The support which legal services provide for international business and finance is crucial to the successful development of any jurisdiction. The legal profession in Bermuda assists with the design and implementation of legislation for new structures and finance solutions, which increasingly must encompass digital transformation and demands for greater sustainability.

Legal service providers (LSPs) in Bermuda are encouraged to contribute to the development and implementation of new and existing legislation in response to the ever-evolving needs of their clients. This ability to collaborate on committees and with various government bodies to improve the legislative and regulatory framework and develop new structures and finance solutions that are needed in response to the disruption caused by rapidly developing new technologies and digitalisation, allows LSPs to contribute to the preservation of the Island's reputation as a stable, well-regulated and dynamic international business and finance centre.

Working alongside the Bermuda Government and regulators such as the Bermuda Monetary Authority (BMA), LSPs fulfil a pioneering role in developing legislative innovations to change the landscape in which companies do business in Bermuda.


In 2000, the Segregated Accounts Companies Act (the SAC Act) was enacted. The SAC Act gives companies the ability to ring-fence assets into bankruptcy remote segregated accounts (SACs), a mechanism that was previously only possible to achieve by way of Private Act (i.e. entity specific legislation). The consolidation of more than a decade of Private Act segregation mechanisms into the SAC Act gave increased legal certainty and consistency and transformed the way SAC registered companies could deal with client assets.

As SACs are not legal entities in their own right, there followed a drive from the insurance sector to develop a structure that allowed SACs to have their own legal personality. This gave rise to incorporated segregated accounts (ISACs). A working group made up of the Bermuda Captive Managers Association, the Bermuda Monetary Authority (BMA) and various LSPs, collaborated on the development of the ISAC legislation.


Under the Insurance Act 1978, licensed insurers are generally required to maintain certain minimum levels of statutory capital, as a regulatory measure to ensure that they can pay the actuarially calculated policyholder claims as they arise. However, for certain specialised reinsurance structures (e.g. catastrophe bonds and collateralised reinsurance), the risk being insured is fully collateralised, with the insurer holding assets at least equal to the risk being insured and solely for the purpose of covering that named risk.

For such structures, the usual minimum statutory capital requirements are not relevant and create capital inefficiencies. In response to increasing pressure from the insurance market to have the ability to offer these fully collateralised insurance products in a capital efficient manner, Special Purpose Insurer licences were developed, effectively disapplying the usual capital requirements, provided that the risk being insured is fully collateralised and the structure involves only highly sophisticated parties. Since then, other licence classifications have emerged alongside industry developments and advancements in technology (for example sandbox licences).


Twenty years ago, technology simply did not exist in the way it does now and the need to create a legal framework by which to regulate activities involving it has arisen. The COVID-19 pandemic, for example, escalated the need for a clear-cut way that electronic signatures could be applied, witnessed and accepted as valid execution of documents. Thankfully Bermuda's Electronic Transactions Act 1999 already provided for some of these features, however the act of witnessing and notarising documents was not within its scope. As a result, the Bermuda Government, following consultation with LSPs, swiftly introduced new legislation to ensure there was certainty around the legal validity of these activities when conducted digitally. This has also led to a wider legislative review aimed at modernising the existing framework to ensure it remains fit for purpose in today's world.

The Digital Asset Business Act 2018 was developed in response to the Bermuda Government's strategy to both embrace blockchain technology and protect Bermuda's existing reputation as a well-regulated and transparent jurisdiction. Assisted by LSPs, a legal framework was developed that allowed digital asset business and services to operate under a licensed regulatory regime in and from the Island. The aim is to leverage Bermuda's expertise in regulatory management and to establish legislation that fosters investor confidence, complies with international standards and creates regulatory certainty.


The aim of the Bermuda Business Development Agency (BDA) is 'to promote and protect, in collaboration with Government and the Private Sector, sustainable and equitable economic growth and prosperity in Bermuda'. As part of this mission, the BDA set up a legal focus group made up of a panel of lawyers who meet regularly to discuss the existing legislative framework and propose changes that are needed to address any shortcomings to make business more efficient.


Increasing pressures that corporations conduct themselves in an ethical and sustainable way have resulted in the implementation of legislative measures to ensure compliance with these expectations. The BMA, who developed and regulate the code of conduct for insurance companies in Bermuda, recently updated it to include explicit ESG principles that companies must actively demonstrate that they have complied with. LSPs have an active role in helping their clients understand what is required and are best placed to advocate for any changes should the need arise.

The sustainability of Bermuda as an international business and finance centre is hinged on its ability to maintain its reputation as being a jurisdiction that complies with international standards of governance and regulation. An area of key importance is economic substance and Bermuda's ability to meet the highest international standards in relation to tax policies is key to the Island's sustainability. LSPs were heavily engaged in developing the policies and guidance for companies on this area of law.


Bermuda has consistently shown itself to be active and nimble when it comes to legal and regulatory development and modernisation. The government's willingness to engage with industry specialists and those LSPs who see, experience and advise on the existing legislative and regulatory framework, as well as those who are involved in the development of cutting edge technology, illustrates its capability and desire to listen to the markets and work collaboratively to ensure Bermuda continues to provide effective supervision and regulatory certainty for those in the international business and finance sectors.

An original version of this article first appeared in Bermuda Business Review 2023-2024, June 2023.

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