Companies Act 1981

[16 July 1981]

[preamble and words of enactment omitted]

PART I

INTERPRETATION AND APPLICATION

Short title and commencement

1 This Act may be cited as the Companies Act 1981.

[commencement provisions omitted]

[this Act was brought into operation on 1 July 1983 by BR 22/1983]

Interpretation

2 (1) In this Act unless the context otherwise requires�

"affiliated company" has the meaning given in section 86(3);

"appointed jurisdiction" means a jurisdiction appointed under subsection (10);

"appointed newspaper" means the Gazette or newspaper ap pointed by the Registrar under subsection (6);

"appointed stock exchange" means any stock exchange appointed by the Minister under subsection (9);

"arrangement" includes a reorganization of the share capital of a company by the consolidation of shares of different classes or by the division of shares into shares of different classes or by both these methods;

"attorney" means barrister and attorney;

"bearer shares" means shares that may be transferred by deliv ery of the warrant or certificate relating thereto;

"book and paper" includes minutes, financial statements, ac counts, deeds, writings and documents;

"bye-laws" means the bye-laws of a company as originally passed or as lawfully altered from time to time;

"company" means a company to which this Act applies by virtue of section 4(1);

"company limited by shares" and "company limited by guarantee" have the meanings given in section 5(2)(a) and (b);

"contributory" has the meaning given in section 159;

"Court" means the Supreme Court;

"creditors' voluntary winding up" has the meaning given in sec tion 206(4);

"debenture" includes debenture stock, bonds and any other se curities of a company whether constituting a charge on the assets of the company or not;

"default fine" has the meaning given in section 280;

"director" includes an alternate director and any person occupy ing the position of director by whatever name called;

"document" includes summons, notice, order or other legal pro cess and registers;

"exempted company" has the meaning given in section 127;

"exempted undertaking" means an exempted company, or permit company or an exempted partnership as defined in the Ex empted Partnership Act 1992 [title 17 item 26];

"general rules" means general rules made under section 288(2) and includes forms;

"holding company" has the meaning given in section 86(2);

"local company" means any company incorporated in Bermuda other than an exempted company;

"member" has the meaning given in section 19;

"members' voluntary winding up" has the meaning described by section 201;

"memorandum" means the memorandum of association of a company, as originally delivered to the Registrar or as law fully altered from time to time;

"minimum subscription" has the meaning given in section 28;

"Minister" means the Minister of Finance or such other Minister as may be appointed to administer this Act;

"mutual company" has the meaning given in section 152;

"non-resident insurance undertaking" has the meaning given in section 1 of the Non-Resident Insurance Undertakings Act 1967 [title 5 item 17];

"Official Receiver" means the Official Receiver appointed under section 3 or such other person as may be performing his du ties under this Act;

"officer" in relation to a body corporate, includes director and secretary;

"overseas company" means any body corporate incorporated out side Bermuda other than a non-resident insurance under taking;

"permit" means a permit issued under section 134;

"permit company" means any company with a valid permit;

"prescribed" means prescribed by statutory instrument made under this Act;

"prospectus" means any prospectus, notice, circular, advertise ment, or other invitation offering to the public for subscrip tion or purchase any shares or debentures in a company;

"receiver" or "manager" have the meaning given in section 272;

"register" means the register of companies maintained under section 14(1);

"Registrar" means the Registrar of Companies appointed under section 3 or such other person as may be performing his du ties under this Act;

"share" means share in the share capital of a company and in cludes stock;

"statutory meeting" means the meeting required to be held under section 70;

"subsidiary company" has the meaning given in section 86;

"unlimited liability company" has the meaning given in section 5(2)(c).

(2) Wherever in this Act an obligation or duty is placed on a company or a company is authorized to do any act then unless it is oth erwise provided such obligation, duty or act may be carried out by the directors of the company.

(3) A person shall not be deemed within the meaning of any provision of this Act to be a person in accordance with whose directions or instructions the directors of a company are accustomed to act, by rea son only that the directors of the company act on advice given by him in a professional capacity.

(4) The expressions "shall be liable to a fine" or "shall be liable to imprisonment" when used in this Act shall mean "shall be guilty of a summary offence and shall be liable on conviction to a fine" or "shall be guilty of a summary offence and shall be liable on conviction to impris onment", as the case may be, and all fines and terms of imprisonment shall be deemed to be maximum fines or periods of imprisonment, as the case maybe.

(5) Where it is stated that a person shall be guilty of contempt of court he shall be deemed to have committed an offence under section 5 of the Administration of Justice (Contempt of Court) Act 1979 [title 8 item 1B].

(6) The Registrar shall from time to time publish in the Gazette a list of newspapers appointed for the purposes of this Act.

(7) Any requirement in this Act to use the word "Limited" may be met by the use of the abbreviation "Ltd.".

(8) In this Act the expression "member" includes shareholder and the expression "shareholder" includes member.

(9) The Minister may appoint a stock exchange and shall cause the appointment to be published in an appointed newspaper.

(10) The Minister may appoint a jurisdiction and shall cause the appointment to be published in an appointed newspaper.

[section 2 amended by 1992:51 effective 1 July 1992; by 1992:66 effective 8 August 1992; by 1993:37 effective 13 July 1993, by 1994:22 effective 13 July 1994; and by 1998 : 35 effective 5 October 1998]

Appointment of Registrar

3 There shall be appointed a Registrar of Companies and an Offi cial Receiver both of whom shall be public officers and shall have the powers and discharge the duties conferred or imposed upon them by this Act.

Application

4 (1) This Act shall apply to �

(a) all companies registered under it or registered before 1 July 1983 under the Companies (Incorporation by Reg istration) Act 1970;

(b) all companies limited by shares incorporated by Act in Bermuda prior to or after 1 July 1983, except to such extent (if any) as may otherwise be expressly provided in the incorporating Act;

(d) any overseas company so far as any provision of this Act requires it to apply.

(1A) In respect of �

(a) non-resident insurance undertakings, section 2 and Parts XIII and XIV shall apply to them except those sections in Part XIII relating exclusively to members' voluntary liquidations and for the purposes of section 2 and Parts XIII and XIV "insurance business" has the meaning assigned to it in the Non-Resident Insurance Undertakings Act 1967 [title 5 item 17];

(b) permit companies, section 2 and Parts III, V, XI and XIII except those sections in Part XIII relating exclusively to members' voluntary liquidations shall apply to them.

(2) Where the provisions of a private Act incorporating a com pany conflict with the provisions of this Act the provisions of the private Act shall prevail provided that �

(a) where reference is made in the private Act to any provi sion of an Act repealed by this Act then if there is a pro vision in this Act corresponding or nearly corresponding to the provision repealed then that provision shall apply;

(b) when reference is made in the private Act to any provi sion of an Act repealed by this Act and there is no provi sion in this Act corresponding or nearly corresponding to the provision repealed then that provision shall continue to have effect; and

(c) notwithstanding any provision in the private Act from 1 July 1984 Parts VI (excepting section 91), VII, VIII, XIII, XIV and XV shall apply to the company.

[section 4 amended by 1992:51 effective 1 July 1992]

Restricted business activities

4A (1) No company shall have objects that enable it to carry on any restricted business activity set out in the Ninth Schedule without the consent of the Minister.

(2) The Minister may, by order subject to the negative resolution procedure, amend the Ninth Schedule by addition, deletion or variation of any restricted business activity.

(3) An application for consent under subsection (1) shall be in such form and accompanied by such documents as the Minister may determine.

(4) Where the Minister refuses to grant his consent under subsection (1), he shall not be bound to assign any reason for his refusal and his decision shall not be subject to appeal or review in any court.

(5) The Registrar shall refuse to register a company that has objects as referred to in subsection (1) unless the consent of the Minister is first obtained.

(6) Any person aggrieved by a decision of the Registrar under subsection (5) may appeal to the Minister whose decision shall be final.

(7) Subject to subsection (8), an application for consent and any documents accompanying any such application shall be treated as confidential by the Minister and all public officers having access thereto.

(8) Subsection (7) does not preclude�

(a) the disclosure of information for the purpose of enabling or assisting the Minister to exercise or perform any functions conferred upon him by this Act;

(b) the disclosure of information or the transmitting of an application for consent and its accompanying documents to the Bermuda Monetary Authority for the purpose of enabling or assisting that Authority to exercise or perform any functions conferred upon the Authority by the Bermuda Monetary Authority Act 1969.

[section 4A inserted by 1998 : 35 effective 5 October 1998]

Prohibited business activities

4B (1) No company shall carry on any prohibited business activity set out in the Tenth Schedule.

(2) The Minister may, by order subject to the negative resolution procedure, amend the Tenth Schedule by addition, deletion or variation of any prohibited business activity.

(3) Where a company carries on any prohibited business activity in contravention of subsection (1), the company may, on the application of the Registrar, be wound up by the Court pursuant to section 161.

[section 4B inserted by 1998 : 35 effective 5 October 1998]

PART II

INCORPORATION OF COMPANIES

Mode of forming a company

5 (1) Any one or more persons by subscribing their names to a memorandum of association and otherwise complying with the requirements of this Act in respect of registration may form a company with or without limited liability.

(2) Such a company may be �

(a) a company having the liability of its members limited by the memorandum to the amount, if any, unpaid on the shares held by them, in this Act termed "a company lim ited by shares";

(b) a company having the liability of its members limited by the memorandum to such an amount as the members may respectively thereby undertake to contribute to the assets of the company in the event of it being wound up, in the Act termed "a company limited by guarantee"; or

(3) A company limited by guarantee shall only be formed if �

(a) its purpose is to promote art, science, religion, charity, sport, education or any other social or useful purpose and its profits, if any, and other income is to be used in promoting its purposes and no dividends are to be paid to its members; or

(b) it is a mutual company.

[section 5 amended by 1993:37 effective 13 July 1993; and by 1994:22 effective 13 July 1994]

Registration of companies

6 (1) An application for registration of a company shall be in such form as may be prescribed by rules made under section 288 and shall be accompanied by such documents as the Minister may determine.

(2) Not more than three months prior to an application for registration of a local company the applicant shall publish in an appointed newspaper an advertisement announcing the intention to incorporate the local company specifying the name and stating its proposed objects.

(3) The Minister may, by order subject to the negative resolution procedure, prohibit the registration of companies or a class of companies the minimum share capital of which is less than an amount stated in the order.

(4) The Registrar shall refuse to register a company if he is of the opinion that�

(a) in the case of a company limited by guarantee its purpose is not one of the purposes referred to in section 5(3); or

(b) its memorandum shows that its minimum share capital will be less than the amount required by the Minister by order under subsection (3).

(5) Any person aggrieved by a decision of the Registrar under subsection (4) may appeal to the Minister whose decision shall be final.

