THE COMPANIES AMENDMENT ACT 2006

1
THE COMPANIES AMENDMENT ACT 2006

• AN OVERVIEW
• Graham B. R. Collis
• Partner, Conyers Dill Pearman

2
Definitions

• Definitions have been tinkered with to facilitate
  electronic communications

3
Delivery of Electronic Records

• New section 2A provides for the delivery of
  electronic records generally.
• Where there is a requirement in the Act or in the
  bye-laws to provide (broadly defined) a
  document (again, broadly defined), the
  requirement may, unless precluded by the bye-laws
  of the company, be met by the delivery of an
  electronic record.

4
Delivery of an Electronic Record

• An electronic record may be delivered by
  communicating it by electronic means to an
  address provided by the recipient for that
  purpose. (E-mail)
• An electronic record is also deemed to have been
  delivered if it is published on a website and the
  person to whom the document is to be provided has
  agreed to that method and been given the
  necessary address. (Notice and Access)

5
Delivery of Electronic Records to the Registrar

• Where there is a requirement for a person to
  provide a document to the Registrar, the
  requirement may be met by the delivery of an
  electronic record.
• The Registrar will issue a direction on how
  exactly this is to be done once the technology is
  in place.
• Eventually, company searches will be performed
  entirely online.

6
Bits and Bobs Electronic Records

• Various minor amendments to the Act facilitate
  the e-friendly initiative no more references
  to by post, increased flexibility on how things
  are signed and how votes are tallied.
• The e-friendly provisions DO NOT provide for
  advance electronic voting for meetings.

7
Minimum Share Capital

• There is no longer any minimum share capital
  requirement save for insurance companies under
  the Insurance Act.

8
Secondary Names

• Companies are now permitted to apply to the
  Registrar for registration of a secondary name in
  a script other than Roman (for example, Arabic).
• Detailed procedure is set out in the legislation,
  but the gist is that you apply to the Registrar
  and provide a translation certified by a notary
  (or similar functionary) fluent in the language
  and script in question, together with a jpeg of
  the name itself.

9
Seals

• No longer mandatory as a matter of the Bermuda
  Companies Act to have all contracts, deeds and
  other instruments executed under seal.
• A company may now issue its share certificates
  not under seal as well.

10
Private Trust Companies

• Private trust companies are added to the list of
  types of companies that can be formed as
  guarantee companies.
• New requirements where limited is to be
  dispensed with in the name of charitable
  companies.

11
Objects

• Company must state in its memorandum the objects
  of the company or otherwise that its objects are
  unrestricted.
• The practical effect is that the company can have
  as its object anything it wishes at any given
  moment without setting it out specifically in its
  constitution.
• Existing companies with specified objects will
  not be impacted. New companies will usually
  choose to be incorporated with unrestricted
  objects as a matter of course.

12
Powers

• Subject to any provision of law, including a
  provision of the Act or a provision of its
  memorandum, a company has the capacity, rights,
  powers and privileges of a natural person.

13
Russell Powers

• Currently, as a matter of common law, a company
  may not agree by contract to fetter its statutory
  powers (the Russell Principle)
• Under the amended Act, a company may agree not to
  exercise the powers in 10 (change of name), 10A
  (change of secondary name), 12 (amending
  memorandum of association), 13 (amending
  bye-laws), 45 (altering share capital), 46
  (reducing share capital), 93 (removing
  directors), 106 (amalgamation), 161 (winding up
  by court) or 201 (voluntary winding up).
• By implication, the company may not agree to
  fetter any other statutory power contained the
  Act.

14
Private Character Offers

• It is now clear that an offer made under an
  employee share scheme (or anything of a similar
  nature) is of a private character, and
  accordingly the prospectus requirements of the
  Act are not engaged.
• An offer does not have a private character solely
  by reason that the offer is made to Members.

15
Publishing Prospectus

• It is not necessary to publish and file a
  prospectus in Bermuda complying with Bermuda law
  where the shares are listed on an appointed stock
  exchange or where application has been made to so
  list.
• The certificate to be provided on filing no
  longer needs to state that the prospectus was
  accepted as a basis for offering shares to the
  public.

16
Treasury Shares

• A company may, if permitted by its memorandum or
  bye-laws, acquire its own shares to be held as
  treasury shares.
• Restrictions on when and how this can occur.
• Mutual funds may not have treasury shares.

17
Inspection of Registers

• Register of members is now open for inspection at
  the registered office to members of the public
  without charge.
• Charges only apply where the person wants to take
  a copy.

18
Members Resolution In Writing

• On a members written resolution, unanimity is no
  longer necessary. The majority that could have
  passed the resolution at a meeting (presumably,
  had everyone entitled attended and voted) can
  pass it on written resolution.
• Notice of the proposed resolution must be given
  to everyone entitled to vote thereon.

19
Titles for Officers

• No longer any specific titles required for
  officers, save for the Secretary.
• A Bermuda company still must have a board of
  directors and a Secretary, but it may now have no
  other officers at all, should it so choose.

20
Loans and Indemnities for Officers

• Local case suggested that where fraud or
  dishonesty is alleged against an officer, the
  company could not provide funds for the defence
  until the matter was concluded and the officer
  was cleared.
• Changes to the Act now permit the company to
  advance a loan to the officer for his defence,
  and then if the allegations of fraud or
  dishonesty are proved, the officer must disgorge
  the funds.

21
Acquisition of Land in Bermuda

• A local company may acquire and hold land with
  the previous sanction of the Minister if it is
  bona fide for the purpose of the company, not
  exceeding the land holding powers in its
  memorandum.
• A local company may take land by way of lease for
  a term not exceeding 50 years, being land bona
  fide required for the purposes of the business of
  the company.
• A local company may with the consent of the
  Minister take a lease for a term not exceeding 21
  years in order to provide accommodation or
  recreational facilities for its officers and
  employees.

22
Landholding Powers of Exempted Companies

• An exempted company shall not acquire or hold
  land in Bermuda except land required for its
  business held by way of lease for a term not
  exceeding fifty years or with the consent of the
  Minister by way of lease for a term not exceeding
  twenty-one years in order to provide
  accommodation or recreational facilities for its
  officers and employees.