1 Legal framework

1.1 Which general legislative provisions have relevance in the private equity context in your jurisdiction?

From a private equity structuring perspective, the most common vehicle used to structure the private equity fund itself is the exempted limited partnership, which is governed by the Exempted Partnership Act 1992, the Limited Partnership Act 1883 and the Partnership Act 1902. A Bermuda partnership can elect to have separate legal personality pursuant to the Partnership Act 1902.

The Limited Liability Companies Act 2016 (LLC Act) provides for the formation of limited liability companies (LLCs), which are closely modelled on the widely used Delaware LLC vehicle. LLCs are an attractive structuring option for operators of closed-ended private equity funds, as their flexible corporate governance structure allows managers to manage the fund (in a similar way to a general partner), but without such manager incurring unlimited liability in respect of the fund's losses, as the LLC is a separate legal entity. Under the LLC Act, parties can create bespoke vehicles which have the contractual freedom to set out the terms of operation and management of the LLC in the LLC agreement, as well as expressly agreeing on the allocation of profits and timing of distributions among its members.

If a corporate vehicle is preferred, it will typically be a Bermuda exempted company with a mutual fund object, which will be governed by the Companies Act 1981 (as amended) and the Investment Funds Act 2006 (as amended) and related rules.

The Segregated Accounts Companies Act 2000 provides for the formation of segregated accounts companies (SACs), which are particularly beneficial for managers wishing to establish structures providing for multiple classes of shares or any structure for different investor classes or strategies or terms where the statutory segregation of assets is desired.

The Incorporated Segregated Accounts Companies Act 2019 provides for the formation of incorporated segregated accounts companies (ISACs), which enjoy the benefits of a traditional SAC, but also allow for the creation of an unlimited number of incorporated segregated accounts (ISAs), each a separate legal person, meaning that each ISA can have its own board of directors and constitution, and has the capacity, rights, powers and privileges of a natural person.

1.2 What specific factors in your jurisdiction have particular relevance for and appeal to the private equity market?

Bermuda's key strengths in the private equity market include:

  • its position as a key global financial centre, with sophisticated infrastructure and intellectual capital;
  • the quality of its service providers;
  • an experienced and active judiciary; and
  • a solid, well-respected legislative and regulatory environment that adheres to and promotes international standards.

Bermuda also offers a wide variety of innovative legal structures, such as LLCs and ISACs, which afford private equity investors maximum flexibility to accommodate their particular investment requirements.

Bermuda is very attractive to investors due to its safe, well-regulated, business-orientated environment: it is an Organisation for Economic Co-operation and Development whitelist country and has robust anti-money laundering and anti-terrorist financing regulations in place.

2 Regulatory framework

2.1 Which regulatory authorities have relevance in the private equity context in your jurisdiction? What powers do they have?

The Bermuda Monetary Authority (BMA) is responsible for the regulation and supervision of the financial services sector in Bermuda, and takes a risk-based approach to the regulation and supervision of the entities for which it is responsible.

The BMA maintains on and off-site supervision programmes, and has a suite of enforcement powers depending on the nature, seriousness and impact of potential breaches. These powers include the following:

  • issuance of formal directions;
  • public censure;
  • imposition of civil penalties;
  • issuance of objections to controllers;
  • issuance of prohibition orders; and
  • pursuit of actions before the courts, including applications for injunctions and winding up of regulated financial institutions.

2.2 What regulatory conditions typically apply to private equity transactions in your jurisdiction?

The Investment Funds Act (IFA) governs the registration and authorisation of open and closed-ended investment funds, their operation and the offering of shares or interests of investment funds.

In December 2019, Bermuda amended the IFA to require the registration of closed-ended funds. A number of registration options are now available under the IFA for closed-ended funds, depending on the types of investors/manager. The process for registration with the BMA is straightforward and, once registered, an annual certification must be filed with the BMA.

A closed-ended fund with fewer than 20 investors that is not offered to the public can qualify as a ‘private fund' and no auditor appointment is required. Once registered, an annual certification must be filed with the BMA.

A ‘professional closed fund' category was created under the IFA amendment. A fund qualifies as a professional closed fund if:

  • it is a closed-ended investment fund;
  • the fund is open only to ‘qualified participants' (ie, accredited/sophisticated/high net worth);
  • all participants are provided with an investment warning prior to the time of the purchase of units, containing such information as the BMA deems appropriate;
  • the operator of the fund has appointed:
    • a local service provider which is licensed by the BMA; or
    • an officer, trustee or representative resident in Bermuda, who has authority to access the books and records of the fund; and
    • an auditor; and
  • the financial statements of the fund are prepared in accordance with International Financial Reporting Standards or Generally Accepted Accounting Principles.