[section 6 amended by 1990:52 effective 12 July1990, and repealed and replaced by 1998 : 35 effective 5 October 1998]

Requirements of memorandum

7 (1) The memorandum of every company must state�

(a) the name of the company and, in the case of a company limited by shares or a company limited by guarantee, subject to section 9, the word "Limited" as the last word of the name;

(aa) in the case of a company limited by shares or a company limited by guarantee, that the liability of its members is limited;

(b) the objects of the Company;

(d) the names, addresses and nationalities of the persons who subscribe their names to the memorandum and which of them, if any, has Bermudian status;

(e) whether the company is to be an exempted company;

(f) [Deleted by 1992:51]

(g) the maximum land holding powers of the company in relation to land situate in Bermuda and, where it is pro posed that the company shall acquire a particular parcel of land, a full description of that parcel; and

(h) the period, if any, fixed for the duration of the company, or the event, if any, on the occurrence of which the company is to be dissolved.

(2) In the case of a company limited by shares the memoran dum must also state �

(a) the amount of share capital with which the company proposes to be registered including the minimum that must be subscribed and the division thereof into shares of a fixed amount; and

(b) that the persons who subscribe their names to the memorandum agree to take such number of shares of the company as may be allotted to them respectively by the provisional directors, not exceeding the number of shares for which they respectively subscribe, and that they agree to satisfy such calls as may be made on them by the directors, provisional directors or promoters in respect of the shares allotted to them.

(3) Subject to section 154 the memorandum of a company limited by guaran tee must state that each member undertakes to contribute to the assets of the company in the event of it being wound up while he is a member, or within one year after he ceases to be a member, for the payment of the debts and liabilities of the company contracted before he ceases to be a member, and of the costs charges and expenses of winding up, and for the adjustment of the rights of the contributories amongst themselves, such amount as may be required, not exceeding a specified amount.

(4) The memorandum of every company shall be signed by each subscriber in the presence of at least one witness who shall attest the signature.

(5) A company may not alter the provisions of its memorandum except in a manner provided in this Act.

[section 7 amended by 1994:22 effective 13 July 1994]

Prohibition of registration of companies with undesirable names

8 (1) No company shall be registered with a name which in the opinion of the Registrar is undesirable.

(2) Without prejudice to the generality of subsection (1), no company shall be permitted to be registered with a name which�

(a) is identical with the name by which a company is regis tered or incorporated under this Act or any other Act or so nearly resembles that name as to be likely to deceive unless that company signifies its consent in such man ner as the Registrar may require;

(b) contains the words "Chamber of Commerce", or in the opinion of the Registrar suggests or is likely to suggest the patronage of Her Majesty or of any member of the Royal Family or connection with any government whether of Bermuda or elsewhere;

(c) contains the word "municipal" or "chartered" or in the opinion of the Registrar suggests, or is likely to suggest, connection with any public board or other local author-ity or with any society or body incorporated by Royal Charter;

(d) contains the word "co-operative";

(e) contains the words "building society"; or

(f) in the case of a company limited by shares or a company limited by guarantee, subject to section 9, does not contain the word "Limited"; or

(g) in the case of an unlimited liability company ends with the word "Limited".

(3) If, through inadvertence or otherwise, a company on its first registration or on its registration with a new name is registered with a name which in the opinion of the Registrar too closely resembles the name by which a company in existence is already registered, the first mentioned company may, with the sanction of the Registrar, change its name, and shall, if the Registrar so directs within six months of its being registered by that name, change its name within six weeks of the date of such direction or within such longer period as the Registrar may think fit to allow.

(4) If at any time after a company has been registered it ap pears to the Registrar that the name under which it is registered is un desirable, the Registrar may notify the company accordingly and may in such notification direct the company to change its name, and the com pany shall change its name within six weeks of such direction unless within that time it shall have lodged an appeal to the Court against such direction. The Court shall thereupon either cancel or confirm such direc tion and its decision shall be final and conclusive.

(5) If a company makes default in complying with a direction under subsection (3) or a confirmed direction under subsection (4) it shall be liable to a default fine:

Provided that in the case of an appeal under subsection (4) the period of default shall not commence until six weeks after the decision of the Court.

(6) Section 10(1), (3) and (4) shall apply to a change of name under this section as they apply to a change of name under that section.

[section 8 amended by 1994:22 effective 13 July 1994]

Power to dispense with "limited" in name of charitable and other companies

9 (1) Where it is proved to the satisfaction of the Minister that an association about to be formed as a limited company is to be formed for promoting art, science, religion, charity, sport or any other useful object, and intends to apply its profits, if any, or other income in promoting its objects, and to prohibit the payment of any dividend to its members, the Minister may by licence direct that the association may be registered as a company, without the addition of the word "Limited" to its name, and the association may be registered accordingly.

(2) Where it is proved to the satisfaction of the Minister �

(a) that the objects of an existing company, are restricted to those specified in subsection (1) and to objects inciden tal or conducive thereto; and

(b) that by its constitution the company is required to apply its profits, if any, in promoting its objects and is prohib ited from paying any dividend to its members, the Min ister may by licence, subject to such conditions as he thinks fit to impose, authorize the company to change by resolution its name by the omission of the word "Limited", and section 10(2), (3) and (4) shall apply to a change of name under this subsection as they apply to a change of name under that section.

(3) A licence under this section may at any time be revoked by the Minister and thereupon the Registrar shall enter the word "Limited" at the end of the name of the company in the register:

Provided that before a licence is revoked the Minister shall give the company an opportunity of being heard.

Change of name of a company

10 (1) Subject to section 8(1) and (2), a company may by resolution change its name if the Registrar has approved the proposed name.

(2) [deleted 1994:22]

(3) The Registrar shall, on receipt of a certified copy of the resolution referred to in subsection (1) together with such fee as may be prescribed�

(a) enter the new name on the register in place of the former name;

(b) enter on the register the effective date of the change of name which shall be the date of entry of the new name on the register; and

(4) The change of name of a company shall not affect any rights or obligations of the company, or render defective any legal proceedings by or against it, and any legal proceedings that might have been contin ued or commenced against it in its former name may be continued or commenced against it in its new name.

(5) Section 8(3) and (4) shall apply mutatis mutandis to any name adopted by a company under this section.

[section 10 amended by 1994:22 effective 13 July 1994; and amended by 1998 : 35 effective 5 October 1998]

Powers and objects of a company

11 (1) Subject to any provision of the law a company limited by shares shall without reference in its memorandum have the powers set out in the First Schedule unless any of such powers are excluded by its memorandum.

(2) A company limited by shares, or other company having a share capital, may amongst its objects by reference include in its memorandum any of the objects set out in the Second Schedule.

(3) The Minister may by notice vary the First and Second Schedules but any such variation shall not affect a company incorpo rated prior to the publication of the notice unless such company alters its memorandum to effect the change contained in the notice.

(4) A notice under subsection (3) shall be subject to affirmative resolution procedure.

(5) The objects set out in the different paragraphs of the objects clause in the memorandum of a company or included therein by refer ence shall not, unless otherwise stated, be limited or restricted in any way by reference to or inference from the terms of any other paragraph in the memorandum and such objects may be carried out in as full and ample a manner and construed in such a manner as if each paragraph defined the objects of a separate and independent company and each is construed as a primary object.

[Section 11 amended by 1994:22 effective 13 July 1994]

Procedure for alteration of memorandum

12 (1) Subject to the provisions of this section, a company may, by resolution passed at a general meeting of members of which due notice has been given, alter the provisions of its memorandum.

(2) Section 6 shall apply to a company wishing to change its memorandum as if the company were applying to be registered save that the advertisement provided for in section 6(2) shall detail the proposed changes to the memorandum rather than the matters set out in section 6(2).

(3) An application may be made to the Court for an alteration to the memorandum of a company passed in accordance with subsection (1) to be annulled and where such an application is made the alteration shall not have effect except in so far as it is confirmed by the Court.

(4) An application under subsection (3) may only be made �

(a) by the holders of not less in the aggregate than twenty per centum in par value of the company's issued share capital or any class thereof; or

(b) by the holders of not less in the aggregate than twenty per centum of the company's debentures entitled to ob ject to alterations to its memorandum; or

Provided that an application shall not be made by any person who has voted in favour of the alteration or has given to the company a statement in writing duly signed that he, having had notice, consents to the alteration.

(5) An application under subsection (3) shall be made within twenty-one days after the date on which the resolution altering the com pany's memorandum was passed, and may be made on behalf of the per sons entitled to make the application by one or more of their number as they may appoint in writing for the purpose.

(6) On an application under subsection (3) the Court may make an order annulling or confirming the alteration, either wholly or in part, and on such terms and conditions as it thinks fit, and may, if it thinks fit, adjourn the proceedings in order that an arrangement may be made to the satisfaction of the Court for the purchase of the interests of dis sentient members, and may give such directions and make such orders as it may think expedient for facilitating or carrying into effect any such arrangement:

Provided that no part of the capital of the company shall be ex pended in the purchase of the interests of dissentient members.

(7) Where a company passes a resolution altering the provi sions of its memorandum �

(a) if no application is made to the Court with respect thereto under this section, it shall within 30 days after the end of the period for making such an application de liver to the Registrar a copy of its memorandum as al tered; and

(b) if such application is made it shall �

(i) forthwith give notice of that fact to the Registrar; and

(ii) within 30 days after the date of any order annulling or confirming the alteration, either wholly or in part, deliver to the Registrar an of fice copy of the order and, in the case of an or der confirming the alteration, a copy of its mem orandum as altered.

(7A) On receipt of the copy of the memorandum altered pursuant to this section, the Registrar shall, subject to section 4A, forthwith register it and the amendment shall be effective from the date of such registration.

(8) If a company makes default in giving notice or delivering any document to the Registrar as required by subsection (7), the com pany and every officer of the company who is in default shall be liable to a fine of one hundred dollars for every day during which the default con tinues.

(9) Notwithstanding anything in this section, if within 21 days of the passing of a resolution a company delivers to the Registrar a copy of the memorandum as altered and an affidavit sworn by at least 2 directors of the company stating that the company does not know of any person who could make an application to the court under subsection (3), the Registrar shall register the memorandum and the amendment shall be effective from the date of such registration.

(10) A company shall give the same notice to the holders of debentures who are entitled to object to alterations to the company's memorandum under subsection (3) as it is required under subsection (1) to give to members of the company.

(11) This section shall not apply to any alteration of the memo randum of a company authorized by section 45 or 46.

[section 12 amended by 1998 : 35 effective 5 October 1998]

Bye-laws

13 (1) The administration of every company shall be regulated by bye-laws; and �

(a) a company limited by shares, or other company having a share capital, shall in its bye-laws make provision for all the matters set out in subsection (2);

(b) a company limited by guarantee shall in its bye-laws make provision for the matters set out in subsection (2)(b), (c), (d) and (f).

(2) A company limited by shares, or other company having a share capital, shall in its bye-laws make provision for �

(a) the transfer of shares and the registration of estate rep resentatives of deceased shareholders;

(b) a general meeting of the company once at least in every year;

(d) an audit of the accounts of the company once at least in every year by an independent representative of the shareholders;

(e) the duties of the secretary to the company; and

(f) the number of members required to constitute a quorum at any general meeting of the members of the company which in any case shall be a quorum of not less than two individuals; however, in the case of a company having only one member, one member present in person or by proxy constitutes a quorum at such meeting.

