Regulatory environment - Bermuda
As
Bermuda became host to international companies, insurance companies in the
early years were essentially self-regulating. However, in 1978 the
government passed the Insurance Act. This Act formed the basis for today's
government supervision of both domestic and international insurance
companies. Administered by the Registrar of Companies assisted by an
advisory committee of personnel from within the insurance industry, the
Act was later modified by Insurance Amendment Acts of 1983 and 1985.
Although
the Act requires certain levels of minimum and paid-up capital for
companies conducting long-term business, there is no need for them to
publicly disclose their accounts. However, annual statutory financial
statements must be submitted to the Registrar of Companies. Flexible and
effective legislation accommodates an innovative industry that has
developed structures, concepts and approaches to maximize profits.
The
regulation of international companies encompasses two stages. During a
company's application for incorporation in Bermuda, government authorities
work closely with private sector professionals to screen applicants.
Excellent financial references are crucial before the company can proceed
through the regulatory process. The Insurers Admissions Committee must be
satisfied with the company's capital base and the reputation and
competence of key personnel.
The
second stage, through the Companies Act, gives the Finance Minister
authority to appoint an inspector to investigate the affairs of any
exempted company registered in Bermuda. The use of the term ‘exempt'
derives from Bermuda's laws. Translated, this means that such companies
are exempt from local laws that require limited companies in Bermuda to
have a minimum 60% Bermudian ownership. And, unlike local companies, they
are exempt from Exchange Control regulations and liability for stamp
duties on executed documents.
However,
companies in the exempt category can transact business from Bermuda, but
not in Bermuda. They are limited to using the Island solely as a base for
their overseas business. Quite often these corporations are subsidiaries
of companies based in countries like the United States, Canada, Hong Kong
and the United Kingdom.
Bermuda's
clean image is undeniably one of its greatest assets. To allay suspicions
or considerations that Bermuda may be among those countries with dubious
regulatory practices, the local government has embarked on a review of
OECD, European Union, and Tax Treaty positions, and legal counsel has been
engaged to represent Bermuda in the UK and Europe. Bermuda already has
significant and effective regulations in place to combat money laundering
and the government emphasis is on showing that the Island remains a safe
and reputable financial jurisdiction for the future.
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