An auditor need not be local and there is no requirement for local auditor sign-off. There is scope to apply to the BMA for a waiver from this requirement, which will be decided on a case-by-case basis, provided that:

  • the fund has a suitable methodology to determine the value of the fund assets in the absence of an audit; and
  • all investors have agreed in writing that no audit is required.

Professional closed funds must file an annual certification confirming that the registration requirements continue to be met.

The operators of both closed-ended private funds and professional closed funds must also:

  • designate responsibility for segregating and safekeeping the investment fund property to a fit and proper person to act as such, based on the nature of the investment fund property (this can be waived for a feeder fund in a master/feeder structure). The name of such designate must be disclosed to the BMA and to investors; and
  • provide annual valuations. The valuation and pricing method adopted by an investment fund must be disclosed to investors in the offering documents and must be consistently applied.

The IFA amendment also introduced a requirement for overseas investment funds (including overseas private equity funds) to:

  • notify the BMA prior to such fund being managed or promoted in or from within Bermuda; and
  • be designated as an ‘overseas fund'.

In addition to the above changes to the IFA, related fund rules apply in the form of the Investment Fund Offering Document Rules 2019 and the Investment Fund Rules 2019.

3 Structuring considerations

3.1 How are private equity transactions typically structured in your jurisdiction?

Private equity funds are typically formed as exempted limited partnerships; however, funds or special purpose vehicles can be set up as Bermuda incorporated companies with limited liability. A closed-ended fund may also benefit from a Bermuda segregated accounts company (SAC) or incorporated segregated accounts company (ISAC) structure, which is ideal for deal-by-deal and multi-strategy platforms.

Most of the private equity funds established in Bermuda have fund managers which are located onshore. As such, market trends in Bermuda track major onshore markets, and in particular we see mirroring of investment strategies of US, European and Asian fund managers.

Private equity transaction structures vary widely, but will often involve private equity investors taking ordinary shares, preference shares and/or loan notes in the target. Management will usually hold ordinary shares and/or employee share options or restricted shares.

Acquisition structures involving private Bermuda companies may involve direct investment in the target (through the issue of new shares to the private equity investor or by secondary transfer) or the formation of a holding company (Topco) into which the private equity investor will invest, alongside management and other shareholders. Intermediate holding companies between Topco and the ultimate target may be inserted to facilitate debt financing or security structures, or for tax or other commercial reasons. The relevant holding company will acquire the shares in the target typically by way of a share purchase, a share-for-share exchange or a merger or amalgamation with the target.

If the shares in the target are publicly held, the structure of a private equity acquisition will typically be by way of:

  • a tender offer to purchase the shares of target (which must generally be accepted by the holders of at least 90% of the shares that are the subject of the offer);
  • compulsory acquisition of the remaining shares where the acquirer holds 95% or more of the shares;
  • a court-sanctioned scheme of arrangement; or
  • a merger or amalgamation with the target.

3.2 What are the potential advantages and disadvantages of the available transaction structures?

Bermuda exempted limited partnerships are widely used and have many benefits, not least because they are usually regarded as fiscally transparent. A Bermuda partnership may elect to have a separate legal personality to enable it to:

  • own assets;
  • be sued in its own name; and
  • register a charge over its assets in order to preserve priority over any unregistered charges or subsequently registered charges in respect of the assets that are subject to the relevant charge.

Bermuda partnerships offer a great degree of flexibility in terms of management (including safe harbour provisions) and structure, making them an attractive option to private equity investors, investment funds and financiers. In addition, the general partner of a Bermuda partnership can be incorporated in a foreign jurisdiction, such as a Delaware limited liability company (LLC); and there is no requirement for the general partner to register in Bermuda to act in such a role.

Bermuda LLCs are another flexible option. They are based on the Delaware LLC model, so will be familiar to entities and advisers who are based or do business in the United States. The LLC is a hybrid entity, with aspects that are similar to both limited companies and partnerships. An LLC is a separate legal person, so members are not personally liable for the debts and obligations of an LLC, similar to shareholders of a company or limited partners in a limited partnership. However, unlike limited partners, members of an LLC will not be personally liable for the debts and obligations of the LLC if they participate in the management and operations of the LLC. In addition, the governing instrument – the LLC agreement – may include provisions that expand, restrict or eliminate the duties (including fiduciary duties) that are owed to the LLC by a person, or to another member or manager (except in the case of fraud or dishonesty).

The fundamental advantage of an SAC or ISAC are the segregation or ‘firewalling' of assets so that the assets and liabilities of one account are ring-fenced from the assets and liabilities of a separate account and are not available to creditors of separate accounts. It also allows for different strategies/assets to be pursued under one vehicle, therefore benefiting from administrative efficiencies.

In terms of the various methods to structure the acquisition transaction, the rationale for choosing the structure will depend on the nature of the target's securities (listed or unlisted), as well as tax and commercial drivers. The advantages of a share purchase, share-for-share exchange or merger are that the acquisition is clean and there are no issues regarding apportionments of pre-payments and receivables. These are more common. An assets acquisition can be more complex, but enables the purchaser to ‘cherry pick' the relevant assets.

3.3 What funding structures are typically used for private equity transactions in your jurisdiction? What restrictions and requirements apply in this regard?

The most common funding structures are drawdowns of investor capital and term loan or revolving credit financing from a traditional bank (which may or may not incorporate a junior or mezzanine layer). Term loans will typically be arranged for a special purpose vehicle bidco subsidiary of the fund, where lender recourse will be to the target, its subsidiaries and their respective assets; whereas revolving facilities are more commonly made available for the fund itself, with lender recourse in such cases being to uncalled investor capital and to the proceeds of capital calls. Increasingly, deal structures may involve alternative financing arrangements from funds and other institutional investors. High-yield bond financing transactions are very popular, especially in Bermuda companies that are listed in Asia.

There are no requirements or restrictions for funding private equity transactions arising under Bermuda law.

Typically, the financing documents will be governed by foreign law; while any security that is provided over Bermuda assets or shares in a Bermuda company will be governed by Bermuda law.

Structuring is determined almost exclusively by onshore tax and regulatory considerations, and the manager's own deal assessment and risk appetite. Save in rare instances, there are no Bermuda-specific factors to take into account.

3.4 What are the potential advantages and disadvantages of the available funding structures?

Given that structuring is ultimately determined by the factors described in question 3.3, there are no advantages or disadvantages that are specific to Bermuda law.

3.5 What specific issues should be borne in mind when structuring cross-border private equity transactions?

Where the target is a Bermuda entity, Bermuda counsel will typically be engaged in a due diligence project to:

  • review the corporate structure, regulatory compliance and annual filings; and
  • confirm that there is no outstanding litigation or registered charges in Bermuda.

Typically, the assets of a Bermuda company will be located outside of the jurisdiction.

Choice of law of the relevant documents will be an important issue. It is common in private equity investments for the investment agreement or shareholders' agreement to be governed by foreign law (typically the law of the jurisdiction in which the investors are located or otherwise as preferred by the investors). Foreign law-governed documents are generally enforceable in the Bermuda courts, subject to the usual rules against the infringement of public policy or with respect to provisions which operate as penalties.

When dealing with a partnership, it will be important to be satisfied that the proposed deal is permitted by the target limited partnership agreement and falls within the partnership's stated purpose.

3.6 What specific issues should be borne in mind when a private equity transaction involves multiple investors?

Considerations will include:

  • pre-emption rights (protecting against dilution) on new issues as well as share transfers;
  • drag/tag-along rights; and
  • other change of control provisions.

An investor taking a minority position will usually seek veto rights over certain matters, including:

  • any changes to the company's share capital, debt position or constitutional documents; and
  • a change of control of the company or of the nature of the business it conducts.

4 Investment process

4.1 How does the investment process typically unfold? What are the key milestones?

Timing milestones are usually dictated by any regulatory approvals required in the jurisdictions in which the private equity investor or the target's assets are located. There are no competition or antitrust filings in Bermuda. Entities that are regulated by the Bermuda Monetary Authority (BMA) will need to observe regulatory notification requirements and obtain any necessary BMA consents.

All issues or transfers of voting shares in Bermuda companies require the prior permission of the BMA, unless a general permission has been granted. A general permission is available for the issue or transfer of shares in a company whose shares are listed on a recognised stock exchange. The BMA will require disclosure of the intermediate and ultimate beneficial ownership of any person wishing to acquire more than 10% of a Bermuda company. Beneficial ownership of private equity funds that are limited partnerships will be traced through the general partners, not the limited partners.

