Bermuda Law, Legislation and Legal System
Bermuda's law and its legal system is completely independent. Although Bermuda has been a British Oversees Territory, none of the British laws apply here. However it is quite similar to the English Common Law and to some extent has been derived from it and has remained that way.
Compared to the democratic laws of the western countries like US, Canada and UK, Bermuda has major differences in its laws. For example, in any of the above western countries the constitution would be applicable to any legal resident irrespective of nationality.
But in Bermuda, the constitution is applicable only for the Bermudians. A non-Bermudian does not get a citizenship even after years of stay in the island, unless one gets married to a Bermudian and stays together for at least 10 years. Even the Human Rights law does not apply to non-citizens the same way it does for the Bermudians.
Law in Bermuda is a self regulated and a fused profession. There is no distinction between a solicitor and a barrister as seen in the UK. All Lawyers need to be member of the Bermuda Bar Association. There is a governing body for the Bar Association called the Bermuda Bar Council, which is made up of elected members of the Bar Association. For disciplinary matters, there is another body called the Bermuda Professional Conduct Committee, which is constituted of the members of the Bar Council and few other select members from the profession.
Most of the lawyers in Bermuda practice in law firms and appear in the courts. There are many lawyers in Bermuda working in various legal jobs and practice in the areas of family, trusts and estate, corporate, commercial, criminal cases and prosecution.
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Bermuda Courts and Litigation
The legal system in Bermuda is relatively simple and easily understood by those who know the English language. The court system in Bermuda is also quite transparent and includes a commercial court as well. Bermuda Courts follow a three tiered system:
Magistrates Court - Which handles mainly the criminal cases.
Supreme Court - For both Civil and Criminal cases. It works more like a High Court, or County Court or the English Crown Court.
Court of Appeal - This is similar to English Court of Appeal. One has a further right to appeal at the Privy Council of London.
While courts in Bermuda are not subordinate to English House of Lords or other English Courts, but Bermuda courts generally accept as bindings the decisions from the House of Lords on common law matters. Additionally, the Bermuda courts do refer to and rely upon decisions from other commonwealth jurisdictions like Hong Kong and Australia.
Company Law in Bermuda
Bermuda’s laws are regularly updated as the conditions change. The Government invites and listens to the voice of the companies and organizations, their suggestions and how they are affected.
Bermuda regulates its corporate interests by a set of rules that meet, or exceed, international standards. It is well accepted that it is a lot easier to run a bank or a fund house from Bermuda than any other place in the world. Bermuda ensures less of bureaucracy without compromising with oversight, monitoring and regulation.
There can be two types of companies formed in Bermuda:
Which must have at least 60% ownership with a Bermudian. Only a local company can trade in the local market of Bermuda and expected to contribute to the economy by paying tax.
Formed by non-Bermudians. These are essentially international or offshore companies which can have physical presence and employ staff in Bermuda.
Property Law in Bermuda
There is no registration of property in Bermuda, or in other words, unlike the property law legislation in UK, all property conveyances in Bermuda are unregistered.
A non-Bermudian in general can not have a property in Bermuda. The only exception is when one gets a license from the government.
The fee for the license is significant and the net value of the property therefore becomes substantially high compared to the market rates available for Bermuda nationals.
In general, the property ownership by non Bermudians are restricted only to 5% of the high-end properties in the island. Barring some exceptions, a non-Bermudian can buy a property only from another non-Bermudian.
Generally, a property or real estate in Bermuda can not be assigned to a corporation unless it's a Trust company or a special permission taken from the Minister as per the strict policy. Even in case of Trusts, the property can not be vested if it benefits a non-Bermudian.
There is no capital gains tax in Bermuda. However there is a hefty stamp duty on sales or while giving a property as a gift to somebody.
Immigration Laws in Bermuda
Following are the different types of resident status in Bermuda:
Bermudian (or Bermuda Citizen)
One can get this status by birth, but the child needs to be born to parents, at least one of who should be Bermudian. The other way is to marry a Bermudian and staying together for at least 10 years and then making an application for consideration. However, the status would be lost if the marriage breaks down.
It is possible to stay in Bermuda permanently if you get a 'Permanent Residence Certificate'. However this is not citizenship and won't give voting rights. Neither the children born will get a Bermudian status.
Expatriates who come with Bermuda Work Permit
in order to work and live in Bermuda for a temporary period, get this status. This does not give any citizenship rights. The spouse and the minor children can however stay with the person. Bermuda Legal Jobs
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One who owns a property with a license. This does not automatically provide any citizenship rights. However, one can reside in Bermuda.
Bermuda Trust Laws
In Bermuda, a trustee requires a license and the license is given generally to a corporation. Hence a trustee in Bermuda is usually a Trust Company. However, an individual can be a trustee if he is connected to a Trust Company and has the appropriate delegation.
Bermuda has been traditionally very liberal with non-Bermuda assets like foreign currency. There is no tax charged on non-Bermuda assets that are either parked with a Trusts, or on the earnings generated out of those assets, or on sale of those assets or on distribution of those non-Bermuda assets to other beneficiaries. As a result, many corporations from high tax jurisdictions have formed trust companies in Bermuda to get such tax benefits.
However, if Bermuda assets are parked or settled into a trust, stamp duties are charged by the government. Domestic Trusts formed by the Bermudians with Bermuda assets are also quite popular here. Because only a stamp duty of up to 15% is charged on the asset value, but there is no tax on the interests earned.
The legislative framework in Bermuda has continued to evolve through 2011. Following are some of the highlights:
Insurance/Re-Insurance: Bermuda has continued to implement the key principles of Solvency II in order to ensure that it has compatible standards with that of Europe. Bermuda Monetary Authority (BMA) has implemented the Insurance Code of Conduct, a set of guidelines against which insurance/re-insurance companies would be assessed.
Tax Information Exchange Agreements (TIEA): Bermuda has signed TIEA with a number of countries. One of the most significant ones is with Canada which is expected to lead to Canada further leveraging Bermuda for Captives, funds etc.
Company Law: In 2011, there were significant changes and amendments made in company acts to reduce bureaucracy in the companies. Some of such changes includes introduction of corporate directors, reducing the minimum directors in the board to 1, removal of provision for financial assistance, creating opt out provision for holding annual general meetings etc.
Banking: Banking sector has seen a period of stability. It has continued to implement international standards like the Base II for solvency and adequacy of capital requirements.
Islamic Finance: More thrust and promotion has been given to Islamic Finance structures that are compliant to the Sharia Law.
The government has taken initiatives to retain and grow international business. One of such steps is the Job Makers Bill 2011 whereby Senior Executives who meet certain criteria can apply for permanent residency in Bermuda.
In 2012, notice has been issued by Barristers and Accountants Anti-Money Laundering and Anti-Terrorist Financing Board of Bermuda to the law firms and accounting firms about the systems and controls that must be in place to establish 'Independent Professionals' status.
Note: This article is based on secondary research and for information only. It is not meant for any legal advice.
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