(3) In addition any company may at the time of registration or from time to time make bye-laws if appropriate to regulate�

(i) and to restrict the entry into and the transfer of membership in the company;

(ii) the allotment of shares;

(iii) the making of calls on shares;

(iv) the payment for shares;

(v) the issue and registration of certificates of shares;

(vi) the forfeiture of shares for non-payment of calls;

(vii) the disposal of forfeited shares, and of the pro ceeds thereof:

(viii) the transfer of shares;

(ix) the declaration and payment of dividends;

(x) the duties and responsibilities of its president and vice presidents and of any other officers with special responsibilities or duties;

(xi) the appointment, functions, duties, remunera tion and removal of all agents, officers, and ser vants of the company, and the security, if any, to be given by them to the company;

(xii) the date on which the annual meetings of the company shall be held;

(xiii) the calling of meetings of the company, and of the board of directors, the requirements as to proxies and requisite majorities in voting on any particular matter or class of matters and the procedure at such meetings;

(xiv) the quorum at meetings of directors which in no case shall be a quorum of less than two individ uals;

(xv) the voting rights and restrictions relating to any class of shares in companies limited by shares, or other company having a share capital, and the voting rights and restrictions of mem bers of companies limited by guarantee includ ing mutual companies;

(xvi) the imposition and recovery of all penalties and forfeitures admitting of regulation by bye-laws;

(xvii) the conduct in all other particulars of the affairs of the company, as well as for the application of its funds and profits; and

(xviii) the use of its common seal and any duplicate common seal.

(4) The persons subscribing their names to the memorandum of association of a company may likewise subscribe their names to bye-laws which shall become operative if approved at the statutory meeting.

(5) The directors of a company may after its registration amend the bye-laws but any such amendment shall be submitted to a general meeting of the company, and shall become operative only to such extent as they are approved at such meeting.

[section 13 amended by 1992:51 effective 1 July 1992; by 1993:37 effective 13 July 1993; and by 1994:22 effective 13 July 1994]

Registration of companies

14 (1) The Registrar shall maintain a register of companies in such form as he shall determine.

(2) The memorandum shall be delivered to the Registrar who, if he is satisfied�

(a) that the company will be in compliance with this Act; and

(b) that, where applicable, the Controller of Foreign Exchange has given permission under the Exchange Control Act 1972 [title 16 item 1] for the issue of shares in the company,

shall register the memorandum, issue a certificate of incorporation showing the date of registration and attach to the certificate a facsimile of the memorandum delivered to him.

(3) From the date of the registration of a company the sub scribers of the memorandum, together with such other persons as may from time to time become members of the company, shall be a body cor porate by the name contained in the memorandum, capable forthwith of exercising all the functions of an incorporated company, and having perpetual succession and power to adopt a common seal, but with such liability on the part of the members to contribute to the assets of the com pany in the event of its being wound up as is mentioned in this Act.

[section 14 amended by 1998 : 35 effective 5 October 1998]

Re-registration of limited liability company as unlimited liability company

14A (1) Subject to the provisions of this section, a company which is registered as a company limited by shares may be re-registered as an unlimited liability company in accordance with the requirements of this section.

(2) No application to re-register a company limited by shares as an unlimited liability company shall be lodged with the Registrar unless such application has been agreed by all the members of the company.

(3) For the purposes of subsection (2) all the members of a company shall be deemed to have agreed at a general meeting if either�

(a) all the members are present in person or by proxy at the meeting and agree; or

(b) if some of the members are not present in person or by proxy at the meeting, then, if the members present in person or by proxy at the meeting agree and there are produced at the meeting statements in writing from the members not present in person or by proxy stating that they agree.

(4) [deleted]

(5) The application shall set out such alterations in the company's memorandum as are requisite in order to conform with the memorandum of a company to be formed as an unlimited liability company and be accompanied by the documents specified in subsection (6).

(6) The documents referred to in subsection (5) are�

(a) a certified copy of the agreement referred to in subsection (3)(a), or certified copies of the agreement and the written statements referred to in subsection (3)(b); and

(b) a statutory declaration made by at least two directors of the company that the persons who have signified their agreement pursuant to sub section (3) constitute the whole membership of the company

(7) Sections 6 and 12(7A) shall apply, with the necessary changes, to a re-registration under this section as they apply to the registration of a company and the registration of a company's memorandum that has been altered.

[Section 14A inserted by 1994:22 effective 13 July 1994; and amended by 1998 : 35 effective 5 October 1998]

Certificate of incorporation to be conclusive evidence

15 No defect in the formalities leading up to the incorporation of a company shall affect the validity of its incorporation and the certificate of incorporation shall be conclusive evidence of the due incorporation of the company and the date of its incorporation.

Effect of memorandum and bye-laws

16 (1) Subject to this Act the memorandum of association when registered and the bye-laws when approved shall bind the company and the members thereof to the same extent as if they respectively had been signed and sealed by each member, and contained covenants on the part of each member to observe all the provisions of the memorandum and of the bye-laws.

(2) All money payable by any member to the company under the memorandum or bye-laws shall be a debt due from him to the com pany.

(3) [deleted 1994:22]

[Section 16 amended by 1994:22 effective 13 July 1994]

Alterations in memorandum or bye-laws increasing liability to contribute to share capital not to bind existing members without con sent

17 Notwithstanding anything in the memorandum or bye-laws of a company, no member of the company shall be bound by an alteration made in the memorandum or bye-laws after the date on which he be came a member, if and so far as the alteration requires him to take or subscribe for more shares than the number held by him at the date on which the alteration is made, or in any way increases his liability as at that date to contribute to the share capital of, or otherwise to pay money to, the company:

Provided that this section shall not apply where the member agrees in writing, either before or after the alteration is made, to be bound thereby.

Copies of memorandum and bye-laws to be given to members

18 (1) A company shall, on being so required by a member send him a copy including all alterations of the memorandum of the company, the Act establishing the company or its bye-laws subject to the payment by the member of the cost thereof.

(2) If a company makes default in complying with this section, the company and every officer of the company who is in default shall be liable to a fine of fifty dollars.

Definition of member

19 (1) The subscribers to the memorandum of a company shall be deemed to have agreed to become members of the company, and on its registration shall be entered as members in its register of members but in the case of a company limited by shares, or other company having a share capital, only if shares have been al lotted to them.

(2) Every other person who agrees to become a member of a company, and whose name is entered in its register of members, shall be a member of the company.

[Section 19 amended by 1994:22 effective 13 July 1994]

20 [repealed by 1993:37]

Form of contracts

21 (1) Contracts on behalf of a company may be made as fol lows:�

(a) a contract which if made between private persons would be by law required to be under seal may be made on be half of the company under the common seal of the com pany if the seal be affixed thereto attested by a director of the company and either the secretary of the company or another director thereof or some other person expressly authorized for the purpose, or in such other manner as the bye-laws may provide;

(b) a contract which if made between private persons would be by law required to be in writing, signed by the parties to be charged therewith, may be made on behalf of the company in writing signed by any person acting under its authority, express or implied;

(c) a contract which if made between private persons would by law be valid although made by parol only, and not re duced into writing, may be made by parol on behalf of the company by any person acting under its authority, express or implied.

(2) A contract made according to this section shall be effectual in law, and shall bind the company and its successors and all other par ties thereto.

(3) A contract made according to this section may be varied or discharged in the same manner in which it is authorized by this section to be made.

(4) Where a contract purports to be made by a company or by a person as agent for a company, at a time when the company has not yet been formed, then subject to any agreement to the contrary, the contract shall have effect as a contract entered into by the person purporting to act for the company or as agent for it and he shall be personally liable on the contract accordingly.

(5) Any contract purported to be made in the manner set out in subsection (4) may subsequently be unilaterally adopted by the company and the company shall thereupon become a party thereto to the same extent as if the contract had been made after the incorporation and in substitution for and discharge of the agent or person purporting to act on its behalf.

[section 21 amended by 1993:37 effective July 13 1993]

Bills of exchange and promissory notes

22 A bill of exchange or promissory note shall be deemed to have been made, accepted or endorsed on behalf of a company if made, ac cepted or endorsed in the name of, or by or on behalf or on account of the company by any person acting under its authority and if so endorsed the person signing the endorsement shall not be liable thereon.

Execution of instruments abroad

23 (1) A company may, by writing under its common seal, em power any person, either generally or in respect of any specified matters, as its agent, to execute deeds on its behalf in any place outside Bermuda.

(2) A deed signed by such an agent on behalf of the company and under his seal shall bind the company and have the same effect as if it were under its common seal.

(3) A company may in addition to its common seal for use in Bermuda, have for use in any territory or place one or more duplicate common seals and a deed or other document to which such seal is duly affixed binds the company as if it had been sealed with the company's common seal.

[section 23 amended by 1992:51 effective 1 July 1992]

Authentication of documents

24 A document or proceeding requiring authentication by a com pany may be signed by a director, secretary or other authorized officer of the company, and need not be under its common seal.

PART III

PROSPECTUSES AND PUBLIC OFFERS

Interpretation of Part III

25 (1) In this Part unless the context otherwise requires�

"company" includes any association of persons seeking to be registered as such a company;

"competent regulatory authority" means any authority appointed by the Minister by notice in an appointed newspaper to ap prove the offering of shares or debentures to the public by companies;

"expert" includes engineer, valuer, accountant and any other person whose profession gives authority to a statement made by him;

"promoter" means a promoter who was party to the preparation of the prospectus, but does not include any person by reason of his acting in a professional capacity for persons engaged in procuring the formation of the company;

"share" includes debentures, units or sub-units of a unit trust or a warrant conferring an option to acquire shares;

(2) Any reference in this Act to offering shares to the public shall, subject to any provision to the contrary contained therein, be con strued as including a reference to offering them to any section of the public, whether selected as members or debenture holders of the com pany concerned or as clients of the person issuing the prospectus or in any other manner, and references in this Act or in a company's bye-laws to invitations to the public to subscribe for shares shall, subject as aforesaid, be similarly construed.

(3) For the purposes of this Part�

(a) a statement included in a prospectus shall be deemed to be untrue if it is misleading in the form and context in which it is included; and

(b) a statement shall be deemed to be included in a prospectus if it is contained therein or in any report or memorandum appearing on the face thereof or by refer ence incorporated therein or issued therewith.

(4) Subsection (2) shall not be taken as requiring any offer or invitation to be treated as made to the public if it is�

(a) an offer to existing holders of shares in the company of the same class as the shares comprised in the offer without any right of renunciation; or

(b) an offer without any right of renunciation to the holders of convertible debentures or debentures having sub scription rights in respect of shares into or in respect of which the right of conversion or subscription exists; or

(c) an offer certified in writing by an officer of the company on behalf of the board of directors to be an offer which the board considers as not being calculated to result, directly or indirectly, in the shares becoming available�

(i) in the case of a local company, to more than 20 persons; and

(ii) in the case of an exempted company, or a permit company to more that 35 persons; or

(d) an offer having a private character whether by reason of the connection between the company issuing the shares and those to whom they are issued or otherwise; or

(e) an offer certified in writing by an officer of the company on behalf of the board of directors to be an offer which the board considers as not being calculated to result, directly or indirectly, in shares becoming available to persons other than persons whose ordinary business involves the acquisition, disposal or holding of shares, whether as principal or agent.

