Bermuda: The Entrepreneurial Advantages Of The Bermuda LLC

Last Updated: 8 February 2018
Article by Alexandra Fox and Kit Cunningham

 After decades of being the favoured corporate structure in the United States, on 1 October 2016, the Government of Bermuda introduced the Limited Liability Company (LLC) to Bermuda through the Limited Liability Company Act 2016 (Act). The LLC is a unique combination of a company and a partnership, which affords its members an increased amount of flexibility in formation, corporate governance and operation of its business. While there are many variations of the LLC, the most notable attributes of a Bermuda-based LLC include:

1. Ease of Registration – The application process for forming an LLC has the same level of ease as the formation of a Bermuda company. A Certificate of Formation is filed with the Registrar of Companies, rather than a Memorandum of Association. The underlying LLC agreement, which governs the LLC, can be formed and effected at a later date. This provides entrepreneurs a timely option to incorporate while they are still finalising their business structure.

2. Affordability – Similar to a company incorporated in Bermuda, the registration and annual fees are based on issued capital interests. The amount of legal fees associated with forming an LLC will vary depending on the complexity of the LLC agreement. Together, these factors make the LLC accessible and attractive to all sizes of firms looking to capitalise on the LLC structure.

3. Independent Body Corporate – Although the LLC operates like a general partnership, an LLC is a separate legal entity and is formed and taxed separately and apart of its member or members. Unless otherwise established in the LLC agreement, this provides entrepreneurs with the same limited liability they would enjoy in a corporation simultaneously providing more flexibility in terms of the operation and management of the business.

4. Operation of Business in Bermuda For all intents and purposes, Bermuda institutions treat LLCs like companies, including when obtaining business licenses, opening bank accounts, licensing vehicles or equipment, or establishing third-party financing. This helps to separate personal finances from business finances during the early stages of the LLC formation. Keeping personal and business finances separate is crucial to ensure protection of an entrepreneur's personal assets.

5. Limited Fiduciary Duty – By way of an LLC agreement, an LLC can limit, and even eliminate its members' or managers' fiduciary duties. There is a codified duty to act in good faith, which can also be expanded or restricted through the LLC agreement. Additionally, unless stipulated in the LLC

agreement, members may exercise a vote in his or her best interest, rather than the best interests of the LLC. However, at no time can an LLC agreement permit dishonesty or fraudulent behaviour.

6. Conversion and Continuation – The Act enables companies, limited liability partnership and LLCs to convert to or amalgamate with LLCs, whether they are exempt or local. This enables existing companies to switch to a more favourable arrangement without recreating their corporate identity. This is particularly attractive to US entities incorporated in Bermuda who are seeking a familiar corporate structure.

7. Similar Residency Requirements – The LLC has the same residency requirements as a company in Bermuda. As such, a local or foreign company (as defined in the Companies Act 1981, as amended) may form or continue as a local or foreign LLC. There are no new residency requirements surrounding an LLC.

8. Confidentiality - While registration at the Registrar of Companies is required to form an LLC, the underlying and governing LLC agreement and a list of the members need not be disclosed to a public registrar. This allows members and managers to operate in an environment of independence. However, some information is made public through the Registrar of Companies, including, (i) licenses granted by the Minister, (ii) the register of managers, (iii) continuation, discontinuation, and business combination documentation, and (iv) the register of charges against the LLC.

9. Less Onerous Maintenance – As mentioned above, the LLC agreement provides ample flexibility in relation to, among other things, corporate governance, profit and loss allocation, creation and distribution of LLC interests, and assignment of manager or member voting rights. Furthermore, there are no requirements surrounding accounting, auditors, or annual general meetings. Once the LLC is formed, there is very little need for continuous maintenance. The freedom from certain corporate governance formalities enables entrepreneurs to focus on raising capital and growing their business.

10. Ease of Transfer of Interests - The flexible formation of an LLC allows entrepreneurs to establish a less onerous process to transfer interests or allot profits to members in the LLC, which is cost efficient and attractive to potential investors or members. The LLC agreement can significantly simplify the process for adding and removing members and transferring interests.

Entrepreneurial Appeal of LLCs

The LLC is particularly accommodating to start-up companies across a wide array of industries, including, among others, technology, film and music, retail, manufacturing, and distribution. The abundance of flexibility enables entrepreneurs to design a corporate structure that is simple, efficient, economic and above all – protects their personal assets. The simplicity of the LLC lends itself particularly to project-based starts-ups because one can utilise the same structure to form a new LLC for each project. This empowers an entrepreneur to track the investment and assets of each project, without being overwhelmed with corporate governance issues or high legal fees. Maintaining separate LLCs is also crucial for tracking business growth to accommodate investors, financial institutions or potential purchasers of assets held by the LLC. LLCs are also suitable for a group of members who wish to pool resources to create and finance projects and share in the generated wealth. Furthermore, the LLC allows its members to establish clear roles of the involved individuals, rather than being confined to directors, shareholders or officers. The amount of control afforded to an entrepreneur is what makes the LLC such an appealing corporate structure as one strives to form a solid foundation on which to grow their business.

Notwithstanding all of its strengths, the LLC it is not appropriate for all businesses. As a business advances, so do the complexities of corporate governance. The amount of flexibility afforded to an LLC can create uncertainty and trepidation with external third parties and markets. Despite the increase of LLCs, venture capitalists and listing exchanges are slowly adapting and accepting the malleable LLC structure. Consequently, a poorly-prepared LLC agreement can be fatal to the growth of a business. An LLC agreement must be prepared with the utmost care and consideration for the development of the business. It is crucial to seek sound legal counsel regarding which structure is appropriate for your business and ensure it is duly formed and in compliance with Bermuda law on a go forward basis.  

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
BeesMont Law Limited
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
BeesMont Law Limited
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions