular resolutions.

A quorum must be in attendance for the entirety of a meeting of the board of directors. Subject to the by-laws of a company, a director who generally declares an interest in writing or declares an interest in the business to be conducted at a meeting at first opportunity may still be counted in the quorum and vote. As an alternative to approving matters at board meetings, written resolutions of the directors are normally permitted by by-laws and typically require a unanimous decision. It is also a common feature of by-laws that written resolutions are to be considered effective on the date on which the last director signs or the resolutions are signed by a specified majority of directors.

Partnerships

The governance arrangements for a partnership, including for partners' meetings, will typically be set out in the partnership agreement. For limited partnerships, it is critically important that the limited partners do not take part in the management of the limited partnership, otherwise they will lose their limited liability status (subject to the “safe harbour” provisions in the Limited Partnership Act 1883, which expressly state that certain actions taken by a limited partner will not be construed as taking part in the management of the partnership). Subject to the partnership agreement, a general partner may delegate their authority to others, including to a management committee or board.

Limited Liability Companies

LLCs can have very flexible governance arrangements, which are dictated by the limited liability operating agreement. It is possible for LLCs to be managed by a sole member.

Directors' and Officers' Liability

Statute

The Companies Act prescribes the legal duties of the directors and officers of a company. In exercising their powers and discharging their duties to the shareholders and company, directors must:

• act honestly and in good faith with a view to the best interests of the company; and
• exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.

Common law rules

At common law, directors and officers owe fiduciary duties and duties of skill and care to the company.

The fiduciary duty is to act in good faith in their dealings with or on behalf of the company and to exercise their powers and fulfil the duties of their office honestly. This duty has four elements:

• to act in good faith;
• to exercise powers for the purpose for which they were intended (eg, the powers should not be exercised for the purposes of preventing a majority of the shareholders from exercising their rights as such);
• to avoid conflicts of interest (ie, where there would be a conflict between the director's personal interest and their duty to the company); and
• not to make a personal profit from opportunities that arise from their directorship.

The duty of skill and care is a more positive obligation on a director and generally has three elements:

• to exercise the degree of skill that may reasonably be expected from a person of their knowledge and experience;
• attending to the business of the company by displaying the reasonable care an ordinary person may be expected to take in the same circumstances; and
• relying upon others (co-directors, officers and executive management), provided such reliance is honest and reasonable.

It should be noted that directors cannot absolve themselves entirely of their responsibility by delegation to others.

The directors owe their duties to the company (being the shareholders as a whole) rather than any particular shareholder or group of shareholders.

The Companies Act provides that a director or officer of a company will be deemed not to be acting honestly and in good faith if they fail:

• on request, to make known to the auditors of the company full details of any emolument, pension or other benefit that they have received, or any loan received or that they are to receive from the company or its subsidiaries; or
• to disclose at first opportunity during a meeting or by writing to the directors their interest in any actual or proposed material contract or in any person that is a party to a material contract or proposed material contract with the company or any of its subsidiaries.

However, a director or officer is not liable to the above duties if they relied in good faith upon:

• the financial statements of the company represented to them by another officer of the company; or
• a report of a professional (such as an attorney, accountant, engineer or appraiser) whose profession lends credibility to a statement they made.

The concept of “piercing the corporate veil” is recognised in Bermuda in limited circumstances, so personal liability may be imposed in certain limited situations. For example, a court may only “pierce the corporate veil” in exceptional cases where a company's separate legal personality is abused (typically when fraud has occurred).

In its by-laws or in any contract or arrangement between the company and any officer, a company may exempt or indemnify such officer in respect of any loss arising or liability attaching to them by virtue of any rule of law in respect of any negligence, default, breach of duty or breach of trust of which the officer or person may be guilty in relation to such company.

