Bermuda: Guide To ICOs In Bermuda – September 2019

Last Updated: 6 November 2019
Article by Stephanie Sanderson

The purpose of this Memo is to generally set out the requirements of Bermuda's ICO legislation as at the date hereof and does not speak to any future date. It has been drafted to cover the requirements applicable to companies in Bermuda, although there are similar provisions for limited liability companies (LLCs).

Relevant Legislation

Bermuda launched the world's most progressive ICO legislation in 2018 in the form of the Companies and Limited Liability Company (Initial Coin Offering) Amendment Act 2018 which revised the Companies Act 1981 and the Limited Liability Company Act, respectively, and came into effect on 9 July, 2018; as well as the Companies (Initial Coin Offering) Regulations 2018 and Limited Liability Company (Initial Coin Offering) Regulations 2018 which came into effect on 10 July, 2018 (together the 'ICO Legislation').

The ICO Legislation applies to companies issuing ICOs (as defined in the ICO Legislation) and imposes certain legal requirements which a company must comply with, including publishing an offer document or 'white paper' with certain disclosures.

The ICO Legislation aims to not only provide certainty for those wishing to issue an ICO but it also aims to provide protection for those looking to purchase tokens or coins via an ICO.

The ICO Legislation makes the issuance an ICO a restricted business activity, meaning that any company wishing to launch an ICO will require the consent of the Minister of Finance under the ICO Legislation. Whilst a company will not be prevented from being incorporated pursuant to the typical processes provided by the Companies Act 1981 (as amended), ministerial consent is required prior to the launch of the ICO.

Any person who contravenes the ICO Legislation restriction on issuing an ICO, or makes (or authorises the making of) an untrue statement1 in an ICO offer document commits an offence under the ICO Legislation2 .

Under the ICO Legislation, an ICO is defined as an offer by a company to the public to purchase or otherwise acquire digital assets. The reference to offering digital assets 'to the public' includes offering them to any section of the public. 'Digital assets' include anything that exists in binary format and comes with the right to use it and includes a digital representation of value that:

  1. s used as a medium of exchange, unit of account, or store of value and is not legal tender, whether or not denominated in legal tender;
  2. is intended to represent assets such as debt or equity in the issuing company;
  3. s otherwise intended to represent any assets or rights associated with such assets; or
  4. is intended to provide access to an application or service or product by means of blockchain.

It is worth noting that any affinity or rewards program which does not permit value to be taken from or exchanged for legal tender, bank credit or any digital asset, falls outside the scope of the ICO Legislation. Similarly, any digital representation of value issued by or on behalf of a publisher and used within an online game, game platform, or family of games sold by the same publisher or offered on the same game platform are excluded.

ICO Offer Document

The ICO Legislation provides that no company shall offer digital assets to the public unless it publishes in electronic form an ICO offer document prior to such offer. The company must file a copy of the offer document signed by or on behalf of all of the directors of the company prior to (or as soon as reasonably practicable after) publication of such ICO offer document.

Notwithstanding the above, an ICO offer document does not need to be filed with the Registrar, at any time or in any circumstances, where—

  1. the digital assets are listed on an appointed stock exchange or appointed digital asset exchange, or an application has been made for the digital assets to be so listed, and the rules of the appointed stock exchange or appointed digital asset exchange do not require the company to publish and file an ICO offer document at such time or in such circumstances;
  2. the company is subject to the rules or regulations of a competent regulatory authority and such rules or regulations do not require the company to publish and file an ICO offer document at such time or in such circumstances, except where exemption from publication and filing of an ICO offer document is given by reason of the offer being made only to persons who are resident outside the jurisdiction of the authority; or
  3. an appointed stock exchange, appointed digital asset exchange or any competent regulatory authority has received or otherwise accepted an ICO offer document or other document in connection with the Initial Coin Offering to the public.

It is important to note that the offer document must remain accurate and must be updated if any of the minimum required information changes. Pursuant to the ICO Legislation, a statement included in an ICO offer document shall be deemed to be untrue if it is misleading in the form and context in which it is included; and, a statement shall be deemed to be included in an ICO offer document if it is contained in the document or in any report or memorandum appearing on the face thereof or incorporated in the document by reference or issued along with it.

Where an ICO offer document invites persons to purchase digital assets of a company, the following persons will be liable3 to pay compensation to all persons who prove that they purchased any digital assets in reliance to his detriment on the ICO offer document for the loss or damage they may have sustained by reason of any untrue statement included therein which is relevant to the ICO that is to say—

  1. every person who is an officer of the company at the time of the issue of the ICO offer document;
  2. every person who has consented to be named and is named in the ICO offer document as an officer or as having agreed to become an officer either immediately or after an interval of time;
  3. a promoter4 of the ICO; and
  4. every person who has authorised the issue to the public of the ICO offer document.

Footnotes

1. Unless he proves either that the statement was immaterial or that at the time he made the statement he had reasonable grounds to believe it was true

2. A person convicted of an offence as set out in this paragraph, shall be liable: on summary conviction, to a fine not exceeding $50,000 or to imprisonment for a period of one year or to both such fine and imprisonment; on conviction on indictment, to a fine not exceeding $250,000 or imprisonment for a period of five years or to or to both such fine and imprisonment.

3. Unless a statutory defense applies.

4. The ICO Regulations provide that a person is not a promoter solely by virtue of his provision of professional services to the company in relation to the ICO.

To view the full article, please click here .

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 Mondaq.com.

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

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
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
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please 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

Mondaq.com (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 www.mondaq.com

To Use Mondaq.com 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.

Disclaimer

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.

General

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