(5) The Minister may, on the application by or on behalf of a company, direct that the provisions of Part III or any provision of that Part and section 35 shall not apply to a proposed offer of shares.

(6) A direction of the Minister given under subsection (5) may be subject to conditions and may at any time be revoked by the Minister.

(7) A direction of the Minister given under subsection (5) is not a statutory instrument having legislative effect.

[section 25 amended by 1992:51 effective 1 July 1992, by 1997 : 21 effective 2 September 1997; and by 1998 : 35 effective 5 October 1998]

Company offering shares to public shall publish a prospectus

26 (1) Subject to any other enactment no company shall offer shares to the public unless prior to such offer it publishes in writing a prospectus signed by or on behalf of all the directors or provisional directors of the company and files a copy with the Registrar.

(2) The Registrar shall not accept for filing a copy of a prospectus unless it is accompanied by a certificate signed by an attorney certifying �

(a) that the prospectus contains the particulars required by section 27(1) and is accompanied by a written statement from the auditor of the company, dated within seven days prior to the date of such filing, which confirms�

(i) the auditor's consent to the inclusion of his name in the prospectus to be issued by the company as having accepted the appointment as auditor of the company; or

(ii) the auditor's consent to the inclusion in that prospectus of any or all reports prepared by him; or;

(b) that an appointed stock exchange or a competent regulatory authority has received or otherwise accepted the prospectus as a basis for offering shares to the public.

(3) The directors, provisional directors and promoters of any company that fails to comply with this section shall each be liable to a fine of one thousand dollars.

[section 26 amended by 1992:51 effective 1 July 1992; and by 1995:33 effective 7 July 1995]

Contents of a prospectus

27 (1) Every prospectus shall contain or there shall be attached thereto documents showing�

(a) the names, descriptions and addresses of the promoters, officers or proposed officers;

(b) the business or proposed business of the company;

(c) the minimum subscription which, in the opinion of the promoters, directors or provisional directors must be raised under section 28;

(d) any rights or restrictions on the shares that are being offered;

(e) all commissions payable on the sale of the shares re ferred to in the prospectus and the net amount receiv able by the company in respect of the sale;

(f) the name and address of any person who owns five per cent or more of the shares of the company:

Provided that this paragraph shall not apply to an ex empted company or a permit company;

(g) any shareholding in the company of an officer of the company;

(h) financial statements of the company prepared in such manner and containing such information as may be required by rules made under section 34;

(i) a report or statement by the auditor of the company prepared in such manner and containing such information as shall be required by rules made un der section 34;

(j) the date and time of the opening and closing of sub scription lists.

(2) Where an appointed stock exchange or any competent regulatory authority has received or otherwise accepted the prospectus then subsection (1) shall not apply.

[section 27 amended by 1992:51 effective 1 July 1992, by 1995:33 effective 7 July 1995, and by 1997 : 21 effective 2 September 1997]

Minimum amount required to be raised to be stated in prospectus

28 Every prospectus shall contain the following particulars�

(a) the minimum subscription which must be raised by the issue of shares in order to provide the sums, or, if any part thereof is to be defrayed in any other manner, the balance of the sums, required to be provided in respect of each of the following matters

(i) the purchase price of any assets purchased or to be purchased which is to be defrayed in whole or in part out of the proceeds of the issue;

(ii) any preliminary expenses payable by the com pany, and any commission so payable to any person in consideration of his agreeing to sub scribe for, or of his procuring or agreeing to pro cure subscriptions for, any shares in the com pany;

(iii) the repayment of any moneys borrowed by the company in respect of any of the foregoing mat ters;

(iv) working capital; and

(b) the amounts to be provided in respect of the matters aforesaid otherwise than out of the proceeds of the issue and the sources out of which those amounts are to be provided.

Companies continuously offering shares to the public

29 (1) Where any company continuously over a period offers shares to the public �

(a) every calendar year from the date of the last issue or such other period as may be granted by the Registrar it shall issue a new prospectus which shall comply with section 27(1) subject to section 27(2); and

(b) whenever any of the particulars in a prospectus issued by such a company ceases in a material respect to be accurate it shall publish supplementary particulars and file a copy thereof with the Registrar.

(2) Each of the directors of any company that fails to comply with this section shall be liable to a fine of one thousand dollars.

[section 29 amended by 1992:51 effective 1 July 1992]

Offences relating to the issue of a prospectus

30 Any person who makes or authorizes the making of an untrue statement in a prospectus unless he proves either that the statement was immaterial or that at the time he made the statement he had rea sonable grounds to believe it was true shall be liable �

(a) on conviction on indictment, to imprisonment for period of five years or to a fine of five thousand dollars or to both such imprisonment and fine; or

(b) on summary conviction to imprisonment for a period of one year or to a fine of two thousand dollars or to both such imprisonment and fine.

Civil liability for mis-statements in prospectus

31 (1) Where a prospectus invites persons to subscribe for shares in a company, the following persons shall be liable to pay compensation to all persons who subscribe for any shares on the faith of the prospec tus for the loss or damage they may have sustained by reason of any untrue statement included therein that is to say �

(a) every person who is an officer of the company a the time of the issue of the prospectus;

(b) every person who has authorized himself to be named and is named in the prospectus as an officer or a having agreed to become an officer either immediately or after an interval of time;

(d) every person who has authorized the issue to the public of the prospectus.

(2) No person shall be liable under subsection (1) if he proves�

(a) that, having consented to become an officer of the com pany, he withdrew his consent before the issue of the prospectus, and that it was issued without his authority or consent; or

(b) that the prospectus was issued without his knowledge or consent, and that on becoming aware of its issue he forthwith gave reasonable public notice that it was is sued without his knowledge or consent; or

(c) that, after the issue of the prospectus and before allot ment thereunder, he, on becoming aware of an untrue statement therein, withdrew his consent thereto and gave reasonable public notice of the withdrawal and of the reason therefor; or

(d) that �

(i) as regards every untrue statement not purport ing to be made on the authority of an expert or of a public official document or statement, he had reasonable ground to believe, and did up to the time of the allotment of the shares believe, that the statement was true; and

(ii) as regards every untrue statement purporting to be a statement by an expert or contained in what purports to be a copy of or extract from a report or valuation of an expert, it fairly repre sented the statement, or was a correct and fair copy of or extract from the report or valuation, and he had reasonable ground to believe and did up to the time of the issue of the prospectus be lieve that the person making the statement was competent to make it and had not withdrawn or altered it; and

(iii) as regards every untrue statement purporting to be a statement made by an official person or contained in what purports to be a copy of or extract from a public official document, it was a correct and fair representation of the statement or copy of or extract from the document.

(3) Where the prospectus contains �

(a) the name of a person as an officer of the company or as having agreed to become an officer of the company thereof, and he has not consented to become an officer, or has withdrawn his consent before the issue of the prospectus, and has not authorized or consented to the issue thereof; or

(b) a statement by an expert or contains what purports to be a copy of or extract from a report or valuation of an expert, which the expert has withdrawn or altered,

the officers of the company, except any without whose knowledge or con sent the prospectus was issued, and any other person who authorized the issue thereof shall be liable to indemnify the person named as afore said or whose consent was required as aforesaid, as the case may be, against all damages, costs and expenses to which he may be made liable by reason of his name having been inserted in the prospectus or of the inclusion therein of a statement purporting to be made by him as an ex pert, as the case may be, or in defending himself against any action or legal proceeding brought against him in respect thereof:

Provided that a person shall not be deemed for the purposes of this subsection to have authorized the issue of a prospectus by reason only of the inclusion therein of a statement purporting to be made by him as an expert.

When experts are not liable

32 A person referred to as an expert in a prospectus shall not be li able under section 30 or 31 if any untrue statement was not made by him or that as regards any untrue statement made by him he was com petent to make the statement and had reasonable grounds to believe and did believe up to the date of the issue of the prospectus that it was true or on becoming aware that the statement was untrue before the issue of the prospectus he had given reasonable public notice of his disassocia tion from the prospectus and the reasons therefor.

Restriction on alteration of terms mentioned in prospectus

33 A company limited by shares , or other company having a share capital, shall not prior to the statutory meeting vary the terms of a contract referred to in a prospectus.

[Section 33 amended by 1994:22 effective 13 July 1994]

Rules

34 The Minister after consultation with the Institute of Chartered Accountants of Bermuda may make rules providing for�

(a) the information that shall be contained in, and the copies of documents that shall be attached to, any financial statement required to be attached to a prospectus by section 27(1)(h); and

(b) the information that shall be contained in any report or statement of an auditor required to be attached to a prospectus by section 27(1)(i).

[Section 34 replaced by 1995:33 effective 7 July 1995]

PART IV

SHARE CAPITAL DEBENTURES AND DIVIDENDS

Prohibition of allotment unless minimum subscription received

35 (1) No allotment shall be made of any share capital of a com pany offered to the public for subscription unless the minimum sub scription to be raised under section 28(a) has been paid to and received by the company.

For the purposes of this subsection, a sum shall be deemed to have been paid to and received by the company if a cheque or other draft for that sum has been received in good faith by the company and the officers of the company have no reason for suspecting that the cheque or other draft will not be paid.

(2) The amount so stated in the prospectus shall be reckoned exclusively of any amount payable otherwise than in cash.

(3) If the conditions aforesaid have not been complied with on the expiration of 120 days after the first publication of the prospectus, all money received from applicants for shares shall be forthwith repaid to them without interest, and, if any such money is not so repaid within 128 days after the issue of the prospectus the directors, provisional di rectors as the case may be and promoters of the company shall be jointly and severally liable to repay that money with interest at the rate of five per cent per annum from the expiration of the 128th day:

Provided that such a person shall not be liable if he proves that the default in the repayment of the money was not due to any miscon duct or negligence on his part.

(4) Any condition requiring or binding any application for shares to waive compliance with any requirement of this section shall be void.

(5) This section shall not apply to any allotment of shares sub sequent to the first allotment of shares offered to the public for sub scription.

Effect of irregular allotment

36 An allotment made by a company to an applicant in contraven tion of section 35 shall be violable at the instance of the applicant within one month after the holding of the statutory meeting of the company and not later, or, in any case where the company is not required to hold a statutory meeting, or where the allotment is made after the holding of the statutory meeting within one month after the date of the allotment, and not later, and shall be so voidable notwithstanding that the company is in course of being wound up.

Penalty for the contravention of section 36

37 If any officer, provisional director, or promoter of a company knowingly contravenes, or permits or authorizes the contravention of, any of the provisions relating to the allotment of shares, he shall be li able to compensate the company and the allottee respectively for any loss, damages or costs which the company or the allottee may have sus tained or incurred thereby:

Provided that proceedings to recover any such loss, damages, or costs shall not be commenced after the expiration of two years from the date of the allotment.

Payment of commissions

38 (1) It shall be lawful for a company to pay a reasonable com mission to any person in consideration of his subscribing or agreeing to subscribe, whether absolutely or conditionally for any shares in the company, or processing or agreeing to process subscriptions, whether absolute or conditional for any shares in the company.