Under the Companies Act, any provision that seeks to exempt or indemnify a director or officer of the company from any liability which by virtue of any rule of law would otherwise attach to said individual in respect of any fraud or dishonesty of which they may be guilty in relation to the company is deemed to be void. This does not prevent the company from indemnifying directors or officers against liability incurred in defending proceedings (whether civil or criminal) in which judgment is given in their favour or in which they are acquitted.

Shareholders’ Liability

Under the Companies Act, the liability of the shareholders of a company limited by shares is limited to the amount unpaid on the shares held by them.

In Bermuda, employment relationships are governed by the Employment and Labour Code of Bermuda, which is comprised of the Employment Act 2000 (EA 2000 – the main statute governing employment relationships) and the Trade Union and Labour Relations (Consolidation) Act 2021 (TULR). The EA 2000 deals with minimum standards of employment, termination and disciplinary procedures, and the TULR regulates the rights of trade unions and their members, together with the rules relating to labour disputes.

There are also a number of ancillary statutes and regulations dealing with matters touching on employment standards, rights, compensation and workplace discrimination, including the Workers' Compensation Act 1965, the Human Rights Act 1981 and the Occupational Safety & Health Act 1982.

Claims or applications relating to breaches of the EA 2000 or for unfair dismissal are determined exclusively by the Employment Tribunal, whose decisions are currently published online. Claims of wrongful dismissal, breach of employment contracts or complaints relating to equity compensation are determined exclusively by the Supreme Court of Bermuda, which will apply Bermudian and English case law. Privy Council decisions are binding, while English case law is highly persuasive. Case law from other commonwealth jurisdictions may also be persuasive.

An employment contract can be concluded in writing or verbally; however, pursuant to Section 6 of the EA 2000, an employer is required to provide a written statement of employment (SOE) within a week of employment commencing. The EA 2000 prescribes a list of more than 18 details that must be contained in the SOE, including:

• the date employment commenced;
• a description of the work;
• benefit entitlements;
• whether any collective agreement directly affects the terms of employment;
• the gross wage or the method of calculating it; and
• any probationary period, etc.

These details are often included in the written contract between the employer and employee, and the employment agreement constitutes the SOE. Parties are not limited to the SOE and may include other terms in an employment agreement as long as they are not contrary to the EA 2000. The EA 2000 does not permit employers to waive any of its requirements.

The duration of an employment contract is not regulated, but in accordance with Section 5 of the EA 2000 the employment contract will be presumed to be continuous unless a fixed term is expressly agreed.

The EA 2000 distinguishes between full-time and part-time employees by reference to the number of hours worked per week. Any employees working 15 hours or more per week will be full-time employees and are entitled to the full scope of protections and rights afforded by the EA 2000. Part-time employees (those working less than 15 hours per week) do not benefit from the requirements of the EA 2000, with the exception of the SOE, which employers must provide for all employee types.

The EA 2000 does not specify a maximum number of hours. However, Section 9 does provide that hours worked in excess of 40 hours per week must be paid at the overtime rate or the employee must be compensated with an equal amount of time off in lieu. This requirement does not apply where the employer and employee agree otherwise. The EA 2000 sets the “overtime rate” at 1.5 times the employee's normal hourly wage. Opting out of overtime is a common practice.

Employees must be given a minimum of 24 hours consecutive rest per week.

Bermuda is not an “at will” employment jurisdiction. Section 18 of the EA 2000 sets out certain reasons for which an employer may validly terminate an employment relationship, including:

• the ability, performance or conduct of the employee; or
• the operational requirements of the employer's business.

In addition to having a valid reason for dismissal, both employers and employees must provide notice of termination. The EA 2000 sets out minimum notice periods of up to a month, although notice periods are typically stipulated in the governing employment agreement. The employer may truncate the notice period by paying the employee a sum equivalent to the wages and other remuneration payable during the notice period. Benefits must also be maintained or paid during this period.

Termination for performance-related reasons or repeated misconduct requires compliance with a graduated warning and cure regime taking place over six months. This requires a written warning setting out the misconduct/unsatisfactory performance followed by appropriate instructions to improve. Summary or immediate termination is permitted for serious misconduct that is directly related to the employment relationship or that has a detrimental effect on the employer's business.