4.2 What level of due diligence does the private equity firm typically conduct into the target?

Private equity investors ordinarily engage in a detailed due diligence process as part of the proposed transaction. Typically, the assets of Bermuda company targets are located outside of the jurisdiction and it is often necessary to coordinate a cross-border due diligence process. In Bermuda, the scope of due diligence is usually focused on corporate structure and governance, as well as any regulatory licences and approvals.

4.3 What disclosure requirements and restrictions may apply throughout the investment process, for both the private equity firm and the target?

The Investment Fund Offering Document Rules 2019 and the Investment Fund Rules 2019 prescribe certain disclosures that must be included in the initial offering document of a Bermuda incorporated investment fund, including a private equity fund.

For general private equity transactions, there are no disclosure requirements or restrictions prescribed under Bermuda law.

For investments that involve the acquisition of voting shares in a Bermuda company, see question 4.1.

4.4 What advisers and other stakeholders are involved in the investment process?

Typical advisers on a private equity transaction will include:

  • outside and in-house legal counsel;
  • tax advisers;
  • accountants involved in financial due diligence;
  • lenders (if debt funding is involved); and
  • sometimes, investment bankers.

Depending on the nature of the target industry, there may be a requirement for regulatory advisers to assist with obtaining regulatory approvals. In a hostile bid, PR firms might be involved to assist with the management of information provided to the company, existing shareholders and the public.

5 Investment terms

5.1 What closing mechanisms are typically used for private equity transactions in your jurisdiction (eg, locked box; closing accounts) and what factors influence the choice of mechanism?

Deal structures vary widely and acquisition documents are typically governed by the law of the jurisdiction in which the buyer is located or as preferred by the parties. As such, closing is structured in accordance with prevailing market practice in those jurisdictions. Closing accounts and post-closing consideration adjustments are common (with or without retentions or holdbacks), although we do see a number of deals structured as fixed price or locked box deals. Earn-outs and anti-embarrassment provisions are seen less frequently, but are permitted under Bermuda law. Factors affecting the deal structure in this regard can include:

  • the relative strength of the negotiating position of the buyer and seller;
  • whether there is an auction process; and
  • the date of the last audit.

5.2 Are break fees permitted in your jurisdiction? If so, under what conditions will they generally be payable? What restrictions or other considerations should be addressed in formulating break fees?

Break fees are permissible in Bermuda and there are no restrictions or requirements under Bermuda law governing their application. Typically break fees range from 2% to 4% of the transaction value. Where a break fee surpasses 4%, the position that it is intended to compensate for loss and not constitute a penalty alone becomes less tenable and it may not be enforceable in the Bermuda courts.

5.3 How is risk typically allocated between the parties?

In the case of a share acquisition, merger or amalgamation, risk usually passes to the buyer on completion of the acquisition. Where there is a gap between exchange and completion, the parties will usually negotiate restrictions on the company's ability to enter into transactions outside of the ordinary course of business and/or above a certain monetary threshold, along with other operational controls. Where issues have been identified during due diligence or as a result of issues disclosed by the seller to the buyer against the representations and warranties in the acquisition agreement, these are commonly dealt with by the inclusion of an indemnity from the seller to the buyer to cover the known risk. The seller will seek to limit is liability under the representations and warranties where the information is ascertainable by the buyer or included in the accounts.

5.4 What representations and warranties will typically be made and what are the consequences of breach? Is warranty and indemnity insurance commonly used?

Private equity sellers typically give representation and warranties only as to title to shares, capacity and authority with knowledge and materiality qualifiers. Such warranties are usually unlimited in time and amount, although this will be subject to negotiation.

Insurance is available and attractive to private equity sellers looking to ‘bridge the gap', but its use can be limited depending on the nature of carve-outs and policy limits (of which there is a wide range) and the scope of coverage. Insurers will typically require all other recovery sources (eg, escrow and holdback funds) to be exhausted before recovering under any such policies.

6 Management considerations

6.1 How are management incentive schemes typically structured in your jurisdiction? What are the potential advantages and disadvantages of these different structures?

Management incentive schemes are typically dictated by the tax implications for the management team, who may be subject to tax onshore. Due to this, a wide range of equity and other incentive schemes are utilised in Bermuda companies, including share options, warrants or the issue of restricted shares with attendant vesting provisions.