(2) Save as aforesaid, no company shall apply any of its shares or capital money either directly or indirectly in payment of any commis sion, discount or allowance to any person in consideration of his sub scribing or agreeing to subscribe, whether absolutely or conditionally, for any shares in the company, or procuring or agreeing to procure sub scriptions, whether absolute or conditional, for any shares in the com pany, whether the shares or money be so applied by being added to the purchase money of any property acquired by the company, or the money be paid out of the nominal purchase money or contract price, or other wise.

(3) Nothing in this section shall affect the power of any com pany to pay such brokerage as it has heretofore been lawful for a com pany to pay.

(4) A vendor to, promoter of, or other person who receives pay ment in money or shares from, a company shall have and shall be deemed always to have had power to apply any part of the money or shares so received in payment of any commission, the payment of which, if made directly by the company, would have been legal under this sec tion.

Financial assistance generally prohibited

39 (1) Subject to sections 39A to 39C (inclusive), where a person is acquiring or is proposing to acquire shares in a company, it shall not be lawful for the company or any of its subsidiaries to give financial assistance directly or indirectly for the purpose of that acquisition before or at the same time as the acquisition takes place.

(2) Subject to sections 39A to 39C (inclusive), where a person has acquired shares in a company and any liability has been incurred (by that or any other person), for the purpose of that acquisition, it shall not be lawful for the company or any of its subsidiaries to give financial assistance directly or indirectly for the purpose of reducing or discharging the li ability so incurred.

(3) In this section and sections 39A to 39C (inclu sive) �

(a) a reference to a person incurring a liability in cludes his changing his financial position by making an agreement or arrangement (whether enforceable or unenforceable, and whether made on his own account or with any other person) or by any other means, and

(b) a reference to a company giving financial assist ance for the purpose of reducing or discharging a liability incurred by a person for the purpose of the acquisition of shares includes its giving such financial assistance for the purpose of wholly or partly restoring his financial position to what it was before the acquisition took place.

(4) If a company acts in contravention of this section, it shall be liable to a fine, and every officer of it who is in de fault shall he liable to imprisonment or fine, or both.

[section 39 amended by 1992:51 effective 1 July 1992]

Exclusion from prohibition on financial assistance

39A (1) Section 39(1) does not prohibit a company from giving financial assistance for the purpose of an acquisition of shares in it or in its holding company if �

(a) the company's principal purpose in giving that assistance is not to give it for the purpose of any such acquisition, or the giving of the assistance for that purpose is but an incidental part of some larger purpose of the company, and

(b) the assistance is given in good faith in the interests of the company.

(2) Section 39(2) does not prohibit a company from giving financial assistance if �

(a) the company's principal purpose in giving the as sistance is not to reduce or discharge any liability incurred by a person for the purpose of the acqui sition of shares in the company or its holding company, or the reduction or discharge of any such liability is but an incidental part of some larger purpose of the company, and

(b) the assistance is given in good faith in the interests of the company.

(2A) Section 39 does not prohibit a company from giving financial assistance if there are reasonable grounds for believing that�

(a) the company is, and would after the giving of such financial assistance be, able to pay its liabilities as they become due; and

(b) the realisable value of the company's assets, after the giving of such financial assistance, would not thereby be less than the aggregate of its liabilities, issued share capital and share premium accounts.

(3) Section 39 does not prohibit any transaction which is permitted by this Act or any other statutory provision including�

(a) a distribution of a company's assets out of funds of the company which would otherwise be available for dividend or distribution,

(b) a distribution made in the course of the company's winding up,

(d) a reduction of capital made in accordance with the provisions of this Act,

(e) a redemption or purchase of shares made in accordance with the provisions of this Act.

(4) Section 39 does not prohibit �

(a) where the lending of money is part of the ordinary business of the company, the lending of money by the company in the ordinary course of its busi ness;

(b) the provision by a company in accordance with an employees' share scheme of money for the ac quisition of fully or partly paid shares in the company or its holding company; and for the purposes of this Act, an employees' share scheme is a scheme for encouraging or facilitating the holding of shares or debentures in a company by or for the benefit of the bona fide employees or former employees (including, notwithstanding section 96, any such bona fide employee or former employee who is or was also a director) of the company, the company's subsidiary or holding company or a subsidiary of the compa ny's holding company, or the wives, husbands, widows, widowers or children or step-children under the age of twenty-one of such employees or former employees;

(c) the making by a company, the company's subsidiary or holding company or a subsidiary of the company's holding company of loans to persons (including, notwithstanding section 96, any such bona fide employee or former employee who is or was also a director) employed in good faith by the company with a view to enabling those persons to acquire fully or partly paid shares in the company or its holding company to be held by them by way of beneficial ownership.

(5) Where a company makes provision for the giving of financial assistance in accordance with subsection (4)(b) and (c), such company may make further provision in its bye-laws requiring or allowing the sale of such shares to the company when an employee ceases to be employed by the company and the purchase of shares by a company by virtue of this subsection shall not be taken as reducing the amount of the company's authorized share capital.

[section 39A inserted by 1992:51 effective 1 July 1992; amended by 1994:22 effective 13 July 1994, and by 1996:21 effective 24 July 1996]

Circumstances where financial assistance is permitted

39B (1) Section 39 does not prohibit a company from giving financial assistance in a case where the acquisition of shares in question is or was an acquisition of shares in the company or, if it is a subsidiary of another company, in that other company if the following provisions of this section and section 39C are complied with as respects the giving of that financial assistance.

(2) The financial assistance may only be given if the company has net assets which are not thereby reduced or, to the extent that they are reduced, if the financial assistance is provided out of funds of the company which would otherwise be available for dividend or distribution.

(3) Unless the company proposing to give the finan cial assistance is a wholly-owned subsidiary of the company whose shares are to be acquired, the giving of assistance under this section must be approved by a resolution of the company in general meeting.

(4) Where the financial assistance is to be given by the company in a case where the acquisition of shares in question is or was an acquisition of shares in its holding com pany, that holding company and any other company which is both the company's holding company and a subsidiary of that other holding company (except, in any case, a company which is a wholly-owned subsidiary) shall also approve by resolution in general meeting the giving of the financial assistance.

(5) The directors of the company proposing to give the financial assistance and, where the shares acquired or to be acquired are shares in its holding company, the directors of that company and of any other company which is both the company's holding company and a subsidiary of that other holding company shall before the financial assistance is given swear an affidavit in accordance with section 39C.

[section 39B inserted by 1992:51 effective 1 July 1992; and amended by 1994:22 effective 13 July 1994]

Conditions applicable to giving of financial assistance under section 39B

39C (1) No company shall provide financial assistance pursuant to section 39B unless before the date as from which the financial assistance is to be given, an affidavit is sworn by at least two directors of the company declaring either that on that date after taking into account the giving of the financial assistance, the company will be solvent or that all the creditors of the company on that date have expressed in writ ing their concurrence in the giving of the financial assistance. The affidavit shall contain particulars of the financial assistance to be given and identify the person to whom the financial assistance is to be given.

(2) A resolution required by section 39B to be passed by a company approving the giving of financial assistance must be passed on the date on which the directors of that company swear the affidavit required by that section in con nection with the giving of that financial assistance or within fifteen days immediately following that date.

(3) Where such a resolution has been passed, an application may be made to the Court within twenty-one days of the passing of that resolution for the cancellation of the reso lution �

(a) by the holders of not less in the aggregate than 10 per cent in nominal value of the company's issued share capital or any class of issued share capital, or

(b) if the company is not limited by shares or does not have a share capital, by not less than 10 per cent of the company's members;

but the application shall not be made by a person who has consented to or voted in favour of the resolution. On the hearing of the application the Court may make an order can celling or confirming the resolution and may make that order on such terms and conditions as it thinks fit and may, if it thinks fit, adjourn the proceedings in order that an arrangement may be made to the satisfaction of the Court for the pur chase of the interests of dissentient members, and may give such directions and make such orders that it thinks expedient for facilitating or carrying into effect any such arrangement.

(4) The affidavit of the directors together with a cer tified copy of any resolution passed by the company and by any other company as required by section 39B shall be delivered to the Registrar within twenty-one days of the swearing of the affidavit.

(5) Where a resolution is required by section 39B to be passed approving the giving of the financial assistance, the financial assistance shall not be given before the expiry of the period of thirty days beginning with �

(a) the date on which the resolution is passed; or

(b) where more than one resolution is passed, the date on which the last of them is passed;

unless, as respects that resolution (or if more than one, each of them), no person or persons when taken together are entitled to make an application to the Court in accordance with sub section (3).

(6) The financial assistance shall not be given after the expiry of the period of sixty days beginning with �

(a) the date on which the directors of the company proposing to give the financial assistance swore their affidavit as required by section 39B; or

(b) where the company is a subsidiary and both its directors and the directors of its holding compa nies swore such an affidavit, the date on which the earliest of the affidavits is sworn;

unless the Court, on an application under subsection (3), oth erwise orders.

(7) Where a company fails to comply with subsection (4), the company and every officer who is in default shall be liable to a fine and, for continued contravention, to a daily de fault fine.

(8) A director of a company who swears an affidavit under section 39B without having reasonable grounds for the opinion expressed in it shall be liable to imprisonment or a fine, or both.

[section 39C inserted by 1992:51 effective 1 July 1992; amended by 1993:37 effective 3 July 1993; and 1994:22 effective 13 July 1994]

Application of premiums received on issue of shares

40 (1) Where a company issues shares at a premium, whether for cash or otherwise, a sum equal to the aggregate amount or value of the premiums on those shares shall be transferred to an account, to be called "the share premium account", and the provisions of this Act re lating to the reduction of the share capital of a company shall, except as provided in this section, apply as if the share premium account were paid-up share capital of the company:

Provided that in the case of an exchange of shares the excess value of the shares acquired over the nominal value of the shares being issued may be credited to a contributed surplus account of the issuing company.

(2) Subject to subsection (2A), the share premium account may, notwithstanding anything in subsection (1) be applied by the company�

(a) in paying up unissued shares of the company to be is sued to members of the company as fully paid bonus shares;

(b) in writing off�

(i) the preliminary expenses of the company; or

(ii) the expenses of, or the commission paid or dis count allowed on, any issue of shares or debentures of the company; or

(2A) Only premiums arising on the same class of shares can be used under subsection (2)(a) and (c).

(3) Where a company has before 1 July 1983 issued any shares at a premium this section shall apply to the premiums received in re spect of such shares as if the shares had been issued after such day:

Provided that any part of such premiums which does not on 1 July 1983 form an identifiable part of the company's reserves shall be disregarded in determining the sum to be included in the share premium account.

(4) [deleted by 1992:51]

(5) [deleted by 1992:51]

[section 40 amended by 1992:51 effective 1 July 1992]

Meaning of "reserve"

41 For the purpose of section 40 "reserve" shall not include any amount written off or retained by way of providing for depreciation, re newals or diminution in the value of assets or retained by way of provid ing for any known liability of which the amount cannot be determined with substantial accuracy.