In addition, an employer may terminate employment where the position is redundant if the conditions of redundancy set out in Section 30 EA 2000 are satisfied. Before terminating the employment for redundancy, the employer is required to inform the employee(s) or, if applicable, the trade union of specific information in no less than 14 days. This may include information relating to the number or category of employees affected and possible measures that may be taken to minimise the effect of redundancy.

The EA 2000 does not state that employees must be represented. In relation to redundancies, employers must follow specific steps within a set timeframe to inform employees of the reason for the redundancies and consult with employees on possibilities for avoiding the redundancies. Where the employee is part of a trade union, said union is required to be consulted where the employer is considering redundancies. Outside of redundancy, there are no formal generally applicable consultation requirements. As set out in 4.4 Termination of Employment Contracts, there is a graduated warning and notice regime applicable to performance and misconduct issues for non-unionised employees. Employers may create a grievance process by policy or contract, although such a process is not mandatory.

In a dispute, common law principles of vicarious liability will apply. In a labour dispute (where the employee is a member of a trade union), employees have a right to representation by and through the trade union pursuant to the terms of the applicable collective bargaining agreement (CBA) with the employer. The CBA will include grievance and dispute procedures, and may state that the employee must have a trade union representative present for any meetings concerning work performance or conduct issues.

In Bermuda, individuals are not subject to personal income tax. However, a payroll tax is levied against all employers, governed by the Payroll Tax Rates Act 1995. Taxable remuneration includes the sum of wages/salaries and benefits paid in cash or in kind to all employees and deemed employees as a result of services provided in Bermuda. This remuneration is capped at BMD1 million per annum per person, and is taxed in two portions: the employer portion and the employee portion. Employer contributions to approved pension, life insurance and health insurance schemes are exempt from payroll tax.

The employer portion is based on the annual remuneration and tax class of the employer, as follows:

• if the annual payroll is less than BMD200,000, the payroll tax is 1%;
• if the annual payroll is BMD200,000–350,000, the payroll tax is 2.5%;
• if the annual payroll is BMD350,000–500,000, the payroll tax is 5.25%;
• if the annual payroll is BMD500,000 to BMD1 million, the payroll tax is 7.5%; and
• if the annual payroll is more than BMD1 million, the payroll tax is 10%.

For all exempt companies, the payroll tax is 10.25%.

The employee portion is based on the employee's remuneration (excluding shared benefits) and the marginal tax rates for employees, as follows.

• if the annual remuneration bands on 1 April 2023 are BMD0–48,000, the maximum taxable portion is BMD48,000 and the payroll tax is 0.5%;
• if the annual remuneration bands on 1 April 2023 are BMD48,000–96,000, the maximum taxable portion is BMD48,000 and the payroll tax is 9.25%;
• if the annual remuneration bands on 1 April 2023 are BMD96,001–200,000, the maximum taxable portion is BMD104,000 and the payroll tax is 10%;
• if the annual remuneration bands on 1 April 2023 are BMD200,001–500,000, the maximum taxable portion is BMD300,000 and the payroll tax is 11.5%;
• if the annual remuneration bands on 1 April 2023 are BMD500,001 to BMD1 million, the maximum taxable portion is BMD500,000 and the payroll tax is 13.5%; and
• if the annual remuneration bands on 1 April 2023 are more than BMD1 million, the maximum taxable portion is BMD1 million.

Payroll tax must be paid on 15 January, 15 April, 15 July and 15 October every year. All exempted companies and companies with annual remuneration greater than BMD200,000 must submit payroll tax online at www.etax.gov.bm.

In addition, employers are required to make monthly contributions to the Contributory Pension Fund for every employee above 17 years of age for each week in which the employee works more than four hours. Employed persons over school-leaving age and under the age of 65 must contribute BMD71.84 per week. This payment is split 50/50 between the employer and the employee.

Local and exempted companies must pay an annual government fee to the Registrar on or before 31 March or 31 January each year, respectively. The annual government fee is paid on a sliding scale and is determined according to an entity's assessable share capital.

In addition, if a local or exempted company is regulated by the BMA, it must also pay an annual registration or licence fee. Such entities include banks, digital asset businesses, insurers and reinsurers, investment businesses, trusts, funds, corporate service providers, credit unions and money service businesses. Annual government fees may be based on a number of factors, including the type of regulated entity, the nature of its activities and the amount of the entity's assets.

CSPs are also required to pay a 7% corporate services tax on revenue earned. Banks, domestic insurers and money service business are also subject to financial services tax, at the following rates:

• banks: financial service tax of 0.0075% of gross consolidated assets;
• domestic insurers: financial service tax of 3.5% of non-health-related gross premiums written; and
• money service businesses: financial service tax of 1% on aggregated outgoing transmission volume.

In relation to foreign shareholders, Bermuda does not impose any taxes on dividends paid or received, interest paid or intellectual property royalties paid.

The Bermuda government routinely grants tax assurance certificates to exempted undertakings (ie, exempted companies, permit companies, exempted partnerships and exempted unit trust schemes) on application to the Minister of Finance through the BMA. These tax assurances certificates guarantee that any parliamentary imposition of such taxes will not be applicable to the company and its operations in future years. Currently, the tax assurances being granted extend to 31 March 2035.

As Bermuda does not impose income taxes on companies, tax consolidation is not applicable.

There are no thin capitalisation rules in Bermuda.

There are no transfer pricing rules in Bermuda.

Bermuda does not currently have anti-evasion legislation in place.

However, Bermuda registered entities (other than entities that are considered to be tax resident in another jurisdiction under Bermuda's rules, as described further below) that are conducting a relevant activity, as prescribed under the Economic Substance Act 2018 and the Economic Substance Regulations 2018, each as amended, are subject to certain “economic substance requirements”.

Entities that are involved in the following services and are engaged in one or more “relevant activity” for economic substance purposes must demonstrate adequate economic presence in Bermuda, in each financial period in which they are conducting any such activity (a “relevant financial period”):

• banking;
• insurance;
• fund management;
• financing and leasing;
• headquarters;
• shipping;
• intellectual property;
• distribution and service centre; and
• holding entity.

Entities that are conducting a relevant activity in a relevant financial period are required to file an economic substance declaration no later than six months from the last day of the entity's financial year-end, demonstrating their compliance with the economic substance requirements.

An entity complies with the Bermuda economic substance requirements if:

• it is managed and directed in Bermuda;
• the core income-generating activities are undertaken in Bermuda with respect to the relevant activity;
• it maintains an adequate physical presence in Bermuda;
• there are adequate full-time employees in Bermuda with suitable qualifications; and
• adequate operating expenditure is incurred in Bermuda in relation to the relevant activity.

Entities conducting the relevant activity of a “holding entity” are subject to the “minimum economic substance requirements”, which include:

• compliance with the corporate governance requirements set forth in the Companies Act, the Limited Liability Companies Act 2016 or the relevant Partnership Act, including keeping records of account, books and papers and financial statements; and
• the filing of the economic substance declaration.

In addition to the minimum economic substance requirements, an entity conducting the relevant activity of a “holding entity” must also have adequate people for holding and managing equity participations and have an adequate presence in Bermuda, which is most often provided through appropriate service providers in Bermuda, such as CSPs, which are typically considered adequate for these purposes.

An entity that is conducting a relevant activity in a relevant financial period but that is resident for tax purposes in a jurisdiction outside of Bermuda that is not on Annex 1 of the EU list of non-co-operative jurisdictions for tax purposes may make a claim to the Registrar that it is a “non-resident entity”. In addition, an entity will not be deemed to be a resident for tax purposes in another jurisdiction if the other jurisdiction does not have a corporate tax regime or if the entity is not subject to equivalent economic substance requirements in such other jurisdiction. These other jurisdictions may include Anguilla, the Bahamas, Bahrain, Barbados, the British Virgin Islands, the Cayman Islands, the Turks and Caicos Islands and the United Arab Emirates.

