This paper describes the process under Bermuda law by which an insurance company may transfer its corporate domicile to or from Bermuda.
The transfer of a company's corporate domicile is often referred to informally as 'redomestication' or 'redomiciliation'. Under Bermuda law, the process by which a body corporate may redomicile to Bermuda is called 'continuance' and the process by which it may redomcile from Bermuda is called 'discontinuance'.
The procedures for continuance and discontinuance of a company under Bermuda law are set out in the Companies Act 1981 of Bermuda (Companies Act). If the company is, or will on continuance in Bermuda be, licensed as an insurer in Bermuda, there is, in addition, a number of legal and regulatory requirements to comply with set out in the Insurance Act 1978 (Insurance Act) and related rules and regulations.
2 Preliminary steps – feasibility study and foreign legal advice
In the case of both continuance and discontinuance, particular attention must be paid to the legal procedure by which the company will discontinue or be continued in the foreign jurisdiction from or to which it is redomiciling.
It will be necessary to consider whether the procedure in that jurisdiction is complementary to the procedure that must be followed in Bermuda. Furthermore, it is essential that the two procedures can and will be implemented roughly at the same time in order to ensure the unbroken continuity of the legal existence of the body corporate. Investigating these matters will require the taking of legal advice in the jurisdiction outside Bermuda in which the company will discontinue or be continued.
The steps to be taken in the applicable foreign jurisdiction have not been included in this paper, which provides a summary only of the Bermuda legal and regulatory requirements.
3 Continuance in Bermuda
A body incorporated outside Bermuda (in what follows, a 'foreign corporation') may be continued in Bermuda as an exempted company to which the Companies Act and other relevant laws of Bermuda apply. An exempted company is a company that does not have to comply with the provisions of the Companies Act applicable to 'local companies', such as the requirement that the company be controlled by Bermudians.
There are three parts to the procedure for the continuance in Bermuda of a foreign corporation licensed as an insurance company:
Obtaining the approval of the Controller of Exchange to the beneficial ownership and control of the entity (Exchange Control Application)
Obtaining the approval of the Bermuda Monetary Authority (BMA) to the registration of the foreign corporation as an insurer under the Insurance Act (Insurance Licensing Application)
Application to register the continuance with the Bermuda Registrar of Companies
3.1 Exchange Control Application
The continuance of a foreign corporation as an exempted company in Bermuda is deemed to be the issue of shares to each of the shareholders of the foreign corporation who will, as a result of the continuance, hold shares in a Bermuda exempted company. Such issue of shares must be approved by the BMA acting as Controller of Exchange pursuant to an Exchange Control Application. An Exchange Control Application can only be made online and should be supported by the following information and documents:
Organisational chart showing the ownership structure of the foreign corporation up to its ultimate beneficial owners including its direct and intermediate owners.
KYC/compliance documents on the foreign corporation's ultimate beneficial owners and direct and intermediate owners (or details of its listing on any appointed stock exchange).
Legal opinion of counsel qualified in the foreign corporation's original jurisdiction of incorporation confirming that all necessary authorisations under the laws of that jurisdiction have been obtained to enable the foreign corporation to continue in Bermuda (a certificate of good standing of the Insurer and copy of the relevant statute should also be provided).
Financial statements of the foreign corporation prepared for a period ending within 12 months of the proposed date of continuance.
Relevant application fee.
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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. Kennedys operates in Bermuda in association with Kennedys Chudleigh Ltd.