Power to issue redeemable preference shares

42 (1) Subject to this section, a company limited by shares, or other company having a share capital, may issue preference shares which �

(i) if so authorized by its bye-laws, are, or at the option of the company are to be liable, to be re deemed;

(ii) if so authorized by its memorandum at the op tion of the holder are to be liable to be re deemed:

Provided that �

(a) no such shares shall be redeemed except out of the capital paid up thereon or out of the funds of the company which would otherwise be available for dividend or distribution or out of the proceeds of a fresh issue of shares made for the purposes of the redemption; and

(b) the premium, if any, payable on redemption, is provided for out of funds of the company which would otherwise be available for dividend or distribution or out of the company's share premium account before the shares are redeemed.

(2) Subject to this section, the redemption of preference shares thereunder may be effected on such terms and in such manner as may be provided by the bye-laws of the company; however, no redemption of preference shares may be effected unless on the date as from which the redemption is to have effect an affidavit is sworn by at least two directors of the company declaring either that on that date after taking into account the redemption the company is solvent or that all the creditors of the company on that date have expressed in writing their concurrence in the redemption.

(2A) In any case where a company is listed on an appointed stock exchange, the affidavit required under subsection (2) may, at the option of the company, be sworn within thirty days after the end of each calendar quarter giving details of the redemptions made during each quarter and the affidavit shall confirm that after taking into account such redemptions, the company is solvent at all material times during the quarter.

(3) The redemption of preference shares under this section shall not be taken as reducing the amount of the company's authorized share capital.

[section 41 amended by 1992:51 effective 1 July 1992; and by 1994:22 effective 13 July 1994]

Purchase by a company of its own shares

42A (1) Subject to this section, a company limited by shares, or other company having a share capital, may, if authorized to do so by its memorandum or bye-laws, purchase its own shares.

(2) Section 42 shall apply in relation to the purchase by a company under this section of its own shares as it applies in relation to the redemption of redeemable preference shares by a company under section 42, save that the terms and manner of purchase need not be determined by the bye-laws as provided in section 42(2).

(3) A company may not purchase any of its own shares if, as a result of the purchase of the shares in question, the issued share capital of the company would be reduced below the minimum capital specified for the company in its memorandum.

(4) A purchase by a company of its own shares may be authorized by its board of directors or otherwise by or in accordance with its bye-laws.

(5) On the date from which the purchase is to be effective an affidavit shall be sworn by at least two directors of the company declar ing either that on that date, and taking into account the purchase, the company is solvent or that all the creditors of the company on that date have expressed in writing their concurrence to the purchase except that in any case where a company is listed on an appointed stock exchange, the affidavit required under this subsection may, at the option of the company, be sworn within thirty days after the end of each calendar quarter giving details of the purchases made during each quarter and the affidavit shall confirm that after taking into account such purchases, the company was solvent at all material times during the quarter.

(6) Shares purchased under this section shall be treated as cancelled and the amount of the company's issued capital shall be di minished by the nominal value of those shares accordingly; but the pur chase of shares under this section shall not be taken as reducing the amount of the company's authorized share capital.

(7) Where a company agrees, or is obliged, to purchase any of its shares then �

(a) the company shall not be liable in damages in respect of any failure to purchase any of the shares;

(b) the court shall not grant an order for specific perfor mance of the purchase if the company shows that to do so would render it insolvent or cause it to breach the provisions of any Act, regulation or licence;

(c) on a liquidation, other shares which carry rights whether as to capital or income which arc preferred to the rights attaching to the shares agreed to be purchased, shall be paid in priority to the purchase price.

[section 42A amended by 1992:51 effective 1 July 1992; and by 1994:22 effective 13 July 1994]

Power to convert preference shares into redeemable preference shares

43 A company limited by shares, or other company having a share capital, may by resolution at a general meeting convert any preference shares into redeemable preference shares:

Provided that �

(a) the consent in writing has first been obtained of the holders of three-fourths of such shares that have been issued;

(b) at a date not more than thirty days and not less than fifteen days before the date it is proposed to convert the shares the company shall cause a notice to be published in an appointed newspaper stating the intention to con vert the shares and the date on which the conversion is to take place;

(c) on the date on which the conversion is to take place an affidavit shall be sworn by at least two directors of the company declaring either that on that date the company is solvent or that all the creditors of the company on that date have expressed in writing their concurrence in the conversion; and

(d) section 42(1) shall apply to such shares.

[section 43 amended by 1994:22 effective 13 July 1994]

Power of company to arrange for different amounts being paid on shares

44 A company limited by shares, or other company having a share capital, if so authorized by its byelaws, may do any one or more of the following things �

(a) make arrangements on the issue of shares for a differ ence between the members in the amounts and times of payment of calls on their shares;

(b) accept from any member the whole or a part of the amount remaining unpaid on any shares held by him, although no part of that amount has been called up;

(c) pay dividends in proportion to the amount paid up on each share where a larger amount is paid up on some shares than on others;

(d) issue its shares in fractional denominations and deal with such fractions to the same extent as its whole shares and shares in fractional denominations shall have in proportion to the respective fractions repre sented thereby all of the rights of the whole shares in cluding (but without limiting the generality of the fore going) the right to vote, to receive dividends and distri butions and to participate in a winding up.

[section 44 amended by 1994:22 effective 13 July 1994]

Power of company limited by shares to alter its share capital

45 (1) A company limited by shares, or other company having a share capital, if authorized by a general meeting and by its bye-laws, may alter the conditions of its memoran dum as follows, that is to say, it may �

(a) increase its share capital by new shares of such amount as it thinks expedient;

(b) divide its shares into several classes and attach thereto respectively any preferential, deferred, qualified or spe cial rights, privileges or conditions;

(d) subdivide its shares, or any of them, into shares of smaller amount than is fixed by the memorandum, so, however, that in the subdivision the proportion between the amount paid and the amount, if any, unpaid on each reduced share shall be the same as it was in the case of the share from which the reduced share is derived;

(dd)change the currency denomination of its share capital;

(e) make provision for the issue and allotment of shares which do not carry any voting rights; and

(f) cancel shares which, at the date of the passing of the resolution in that behalf, have not been taken or agreed to be taken by any person, and diminish the amount of its share capital by the amount of the shares so can celled.

(2) A cancellation of shares in pursuance of this section shall not be deemed to be a reduction of share capital within the meaning of this Act.

(3) Whenever a company alters the conditions of its memoran dum under subsection (1)(a), (dd) or (f), then within thirty days thereafter the company shall file a memorandum with the Registrar setting out the altered conditions.

(4) If any company fails to file a memorandum in accordance with subsection (3) it shall be liable to a default fine.

[section 45 amended by 1992:51 effective 1 July 1992; 1993:37 effective 13 July 1993; and by 1994:22 effective 13 July 1994]

Reduction of share capital

46 (1) A company having share capital if authorized in a general meeting may subject to any order made by the Minister under section 6(3) and to its memorandum and bye-laws on such terms as it may de cide reduce its share capital in any way, and in particular, without prej udice to the generality of the foregoing power, by �

(a) extinguishing or reducing the liability on any of it shares in respect of capital not paid up; or

(b) either with or without extinguishing or reducing liability on any of its shares cancel any paid up capital that is lost or unrepresented by available assets; or

(c) either with or without extinguishing or reducing liability of any of its shares and either with or with out reducing the number of such shares pay off any paid up capital that is in excess of the requirements of the company.

(2) No company shall reduce the amount of its share capital by virtue of subsection (1) unless it complies with the following�

(a) at a date not more than thirty days and not less than fifteen days before the date as from which the reduction of the share capital is to have effect the company shall cause a notice to be published in an appointed newspa per stating the amount of the share capital as last previ ously determined by the company, the amount to which the share capital is to be reduced, and the date as from which the reduction is to have effect; and

(b) on the date as from which the reduction is to have effect an affidavit shall be sworn by at least two directors of the company declaring either that on that date the com pany is solvent or that all the creditors of the company on that date have expressed in writing their concurrence in the reduction.

(3) Unless the bye-laws otherwise provide where the capital of a company is reduced by the cancellation of shares and part only of a class of shares is to be cancelled, the shares to be cancelled shall be selected�

(a) by lot in such manner as the directors shall determine; or

(b) as nearly as may be in proportion to the number of shares of the class registered in the name of each share holder; or

(c) in such other manner as the directors determine with the consent of the majority of the holders of the shares of the class to be cancelled.

(4) Where shares are to be cancelled in order to reduce the capital of a company the shares shall be acquired at the lowest price at which, in the opinion of the directors, the shares are obtainable, but not exceeding an amount, if any, stated in or determined by the bye-laws.

(5) Where a company having share capital reduces the amount of its share capital, then within thirty days after the date as from which the reduction has effect the company shall file a memorandum, with a copy of the notice referred to in subsection (2)(a) and the affidavit re ferred to in subsection (2)(b) annexed thereto, in the office of the Registrar stating that this section has been duly complied with.

(6) If any company fails to comply with subsection (2), (3) or (4) every officer of the company shall be liable to a fine of five thousand dol lars and if the company fails to comply with subsection (5) the company shall be liable to a default fine.

Rights of holders of special classes of shares

47 (1) If in the case of a company the share capital of which is di vided into different classes of shares, provision is made by the memo randum or bye-laws for authorizing the variation of rights attached to any class of shares in the company, subject to the consent of any speci fied proportions of the holders of the issued shares of that class or the sanction of a resolution passed at a separate meeting of the holders of those shares, and in pursuance of the said provision the rights attached to any such class of shares are at any time varied, the holders of not less in the aggregate than ten percent of the issued shares of that class, may apply to the Court to have the variation cancelled, and, where any such application is made, the variation shall not have effect unless and until it is confirmed by the Court.

(2) An application under this section must be made within twenty-eight days after the date on which the consent was given or the resolution was passed, as the case may be, and may be made on behalf of the shareholders entitled to make the application by such one or more of their number as they may appoint in writing for the purpose.

(3) On any such application the Court, after hearing the appli cant and any other persons who apply to the Court to be heard and ap pear to the Court to be interested in the application, may, if it is satis fied, having regard to all the circumstances of the case, that the variation would unfairly prejudice the shareholders of the class represented by the applicant, disallow the variation and shall, if not so satisfied, confirm the variation.

(4) The decision of the Court on any such application shall be final.

(5) The company shall within twenty-one days after the making of an order by the Court on any such application forward a copy of the order to the Registrar, and, if default is made in complying with this pro vision, the company and every officer of the company who is in default shall be liable to a default fine.

(6) Nothing in this section shall be deemed to modify the rights of any member of a company under section 111.

(7) If the memorandum or bye-laws of a company with share capital which is divided into different classes of shares makes no provi sion for varying the rights attached to any class of share and nothing in the memorandum or bye-laws precludes a variation of such rights, the rights attached to any class, unless otherwise provided by the terms of issue of the shares of that class may, whether or not the company is be ing wound up, be varied with the consent in writing of the holders of three-fourths of the issued shares of that class, or with the sanction of a resolution passed at a separate general meeting of the holders of the shares of the class. To every such separate general meeting the provi sions of the byelaws or other rules of the company relating to general meetings shall apply, but so that the necessary quorum shall be two per sons at least holding or representing by proxy one-third of the issued shares of the class and that any holder of shares of the class present in person or by proxy may demand a poll; however, in the case of a company having only one member, one member present in person or by proxy constitutes the necessary quorum.