A non-resident entity that is conducting a relevant activity in a relevant financial period is required to file an economic substance declaration with the Registrar, which includes evidence of the entity's tax residency for the relevant financial period, no later than six months from the last day of the entity's financial year-end.

Failure to meet these requirement may be subject to a penalty of up to BMD250,000.

There is no legislation specifically regulating merger control or notifications thereof. However, the Companies Act applies to all companies registered in Bermuda and allows for both mergers and amalgamations, and a court-sanctioned scheme of arrangement. There are no statutory merger control and takeover tests.

This is not applicable in Bermuda as there are no laws governing merger notification. The Companies Act and a company's by-laws set out the notification requirements to shareholders for the purposes of obtaining shareholder approval of mergers and amalgamations.

This is not applicable in Bermuda as there are no laws governing anti-competitive agreements and practices.

This is not applicable in Bermuda as there are no laws governing unilateral conduct and economic dependency.

Patents are protected in Bermuda under the Patents and Designs Act 1930 (as amended) and related regulations.

Definition

A patent is granted for an invention. An invention is any manner of new manufacture which, at the time of the application for a patent, is not in use by others, and which is not contrary to law, nor detrimental to the State by raising prices of commodities at home, nor damaging to trade, nor generally inconvenient; it also includes an alleged invention.

There are two types of patents in Bermuda:

• national Bermuda patents; and
• re-registration of UK or European patents (provided the application is made within three years from the date of issue of the UK registered patent or a European patent that designates the UK).

Length of Protection

A registered national Bermuda patent lasts for 16 years and can be extended for a further period not exceeding seven years at a time. A re-registration of a UK or European patent lasts for up to 20 years, depending on when the Bermuda application was made and if it is still valid in the UK or Europe.

Registration Process

The process to register a patent is as follows.

• A search of similar patents to ensure the invention is new.
• The submission of a completed Form A Application for a Patent.
• Two copies of the invention's specification must be included with the application and should include:
1. the title of the invention;
2. a detailed written description of the invention;
3. a claim, explaining the extent of the protection being requested; and
4. drawings of the new invention showing how it works. If the invention is three-dimensional, drawings from all angles should be provided.
• Once the patent application including the specifications and filing fee is filed, an official search is made for the same or similar patents on the Register of Patents. Applications are also sent to the UK IPO for a technical assessment and will incur an additional fee depending on how much time is required to review the application.
• The results of the search report are usually received within six months.
• The application is then published in the local newspaper, without the details of the invention. Once the application is published, there is a two-month period in which anyone can file an opposition to the application.
• If no oppositions are filed, or once any comments are resolved, a patent will be granted and the certificate of registration will be issued.

Individuals are also allowed to apply for a provisional patent when the full detailed specifications of an invention are not yet available and they require temporary protection. The provisional patent gives protection for nine months and can be converted into a full application at any time during the nine months.

Patents that are already registered in the UK, or European patents that designate the UK, can be registered in Bermuda within three years of their first registration. No search will be required and the patent will grant the same rights as any other patent registered in Bermuda. It will only be in force as long as the UK or European patent is in force and cannot be renewed once it expires.

Enforcement and Remedies

An owner of the patent can bring civil proceedings for infringement. The law provides statutory remedies for the infringement of a patent, such as:

• injunctive relief;
• account of profits;
• damages; and
• a declaration that the patent is valid and has been infringed.

Trade marks are protected in Bermuda under the Trade Marks Act 1974 (as amended), related regulations and policies set by the Bermuda Registry General's Intellectual Property Office (IPO). The government of Bermuda is currently working on introducing a new Trade Marks Act that directly mirrors the legislation applicable to trade marks in the UK.

