![]() ![]() Since the July 2012 amendment several companies listed on the Bermuda Stock Exchange have given notice of their intention to avail themselves of the new opportunity to access foreign capital. The first industry to be regulated under the umbrella of the Regulatory Authority Act 2011 will be the electronic communications industry, which will be subject to the Electronic Communications Act 2011, when it is brought into force. The relaxation of the 60/40 rule also coincides with the introduction, pursuant to the Regulatory Authority Act 2011, of a new regulatory authority with responsibility for supervising and regulating multiple industry sectors. ![]() The expression 'in a material way' is not defined in the amendment act. With effect from July 27 2012, the 60/40 rule was abolished in the case of certain 'prescribed industries' (ie, telecommunications, energy, insurance, hotel operations, banking and international transport services by ship or aircraft), provided that the business is being carried on 'in a material way' and the company is listed on the Bermuda Stock Exchange or such other stock exchange as may be designated by the minister of finance, or if the company is a wholly owned subsidiary of such a listed company. In considering whether to grant a licence to a company, the minister of finance is required, in particular, to consider "the desirability of retaining in the control of Bermudians the economic resources of Bermuda". However, the Ministry of Finance has power to relax the application of the 60/40 rule in particular cases by granting a licence under Section 114(b). The 60/40 rule applies to all local companies, whatever the nature of business being carried on by the company. The 60/40 rule requires that a company must be controlled by Bermudians and, without prejudice to the overriding criterion of 'control', that 60% of its directors must be Bermudian and 60% of its voting shares must be owned by Bermudians. The current rules are contained in Part IX (Local Companies) and the Third Schedule to theCompanies Act 1981. ![]() Successive Companies Acts have provided a mechanism whereby participation in the local economy can be restricted to Bermudian-owned companies. With a land mass of only 21 square miles and a population of approximately 65,000 people, it is understandable that Bermuda has imposed controls on the acquisition of land by foreigners and restricted the right of foreign-owned enterprises to carry on business in Bermuda. The ownership of land and the ability of non-Bermudian individuals to engage in gainful employment or enter into partnership in a local business have been regulated for generations by the Bermuda Immigration and Protection Act 1956. The amendment facilitates foreign investment in a broad range of industries in Bermuda by removing the requirement that such businesses shall be "controlled by Bermudians". A recent amendment to the Companies Act 1981 has removed a significant impediment to foreign investment in Bermuda. ![]()
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