(8) In this section "variation" includes abrogation and "varied" shall be construed accordingly.

[section 47 amended by 1993:37 effective 13 July 1993]

Nature and transfer of shares

48 (1) Subject to any other enactment the shares or other interest of any member in a company shall be personal estate, transferable in manner provided by the bye-laws of the company.

(2) Notwithstanding anything in the bye-laws of a company, it shall not be lawful for the company to register a transfer of shares in or debentures of the company unless a proper instrument of transfer has been delivered to the company:

Provided that nothing in this section shall prejudice any power of the company to register as shareholder or debenture holder any person to whom the right to any shares in or debentures of the company has been transmitted by operation of law.

Transfer by estate representative

49 A transfer of the share or other interest of a deceased member of a company made by his estate representative shall, although the estate representative is not himself a member of the company, be as valid as if he had been such a member at the time of the execution of the instru ment of transfer.

Notice of refusal to register transfer

50 (1) If a company refuses to register a transfer of any shares or debentures, the company shall, within three months after the date on which the transfer was lodged with the company, send to the transferor and transferee notice of the refusal.

(2) If default is made in complying with this section, the com pany and every officer of the company who is in default shall be liable to a default fine.

Duties of company with respect to the issue of certificates

51 (1) Every company shall, so soon as practicable after the allot ment of any of its shares, or debentures and in any case within two months after a demand for a certificate of such shares or debentures has been made by the person to whom they have been allotted, complete and have ready for delivery such certificates unless the conditions of issue of the shares or debentures otherwise provide.

(2) If default is made in complying with this section, the com pany and every officer of the company who is in default shall be liable to a default fine.

(3) If any company on whom a notice has been served requiring the company to make good any default in complying with subsection (1) fails to make good the default within ten days after the service of the notice, the Court may, on the application of the person entitled to have the certificates or the debentures delivered to him, make an order directing the company and any officer of the company to make good the default within such time as may be specified in the order, and any such order may provide that all costs of and incidental to the application shall be borne by the company or by any officer of the company responsible for the default.

Certificate to be evidence of title and evidence of grant of probate

52 (1) A certificate, under the common seal of the company speci fying any shares or debentures held by any member, shall be prima facie evidence of the title of the member to the shares or debentures.

(2) The production to a company of any document which is by law sufficient evidence of probate of the will, or the grant of letters of administration of the estate, or confirmation as executor of a deceased person having been granted to some person shall be accepted by the company, notwithstanding anything in its bye-laws, as sufficient evi dence of the grant.

(3) "law" in subsection (2) includes the law of Bermuda and of any country in the Commonwealth and the law in any part of the United States of America.

Bearer shares prohibited

53 It shall not be lawful for any company to issue bearer shares.

Dividends and other distributions

54 (1) A company shall not declare or pay a dividend, or make a distribution out of contributed surplus, if there are reasonable grounds for believing that�

(a) the company is, or would after the payment be, unable to pay its liabilities as they become due; or

(b) the realizable value of the company's assets would thereby be less than the aggregate of its liabilities and its issued share capital and share premium accounts.

(2) For the purposes of this section, "contributed surplus" includes proceeds arising from donated shares, credits resulting from the redemption or conversion of shares at less than the amount set up as nominal capital and donations of cash and other assets to the company.

[section 54 repealed and replaced by 1992:51 effective 1 July 1992 and amended by 1993:37 effective July 13 1993]

PART V

THE REGISTRATION OF CHARGES

55 (1) The Registrar shall keep with respect to each company a register of charges on the assets of the company and any person, in cluding the company, interested in a charge on the assets of the com pany may apply to have that charge registered, and the Registrar shall register the charge in such form as may be prescribed.

(2) Any charge registered shall have priority based on the date that it is registered and not on the date of its creation and shall have such priority over any unregistered charge.

(3) Subsection (2) shall not apply to charges created before 1 July 1983. Such charges shall continue to have the priority they had prior to that date:

Provided that any person interested in a charge on the assets on a company created before 1 July 1983 may register that charge but the charge shall continue to have the priority it had prior to registration.

(4) Where a charge is created by a company but is a charge on assets outside Bermuda, the instrument creating or purporting to create the charge may be registered under this section notwithstanding that further proceedings may be necessary to make the charge valid or effec tual according to the law of the country in which the property is situate.

(5) Notwithstanding anything in this section, a charge on�

(a) land in Bermuda shall be registered under the Mortgage Registration Act 1786 [title 26 item 32] or any Act re placing it and not under this Act and the priority of such charge shall be determined in accordance with the Mortgage Registration Act 1786 [title 26 item 32] or any Act replacing it;

(b) any ship registered in Bermuda or any interest therein registrable under the Merchant Shipping Act 1894 or any Act replacing it shall be registered thereunder, and not under this Act and the priority of such charge shall be determined in accordance with the Merchant Ship-ping Act 1894 or any Act replacing it.

(6) [deleted by 1984:36]

(7) The register of charges shall be available for inspection by members of the public during normal working hours.

(8) In this Part, "charge" includes mortgage.

Correction of register

56 (1) The Registrar on being satisfied that an omission or mis statement of any particulars with respect to any registered charge on the assets of a company was accidental, or due to inadvertence or to some other sufficient cause, and is not of a nature to prejudice the position of creditors or shareholders of the company, may, on the application of the company or any person interested rectify the register; and any such rec tification shall have effect from the date of the first entry of the charge in the register.

(2) Any creditor or member of the company aggrieved by a deci sion of the Registrar either to rectify or not rectify the register may within six months of the decision of the Registrar appeal to the Court which shall have the same powers as the Registrar. No appeal shall lie from a decision of the Court.

[section 56 amended by 1992:51 effective 1 July 1992]

Registration of series of debentures

57 Where a series of debentures containing, or giving by reference to any other instrument, any charge to the benefit which the debenture holders of that series are entitled pari passu is created by a company, it shall, for the purposes of the registration of the series under section 55, be sufficient if the following particulars are registered with the Regis trar�

(a) the total amount secured by the whole series; and

(b) the dates of the resolutions authorizing the issue of the series and the date of the covering deed, if any, by which the security is created or defined; and

(d) the names of the trustees, if any, for the debenture hold ers,

together with a copy of the deed containing the charge, or, if there is no such deed, a copy of one of the debentures of the series:

Provided that, where more than one issue is made of debentures in the series, there shall be sent to the Registrar for entry in the register particulars of the date and amount of each issue, but an omission to do this shall not affect the validity of the debentures issued.

Registration of particulars of commission paid

58 Where any commission, allowance or discount has been paid or made either directly or indirectly by a company to any person in consid eration of his subscribing or agreeing to subscribe, whether absolutely or conditionally, for any debentures of the company, or procuring or agree ing to procure subscriptions, whether absolute or conditional, for any such debentures, the particulars sent for registration shall include par ticulars as to the amount or rate per cent of the commission, discount or allowance so paid or made, but omission to do this shall not affect the validity of the debentures issued.

Entry of satisfaction; release of property from charge

59 The Registrar, on evidence being given to his satisfaction with respect to any registered charge �

(a) that the debt for which the charge was given has been paid or satisfied in whole or in part; or

(b) that part of the property or undertaking charged has been released from the charge or has ceased to form part of the company's property or undertaking,

shall enter on the register a memorandum of satisfaction in whole or in part, or of the fact that part of the property or undertaking has been re leased from the charge or has ceased to form part of the company's prop erty or undertaking, as the case may be, and where he enters a memo randum of satisfaction in whole he shall, if required, furnish the com pany with a copy thereof.

Registration of enforcement of security

60 (1) If any person obtains an order for the appointment of a re ceiver or manager of the property of a company, or appoints such a re ceiver or manager under any powers contained in any instrument, he shall, within seven days from the date of the order or of the appointment under the said powers give notice of the fact to the Registrar, and the Registrar shall, on payment of such fee as may be specified by rules made by the Minister, enter the fact in the register of charges.

(2) Where any person appointed receiver or manager of the property of a company under the powers contained in any instrument ceases to act as such receiver or manager, he shall on so ceasing, give the Registrar notice to that effect, and the Registrar shall enter the notice in the register of charges.

(3) If any person makes default in complying with the require ments of this section, he shall be liable to a default fine.

(4) Rules made under this section shall be subject to affirma tive resolution procedure.

Application of Part V to charges created and acquired by company incorporated outside Bermuda

61 This Part shall extend to charges on property in Bermuda which are created, and to charges on property in Bermuda which are acquired, by a company incorporated outside Bermuda.

[section 61 amended by 1992:51 effective 1 July 1992]

PART VI

MANAGEMENT AND ADMINISTRATION

Registered office of company

62 (1) A company shall at all times have a registered office in Bermuda which shall not be a post office box to which all communica tions and notices may be addressed.

(2) Notice of the address of a company's registered office and every change thereof shall be given to the Registrar within fourteen days of the company establishing the office or making the change.

(3) If default is made in complying with this section the com pany and every officer of the company who is in default shall be liable to a default fine.

Service of documents

62A A document may be served on a company by leaving it at the registered office of the company or, in the case of a non-resident insurance undertaking the principal office in Bermuda, or in the case of a permit company, the principal place of business in Bermuda from which the company engages in or carries on its trade or business in Bermuda.

[section 62A inserted by 1992:51 effective 1 July 1992]

Publication of name of company

63 (1) Every company shall have its name mentioned in legible characters in all business letters of the company and in all notices and other official publications of the company, and in all bills of exchange, promissory notes, endorsements, cheques and orders for money or goods purporting to be signed by or on behalf of the company, and in all bills of parcels, invoices, receipts and letters of credit of the company.

(2) If default is made in complying with this section the com pany and every officer of the company who is in default shall be liable to a fine of five hundred dollars.

Restriction on commencement of business

64 (1) No company shall commence or carry on business or exer cise any borrowing powers unless and until the minimum capital as stated in its memorandum in accordance with section 7 has been sub scribed.

(2) If any company commences or continues business or exer cises borrowing powers in contravention of this section every person who is responsible for the contravention shall without prejudice to any other liability, be liable to a fine of one hundred dollars for every day during which the contravention continues.

65 (1) Every company shall keep a register of its members and enter therein in respect of every member becoming a member after 30 June 1983 the following particulars �

(a) the names and addresses of the members, and in the case of a company having a share capital a statement of the shares held by member, distinguishing each share by its number so long as the share has a number, and of the amount paid or agreed to be considered as paid on the shares of each member;

(b) the date at which each person was entered in the regis ter as a member;

(2) The register of members shall be kept at the registered office of the company or after giving written notice to the Registrar of the place at such other place in Bermuda convenient for inspection by members of the company and other persons entitled to inspect it.

(3) A company the shares of which are traded on an appointed stock exchange or have been offered to the public pursuant to a prospectus filed under section 26, may keep in any place outside Bermuda, one or more branch registers after giving written notice to the Registrar of the place where each such register is to be kept.

(4) A branch register shall be kept in the same manner in which the register of members is by subsection (1) required to be kept.

(5) Every company shall, as soon as reasonably practicable, after the date on which any entry or alteration is made in a branch reg ister, make any necessary alteration in the register of members.