Definition

A trade mark is a mark, which can include words, sounds, logos, colours or a combination of any of these, used or proposed to be used in relation to goods for the purpose of indicating, or so as to indicate, a connection in the course of trade between the goods, and some person having the right either as proprietor or as registered user to use the mark, whether with or without any indication of the identity of that person.

Trade marks that are used in connection with services are called service marks and are afforded the same protections from registration as those for trade marks. They follow the same registration process as trade marks.

Registration gives the owner the exclusive rights to use the mark on the goods/services that are covered by the application.

Length of Protection

A registered trade mark will be registered for a period of seven years and may be renewed for a further 14 years after payment of a fee.

Registration Process

The registration process for trade marks is governed by the Trade Marks Act and the policies set by the IPO.

The process to register a trade mark is as follows.

• A search of the trade marks database must be completed to check if anyone has registered an identical or similar trade mark for the same or similar goods or services.
• A trade marks application for registration of a trade mark/service mark (Form TM3) must be completed and submitted to the Registry General, along with the application fee and a representation of the mark affixed.
• When completing the application form, the following must be considered:
1. whether the mark should be registered in part A (for marks that are inherently distinctive or have acquired distinctiveness through use) or part B (for marks with a lower level of distinctiveness, but which are capable of being recognised as the goods/services of the owner) of the Register, noting that applications made under part A are afforded slightly more protection in legal proceedings than part B; and
2. which class of goods or services are to be covered by the registration, using the internationally agreed classification system, which divides all goods into 34 classes and all services into 11 classes.
• A separate application is required for each class of interest.
• An Authorisation of Agent form (Form TM-13) must accompany the application, which appoints an agent with a local address for service.

Following receipt of the application, the Registry General enters the details into its database and an acknowledgment letter is issued.

The application is then reviewed by the Trade Mark Examiner, and the following will occur:

• the examiner will provide feedback on the application, in the form of an examination report – the applicant will have six months to resolve any issues;
• if the examiner has no objections to the application, it will be published in the Official Gazette for two months, during which time anyone can oppose the registration of the mark; and
• if there are no objections received or once the objections are resolved, the trade mark will be registered and a certificate of registration will be issued by the Registry General, confirming registration.

If the trade mark is already registered in the UK, an application can be made to the Registry General to have it registered based on the condition that the mark is registered under the same specifications. The Registry General has discretion as to whether the mark is registered or not.

Enforcement and Remedies

An owner of the trade mark or the licensee of the trade mark granted by the owner, authorising them to use the mark, can enforce a registered trade mark. The law provides statutory protection to an owner from infringement of an identical mark or a mark that is confusingly similar to the registered mark, which is enforceable through the Bermuda courts. An unregistered mark is only enforceable through the courts by anyone who can show the requisite reputation, use and confusion.

Designs are protected in Bermuda under the Patent and Design Act 1930 (as amended).

Definition

A design is only the features of shape, configuration, pattern or ornament applied to any article by any industrial process or means, whether manual, mechanical or chemical, separate or combined, which in the finished article appeal to and are judged solely by the eye; it does not include any mode or principle of construction, or anything which is in substance a mere mechanical device.

Length of Protection

Protection of a design lasts for five years. However, an owner has the option to renew the registered design two times, giving the owner of a design the right to prevent others from using it for up to 15 years.

Registration Process

The process to register a design is as follows.

• A search must be completed against the Registry General design database and the World Intellectual Property Organization registers to check if the design is unique.
• A Form D Application to Register a Design must be completed and must include the following:
1. a statement of which of the 14 classes the design is to be registered in;
2. a brief summary of the design;
3. three sets of drawings of the design (which can include photographs and tracings) viewed from different angles and ensuring all original features are highlighted; and
4. the application fee.
• A separate application is required to register the design in additional classes.

Following receipt of the application, the Registry General examines the application to determine whether the same or a similar design is already registered. If not, the design is entered onto the Registry General's Register of Design and a certificate of registration is issued.