Typically, management incentive schemes are achieved through a particular class of shares. This is useful because rights and restrictions attaching to such shares (eg, ranking behind investor shares in dividend preference or on winding up, or limited voting rights) can be set out in the target's byelaws.

6.2 What are the tax implications of these different structures? What strategies are available to mitigate tax exposure?

As Bermuda is a tax-neutral jurisdiction, any tax implications or strategies are driven by onshore requirements. Bermuda does not impose any tax in relation to the establishment and operation of private equity funds. Private equity funds domiciled in Bermuda and their shareholders will not be subject to any corporation withholding, capital gains or income tax in Bermuda. Upon incorporation, a private equity fund structured as a company, limited liability company or partnership may apply to the minister of finance of Bermuda for an assurance that, in the event of any such tax subsequently being chargeable in Bermuda, it will not apply to the fund or its assets or undertaking until at least 31 March 2035. Stamp duty is not payable on the issue or transfer of a share other interest in a private equity fund.

6.3 What rights are typically granted and what restrictions typically apply to manager shareholders?

This will vary on a deal-by-deal basis, subject to the agreed contractual/constitutional provisions.

6.4 What leaver provisions typically apply to manager shareholders and how are ‘good' and ‘bad' leavers typically defined?

What constitutes a good or a bad leaver will be agreed contractually rather than by reference to Bermuda employment laws. Bad leavers will include those who:

  • voluntarily resign;
  • breach non-compete or other covenants; or
  • are otherwise terminated for cause.

Good leavers will include those leaving employment due to death, injury or retirement, or for any other reason that does not fall under the category of a bad leaver.

7 Governance and oversight

7.1 What are the typical governance arrangements of private equity portfolio companies?

A Bermuda domiciled private equity portfolio company will be managed by a board of directors, including executive directors, investor directors and independent directors, with the composition varying depending on the deal structure.

The board's authority is subject to any restrictions set out in the constitutional documents and in any shareholders' agreement.

The constitutional documents comprise:

  • the memorandum of association, which sets out the objects and powers of the company; and
  • the byelaws, which govern the relationship between the company and its shareholders and contain the corporate governance provisions.

The byelaws may also be subject to a separate shareholders' or investor rights agreement between the company and its shareholders (or some of them), which is often required by private equity investors, in part due to concerns over confidentiality.

7.2 What considerations should a private equity firm take into account when putting forward nominees to the board of the portfolio company?

Directors of Bermuda companies owe their duties generally to the company itself and not to the party that nominated them. Nominee directors must be particularly mindful of their duties to:

  • act in the best interests of the company as a whole (which should take into account all shareholders and employees and, in an insolvent situation, creditors); and
  • avoid conflicts of interest.

Although the concept of a ‘shadow director' is not formally recognised in Bermuda, for the purposes of Section 243 of the Companies Act (dealing with offences by past or present officers of companies in liquidation), the definition of ‘officer' includes a person "in accordance with whose directions or instructions the directors of a company have been accustomed to act".

7.3 Can the private equity firm and/or its nominated directors typically veto significant corporate decisions of the portfolio company?

Directors of a Bermuda company owe:

  • a fiduciary to act in good faith (including a duty to avoid conflicts of interest) in dealing with or on behalf of the company; and
  • a statutory duty to act honestly and in good faith with a view to the best interests of the company.

Such duties are owed to the company as a whole, including all its shareholders. As such, directors cannot prioritise the interests of the shareholder that nominated them over the interests of the company, and must be mindful that their duties are owed to the company as a whole and not to the shareholder that nominated them.

Similarly, where a director is a director for multiple companies of the same group, while a group benefit may be considered, he or she must nonetheless act in the best interests of each company that he or she serves individually, and not sacrifice any one such company's interests to those of the group as a whole.

Any purported fettering of the discretion of the directors and their ability to act in the best interests of the company in the byelaws or a shareholders'/investor rights agreement may not be upheld by a Bermuda court. To avoid such issues, voting and veto powers should, to the extent possible, be at the shareholder level in the shareholders' agreement.

Generally, veto rights will be upheld by the Bermuda courts, unless they are considered to be an unlawful fetter on the statutory powers of the company. The Companies Act expressly permits a company to fetter its powers in certain circumstances, including:

  • changes to the constitutional documents;
  • changes to share capital;
  • removal of directors; and
  • approval of amalgamations and mergers and voluntary liquidations.

7.4 What other tools and strategies are available to the private equity firm to monitor and influence the performance of the portfolio company?

