Offshore Vehicles: The Bermuda Company
| Author | Ian R. C. Kawaley/Karen Skiffington |
| Pages | 43-51 |
PART II
ESTABLISHING OFFSHORE VEHICLES
Chapter 2 Offshore Vehicles: The Bermuda Company
John CR Collis 45 Chapter 3 Bermuda Limited Liability Companies
David Cooke 53 Chapter 4 Partnership Law and Corporate Commercial Practice in Bermuda:
A Professional Development Perspective
Kenneth ET Robinson 61 Chapter 5 Insurance Law
Warren Cabral, Neil Horner and Maryssa Gabriel 79 Chapter 6 Trust and Private Client Practice in Bermuda
Alec Anderson 105 Chapter 7 Establishment and Regulation of Offshore Funds: A Comparison between Cayman Islands, Bermuda and British Virgin Islands
Jennifer S Eve 137 Chapter 8 Shareholders: Majority Rule and Minority Rights under Bermuda
Company Law
Peter Martin 163 Chapter 9 Director’s Liability in Bermuda: An Overview
John Riihiluoma 193 Chapter 10 Arrangements, Amalgamations, Mergers and Re-domestications
CHAPTER 2
OFFSHORE VEHICLES: THE BERMUDA COMPANY
John CR Collis
Early beginnings 45 Development of a regulatory model 48 Bermuda and other offshore jurisdictions 50 Establishing offshore companies today 51 Conclusion 51
EARLY BEGINNINGS
2.1 The legal creation known generically around the world as the company or corporation is one of the most familiar features of trade and commerce. Technically, a company is described as an artificial legal person, which means it has been granted by statute certain powers or capacities similar to a human being, particularly the power to contract in its own name. This enables business to be carried on separately from the owners of the business. Most particularly, the owners of the company will generally not have liability for the debts or obligations of the company.
2.2 Businesses can also be carried on through partnerships, although today these are less common. Partnerships rely on the notion of agency, as distinct from legal personality, which can be somewhat more cumbersome in a number of respects. Furthermore, the owners, at least those that participate in the business, do not enjoy the benefit of limited liability, which is seen as a big disadvantage.
46 Offshore Commercial Law in Bermuda
2.3 Most commercial laws in most jurisdictions around the world provide for the formation and operation of companies. While the laws in various jurisdictions may make various provisions, the fundamental notion of the company is similar across most jurisdictions and, as such, most jurisdictions recognise the corporate form of other jurisdictions.
2.4 In years gone by when the world was less connected, trade was typically a local activity. Businesses could be operated as sole proprietorships, partnerships or companies, but it tended to be the case that only larger business operations were organised in the form of companies. However, in the modern world of multinational businesses trading on a global scale, the only practical means of conducting such business is through one or more or a collection of corporate vehicles.
2.5 For most purposes, the history of the company in Bermuda begins at the end of the 19th century. It is around that time that a handful of local businesses, including hotels, utilities and banks, were first incorporated. In those days, there were no statutes of general application to which companies were subject. Each company was incorporated by virtue of its very own Act of the Bermuda legislature. These Acts were known as private Acts because they were not part of the political agenda of the government of the day, but they were still required to progress through the legislature in the same way as all other Acts. Consequently, incorporation was time consuming and could only be achieved at certain times of the year.
2.6 These private Acts would each contain in themselves provisions for the administration of the company itself. However, reading through the various private Acts, one has a sense that...
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