MIGRATION TO BERMUDA
The Companies Act 1981 of Bermuda (the "Companies Act") permits a body corporate incorporated outside Bermuda (the "foreign corporation") to be continued in Bermuda by way of continuation as an exempted company under the Companies Act (the "Registrant").
Pre-conditions to registration
The Registrant must:
- obtain all necessary authorisations, if any, required under the laws of the jurisdiction in which it is presently registered in order to enable it to continue as an exempted company registered in Bermuda;
- make an application to the Bermuda
Monetary Authority ("BMA") accompanied
- a statement of the proposed business of the exempted company;
- information concerning the beneficial owners of the exempted company; and
- a legal opinion of foreign counsel in the jurisdiction from which the Registrant is discontinuing, and
- provide financial statements prepared for a period ending within twelve months of the proposed date of continuance.
The BMA will grant the relevant consent where these conditions are met.
Process of continuation to Bermuda
On satisfaction of the pre-conditions to registration, the Registrant must make an application for registration accompanied by:
- the original signed memorandum of continuance;
- the legal opinion issued by the foreign counsel; and
- the relevant government fee and filing fee to the Registrar of Companies in Bermuda (the "Registrar").
The Registrar will register the memorandum of continuance and issue a certificate of continuance if they are satisfied that the Registrant is in compliance with the Companies Act. The Registrant should forward a copy of the certificate of continuance to the competent authority in the country or jurisdiction from which it has been continued.
On completion of these steps, the Registrant will become an exempted company to which the Companies Act and any other laws of Bermuda apply as if it had been incorporated in Bermuda on the date of the registration of the memorandum of continuance. The memorandum of continuance will then be deemed to be the memorandum of association of the Registrant in lieu of its original, re-stated or amended memorandum of association, articles of incorporation or other constituting documents.
The continued company must, as soon as practicable from the date of continuation in Bermuda, ensure that it has adopted bye-laws which conform to the requirements of the Companies Act.
Effect of continuation in Bermuda
The registration of the continuance of a foreign corporation will not be deemed to create a new legal entity or prejudice or affect the continuity of the body corporate which was formerly a foreign corporation and has now become an exempted company continued in Bermuda. For example:
- The property of the foreign corporation continues to be the property of the continued company.
- The continued company continues to be liable for its obligations predating its registration as a Bermuda exempted company.
- Any existing cause of action, claim or liability to prosecution in respect of the foreign corporation is unaffected; any civil, criminal or administrative action or proceeding pending by or against the foreign corporation may be continued by or against the continued company.
- Any conviction against, or any ruling, order or judgment in favour of or against the foreign corporation may be enforced by or against the continued company.
Whilst the continued company remains liable for its obligations when it was a foreign corporation, the Companies Act is silent on the priority of any secured obligations of the continued company. It would be advisable for any secured party of the continued company to file an application with the Registrar to register any security created in the register of charges as maintained by the Registrar (the "Register of Charges"). Upon filing, that security will have priority over any other security interests which are subsequently registered in the Register of Charges and any unregistered charges in respect of that security.
DISCONTINUATION FROM BERMUDA
An exempted company may be discontinued under the Companies Act and be continued in a jurisdiction outside Bermuda as if it had been incorporated under the laws of that other jurisdiction. The jurisdiction in which such exempted company is to be continued must be an "appointed jurisdiction" or approved, upon specific application, by the Minister of Finance in Bermuda.
Unlike for a foreign corporation continuing into Bermuda, consent from the BMA is generally not required. However, the discontinuance must be approved in such manner as may be authorised by the bye-laws of the exempted company and it must be completed in accordance with the Companies Act.
Pre-conditions to de-registration
Before discontinuance can take place the exempted company must provide:
- a resolution of the members approving the discontinuance;
- a statutory declaration, signed by a director of the exempted company, stating that the exempted company is solvent and can meet all of its liabilities and obligations, and that the discontinuance will not adversely affect the interests or rights of bona fide creditors and members;
- an irrevocable deed poll stating
- the exempted company and each of its directors may be served with legal process in Bermuda in any proceedings arising out of actions or omissions of the company prior to the discontinuance;
- provision has been made for the appointment of a person within Bermuda as agent for the exempted company for the service of process for a period of no fewer than three years from the date of discontinuance (a copy of the signed acceptance of the appointment should be appended to the deed poll); or
- the exempted company and each of its directors may be served with legal process at a specified address in the United Kingdom, the United States of America or any "appointed jurisdiction", and the exempted company and its directors submit to the non-exclusive jurisdiction of the courts of that country or jurisdiction.
At least fourteen days prior to the discontinuance, the exempted company must give notice, in an appointed newspaper in Bermuda and in a national newspaper in each jurisdiction within which it carries on a substantial part of its business, of its intention to discontinue in Bermuda and its proposal to continue in the named jurisdiction.
Documents to be filed on discontinuance
The exempted company seeking discontinuance must file with the Registrar a notice of the discontinuance together with the following:
- confirmation of the effective date of the discontinuance;
- the name of the jurisdiction in which the exempted company will continue;
- the address of the registered office or the principal business address of the exempted company in the jurisdiction in which the company will continue;
- a copy of the statutory declaration; and
- a copy of the irrevocable deed poll.
The exempted company also needs to file with the Registrar a copy of the instrument of continuance issued to such company by the appropriate authority of the jurisdiction into which the exempted company is to be continued, or, if no such instrument of continuance is issued, such other documentary evidence of continuance as such authority issues, within 30 days of receipt of such certificate or other documentary evidence ("Evidence of Continuance").
On receipt of the copy of the Evidence of Continuance, the Registrar will file that instrument or document and issue a certificate of discontinuance. The effective date of discontinuance will be the date of continuance in the other jurisdiction. The discontinuance does not create a new legal entity, or prejudice or affect the continuity of the body corporate which was formerly a Bermuda exempted company.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.