If the design is already registered in the UK, the owner has the same rights as if the UK certificate of registration had been issued with an extension to Bermuda.

Enforcement and Remedies

An owner of the design right/copyright or the licensee thereof can enforce the design right. The law provides statutory remedies for the infringement of a design rights, such as:

• injunctive relief;
• inspection of registered designs;
• account of profits;
• damages; and
• a declaration of rights regarding design.

Copyright is protected in Bermuda under the Copyright and Design Act 2004 (as amended).

Definition

A copyright is a property right that subsists in original literary, dramatic, musical or artistic works, sound recordings, films, broadcast or cable programmes, and the typographical arrangement of published editions.

Length of Protection

The author of the work is usually the first owner, and protection of the copyright starts as soon as a work is created. The length of the protection of the copyright depends on the type of work created, as follows:

• written, dramatic, musical and artistic: copyright usually lasts 70 years after the author's death;
• sounds and music recording: copyright usually lasts 70 years from when it is first published;
• films: copyright usually lasts 70 years after the death of the director, author of the screenplay, author of the dialogue and the composer;
• broadcasts: copyright usually last 50 years from the first broadcast; and
• layout of published editions of written dramatic or musical works: copyright usually lasts 25 years from when it is first published.

Copyright protection is not renewable.

Registration Process

Copyright protection is granted automatically, and does not require an application or the payment of a fee. There is no register of copyright works in Bermuda.

Enforcement and Remedies

An owner of the copyright or the licensee of the copyright can bring civil proceedings for an infringement of a copyright. Possible remedies include:

• injunctive relief;
• delivering up or destroying infringing products;
• damages;
• account of profits;
• a declaration that the copyright is valid and has been infringed; and
• exemplary damages in certain cases.

Domain names are protected under the Electronic Communications Act 2011 (as amended).

Definition

A domain name is the address used when navigating the internet or sending emails. It functions much like a phone number, by enabling computers to use the internet to find specific locations, such as a website or an email inbox. The domain name in a web address is the words after the www., and in an email address they are the words after the @ symbol. It is the domain name assigned by the Bermuda NIC Registry to the registrant.

Length of Protection

Protection for a registrant of a domain name lasts for one year and can be renewed on a yearly basis.

Registration Process

The registration of domain names agreement must be reviewed and accepted, the online application form located on the Bermuda NIC Registry must be completed in full, and the registration fee must be paid.

The Personal Information Protection Act 2016 (as amended) (PIPA) was introduced to regulate the use of personal information in a manner that both protects privacy and recognises the need for organisations in Bermuda to use personal information for legitimate purposes.

PIPA received royal assent in July 2016, although only limited provisions relating to the appointment of the Privacy Commissioner and the establishment of the Office of the Privacy Commissioner were previously operative. Pursuant to the Personal Information Protection Amendment Bill 2023, the operative date for the remaining provisions was set at 1 January 2025.

PIPA applies to every organisation in Bermuda that uses personal information where it is used wholly or partly by automated means and in respect of uses other than by automated means of personal information, which form, or are intended to form, part of a structured filing system.

“Organisation” is broadly defined as “any individual, entity or public authority that uses personal information” and the “use” of personal information is defined as “carrying out any operation on personal information, including collecting, obtaining, recording, holding, storing, organisation, adapting, altering, retrieving, transferring, consulting, disclosing, disseminating, or otherwise making available, combining, blocking, erasing or destroying it”.

There is no scope to contract out of PIPA, and PIPA provides for the grandfathering of personal information held prior to PIPA coming into effect.

Personal information collected and under an organisation’s control prior to PIPA becoming operative is deemed to have been collected pursuant to consent by the relevant individual and may continue to be used by the organisation for the purpose for which it was collected, at the time it was collected.

The competent authority for data privacy and protection in Bermuda is the Office of the Privacy Commissioner.

No major legislative reforms in any of the above legal fields are expected in the near future.