This will vary on a deal-by-deal basis, but could include the private equity firm appointing a board observer to attend, but not be entitled to vote at, certain board meetings of the portfolio company. In addition, members of the management team of the portfolio company often receive an incentive by way of bonus preferred shares, whose value will be driven by the success of the investment.

8 Exit

8.1 What exit strategies are typically negotiated by private equity firms in your jurisdiction?

The most commonly used exit strategies in Bermuda are:

  • initial public offerings;
  • secondary buy-outs; and
  • trade sales.

8.2 What specific legal and regulatory considerations (if any) must be borne in mind when pursuing each of these different strategies in your jurisdiction?

There are no specific Bermuda law requirements which would dictate which exit strategy is the most favourable. The managers thus have the flexibility to select whichever route will lead to maximum value for investors.

9 Tax considerations

9.1 What are the key tax considerations for private equity transactions in your jurisdiction?

As a tax-neutral jurisdiction, Bermuda imposes no taxes on dividends or stamp duty in share transfers for private equity vehicles or portfolio companies. Private equity vehicles and portfolio companies that are Bermuda exempted companies, partnerships or limited liability companies (LLCs) may obtain a tax assurance from the minister of finance for a nominal fee confirming that, until 31 March 2035, in the event that legislation is enacted in Bermuda that would impose such taxes, these will not apply to the entity concerned or its operations, shares, interests, debentures or obligations.

As such, any tax structuring or considerations are driven by onshore requirements.

Bermuda has adopted the Organisation for Economic Co-operation and Development's standards for base erosion and profit shifting (BEPS) compliance for the automatic exchange of financial account information via Common Reporting Standard (CRS) and country-by-country reporting. The CRS initiative was introduced to improve the exchange of information on financial institutions between jurisdictions. Similar to the US Foreign Account Tax Compliance Act, the CRS requires financial institutions which are subject to the rules to report certain information in respect of account holders. All financial institutions resident in Bermuda must now establish, implement and comply with procedures to fulfil their obligations under the CRS.

Bermuda is a member of BEPS and has enacted legislation in response to requirements for entities that conduct certain types of activities to have economic substance developed under BEPS Action 5. The OECD has confirmed that Bermuda's legislation meets its standards. Investment funds are not required to have economic substance and, as such, there is little impact for funds.

9.2 What indirect tax risks and opportunities can arise from private equity transactions in your jurisdiction?

See question 9.1.

9.3 What preferred tax strategies are typically adopted in private equity transactions in your jurisdiction?

See question 9.1.

10 Trends and predictions

10.1 How would you describe the current private equity landscape and prevailing trends in your jurisdiction? What are regarded as the key opportunities and main challenges for the coming 12 months?

In January 2020, Bermuda's regulatory regime was assessed by the Caribbean Financial Action Task Force and the global inter-governmental Financial Action Task Force. Bermuda was confirmed as a global leader for having some of the highest international standards when it comes to combating money laundering and the financing of terrorism and proliferation.

In February 2020 the European Union announced that Bermuda was a ‘cooperative jurisdiction' with respect to EU tax governance principles and therefore removed it from Annex II of the EU list; Bermuda was thus effectively whitelisted. Since this announcement, Bermuda has seen an increase in enquiries for new structures and deployment of capital into private equity funds and similar products, particularly from family offices and European investors.

We anticipate increased interest in the use of incorporated segregated accounts companies (ISACs) as an attractive option for private equity structuring. ISACs blend the benefits of a company (separate legal personality) with those of a segregated account of a segregated accounts company. They are cost efficient, as they avoid the expense of incorporating several separate companies and can be used for multi-strategy platforms.

10.2 Are any developments anticipated in the next 12 months, including any proposed legislative reforms in the legal or tax framework?

There are no proposed legislative reforms in the legal or tax framework in the next 12 months.

11 Tips and traps

11.1 What are your tips to maximise the opportunities that private equity presents in your jurisdiction, for both investors and targets, and what potential issues or limitations would you highlight?

The main issue to be aware of from a Bermuda perspective is the requirement for the approval of the Bermuda Monetary Authority (BMA) for any issue or transfer of shares of a Bermuda company to any person that will thereby become the beneficial owner of more than 10% of the voting interests in the Bermuda company. This approval process should be managed well in advance of closing, as the BMA will require the provision of certain information in respect of the proposed beneficial owner. In the case of private equity investors that are structured as partnerships, beneficial ownership is tracked through the general partner and not the limited partners.

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.