(6) If the register of members is not made easily available for inspection by members the company and every officer of the company shall be liable to a fine of five hundred dollars and the court convicting the company or the officers, as the case may be, may order the company to make the register immediately available for inspection.

(7) A company shall not be bound to see to the execution of any trust, whether express, implied or constructive, to which any of its shares are subject and whether or not the company had notice of such trust; and the receipt of the person, firm or corporation in whose name any share stands shall be sufficient discharge to the company for any money paid by the company in respect of such share notwithstanding any trust to which it may be subject.

Inspection of register

66 (1) Except when the register of members is closed under this Act, the register of the members of a company shall during business hours (subject to such reasonable restrictions as the company may im pose, so that not less than two hours in each day be allowed for inspec tion) be open for inspection by any member without charge and by any other person on payment of five dollars, or such less sum as the com pany may determine, for each inspection.

(2) Any member or other person may require a copy of the reg ister, or of any part thereof, on payment of the appropriate fee prescribed in the Eighth Schedule.

(3) If any inspection required under this section is refused or if any copy required under this section is not sent within fourteen days from the receipt of a written request, the company and every officer of the company who is in default shall be liable in respect of each offence to a default fine.

(4) In the case of any such refusal or default, the Court may by order compel an immediate inspection of the register or direct that the copies required shall be sent to the persons requiring them.

(5) A company may on giving notice by advertisement in an appointed newspaper close the register of members for any time or times not exceeding in the whole thirty days in a year.

[section 66 amended by 1992:51 effective 1 July 1992; and by 1998 : 35 effective 5 October 1998]

Power of Court to rectify register

67 (1) If �

(a) the name of any person is, without sufficient cause, en tered in or omitted from the register of members of a company; or

(b) default is made or unnecessary delay takes place in en tering on the register the fact of any person having ceased to be a member,

the person aggrieved, or any member of the company, may apply to the Court for rectification of the register.

(2) Where an application is made under this section, the Court may either refuse the application or may order rectification of the register and payment by the company of any damages sustained by any party aggrieved.

(3) On an application under this section the Court may decide any question relating to the title of any person who is a party to the ap plication to have his name entered in or omitted from the register, whether the question arises between members or alleged members, or between members or alleged members on the one hand and the company on the other hand, and generally may decide any question necessary or expedient to be decided for rectification of the register.

68 The register of members shall be prima facie evidence of any matters by this Act directed or authorized to be inserted therein.

Provisional directors and their powers

69 (1) The persons whose names are subscribed to the memoran dum of association shall be the provisional directors of the company to which the memorandum of association relates and shall have power to add to their number.

(2) The provisional directors of a company shall hold office as such until the first board of directors is elected, as hereinafter provided, and subject to subsection (1) shall have the following powers only that is to say, �

(a) power to cause books to be opened for the purpose of recording the subscriptions of such persons as may de sire to become members of the company, and power to keep open such books for so long as the provisional di rections may consider necessary;

(b) power, at any time after the minimum subscription has been subscribed to allot to any subscriber such number of shares, not exceeding the number subscribed for by him, as the provisional directors may deem expedient;

(c) power to appoint any person to be secretary of the com pany to hold office until the election of the first board of directors of the company; and

(d) power by resolution to make such calls upon any sub scriber in respect of shares allotted to him as the provi sional directors may consider necessary; and in case any subscriber fails to satisfy any such call in the time lim ited by the provisional directors, to recover the amount of the call as a debt due by the subscriber.

(3) Any power vested in the provisional directors or any act authorized to be done by them may be exercised by a majority of them.

First general meeting of members to elect directors

70 (1) As soon as convenient after the minimum share capital set out in the memorandum as provided in section 7 has been subscribed, the provisional directors shall convene the statutory meeting which shall be a general meeting of the members of the company for the purpose of electing the first board of directors.

(2) At least five days' notice in writing of the statutory meeting shall be given to each member of the company unless the members unanimously agree to waive such notice; the notice shall specify the place, date and hour at which the meeting is intended to be held, and shall state that at the meeting the members present or represented by proxy will elect the first board of directors.

(3) For the purposes of this section "member" shall not include any member who has failed to satisfy any call made upon him which came due to be satisfied before the date on which the general meeting under this section is held.

(4) The procedure at a meeting called under this section shall be the same as that for an annual general meeting called under section 71.

(5) The quorum for a meeting called under this section shall be a majority of the members of the company present in person or by proxy.

(6) A meeting called under subsection (1) shall be deemed to be the annual general meeting for the year in which it is convened.

[section 70 amended by 1992:51 effective 1 July 1992]

General meetings

71 (1) A meeting of members of a company shall be convened at least once in every calendar year; this meeting shall be referred to as the annual general meeting.

(2) The directors may, whenever they think fit, convene a gen eral meeting; all meetings other than annual general meetings shall be called special general meetings.

(3) Notice of all general meetings shall specify the place, the day and hour of the meeting, and, in case of special general meetings, the general nature of the business to be considered.

(4) The accidental omission to give notice of a meeting to, or the non-receipt of a notice of a meeting by any persons entitled to receive notice shall not invalidate the proceedings of the meeting.

Failure to hold annual general meeting or to elect directors

72 (1) If default is made in calling or holding a general meeting in accordance with section 71(1) the directors shall use their best endeav ours to call or hold the meeting at the earliest practicable date.

(2) If an annual general meeting is not held within three months of the date it should have been held or the required number of directors have not been elected at such a meeting the company may ap ply to the Registrar to sanction the holding of a general meeting to put the affairs of the company in order. Upon receipt of such an application the Registrar may in his discretion make an order allowing the applica tion under such conditions as he thinks fit to impose including ordering the date by which the affairs of the company shall be put in order.

(3) Subject to subsection (2) if default is made in calling an an nual general meeting in accordance with section 71 or to elect the re quired number of directors at such meeting the Registrar, any creditors or member of the company may apply to the Court for the winding up of the company and the Court on such application may order the company to be wound up or make any order that the Registrar might have made under subsection (2).

(4) Where an application is made to the Registrar for an order under subsection (2) a fee of two hundred and fifty dollars shall be paid to the Registrar if there has been a failure to hold one annual general meeting and if there has been failure to hold more than one meeting a further fee shall be payable of one hundred dollars in respect of each such meeting.

Position when election of directors does not take place

73 If the annual general meeting or the election of any directors does not take place at the proper time, it shall be lawful for the company to continue its business and for the existing directors to continue in of fice.

Convening of special general meeting on requisition

74 (1) The directors of a company, notwithstanding anything in its bye-laws shall, on the requisition of members of the company holding at the date of the deposit of the requisition not less than one-tenth of such of the paid-up capital of the company as at the date of the deposit carries the right of voting at general meetings of the company, or, in the case of a company not having a share capital, members of the company repre senting not less than one-tenth of the total voting rights of all the mem bers having at the said date a right to vote at general meetings of the company, forthwith proceed duly to convene a special general meeting of the company.

(2) The requisition must state the purposes of the meeting, and must be signed by the requisitionists and deposited at the registered of fice of the company, and may consist of several documents in like form each signed by one or more requisitionists.

(3) If the directors do not within twenty-one days from the date of the deposit of the requisition proceed duly to convene a meeting, the requisitionists, or any of them representing more than one half of the total voting rights of all of them, may themselves convene a meeting, but any meeting so convened shall not be held after the expiration of three months from the said date.

(4) A meeting convened under this section by the requisition ists shall be convened in the same manner, as nearly as possible, as that in which meetings are to be convened by directors.

(5) Any reasonable expenses incurred by the requisitionists by reason of the failure of the directors duly to convene a meeting shall be repaid to the requisitionists by the company, and any sum so repaid shall be retained by the company out of any sums due or to become due from the company by way of fees or other remuneration in respect of their services to such directors as were in default.

Length of notice for calling meetings

75 (1) Notwithstanding any provision in the bye-laws of a company at least five days notice shall be given of a meeting of a company, other than an adjourned meeting.

(2) A meeting of a company shall, notwithstanding that it is called by shorter notice than that specified in subsection (1) be deemed to have been duly called if it is so agreed�

(a) in the case of a meeting called as the annual general meeting, by all the members entitled to attend and vote thereat; and

(b) in the case of any other meeting, by a majority in num ber of the members having a right to attend and vote at the meeting, being a majority together holding not less than ninety-five per cent in nominal value of the shares giving a right to attend and vote at the meeting, or, in the case of a company not having a share capital, to gether representing not less than ninety-five per cent of the total voting rights at that meeting of all the mem bers.

Telephonic, etc. meeting

75A Unless the bye-laws otherwise provide, a meeting of directors or of a committee of directors or of the members or any class thereof may be held by means of such telephone, electronic or other communication facilities as permit all persons participating in the meeting to communicate with each other simultaneously and instantaneously, and participation in such a meeting shall constitute presence in person at such meeting.

[section 75A inserted by 1992:51 effective 1 July 1992]

Power of Court to order meeting

76 (1) If for any reason it is impracticable to call a meeting of a company in any manner in which meetings of that company may be called, or to conduct the meeting of the company in manner prescribed by the bye-laws or this Act, the Court may, either of its own motion or on the application of any director of the company or of any member of the company who would be entitled to vote at the meeting, order a meeting of the company to be called, held and conducted in such manner as the Court thinks fit, and where any such order is made may give such an cillary or consequential directions as it thinks expedient.

(2) Any meeting called, held and conducted in accordance with an order under subsection (1) shall for all purposes be deemed to be a meeting of the company duly called, held and conducted.

Voting at meetings

77 (1) Subject to the provisions of this section, the bye-laws of the company and to any rights or restrictions lawfully attached to any class of shares, at any general meeting each member of the company shall be entitled in the case of a company limited by shares, or other company having a share capital, to one vote for each share held by him and in the case of a company limited by guarantee one vote; such votes may be given in person or by proxy.

(2) At any general meeting of a company any question proposed for consideration shall be decided on a simple majority of votes or by such majority as the bye-laws of the company may prescribe, and such majority shall be ascertained in accordance with this section.

(3) Subject to subsection (5), it shall be lawful for any question proposed for consideration at a general meeting of a company to be de cided on a show of hands and in any such case, and subject to any rights or restrictions for the time being lawfully attached to any class of shares, every member present in person or by proxy at such meeting shall be entitled to one vote and shall cast such vote by raising his hand.

(4) At any general meeting of a company a declaration by the chairman that a question proposed for consideration has, on a show of hands, been carried, or carried unanimously or by a particular majority or lost and an entry to that effect in a book containing the minutes of the proceedings of the company shall, subject to subsection (5), be conclu sive evidence of that fact without proof of the number or proportion of the votes recorded in favour of or against such question.

(5) Notwithstanding subsection (3), at any general meeting of a company, it shall be lawful, in respect of any question proposed for the consideration of the members, whether before or on the declaration of the result of a show of hands as provided for in subsection (3) for a poll to be demanded by any of the following persons �

(a) the Chairman of such meeting; or

(b) at least three members present in person; or represented by proxy; or

(c) any member or members present in person or repre sented by proxy and holding between them not less than one-tenth of the total voting rights of all the members having the right to vote at such meeting; or

(d) a member or members present in person or represented by proxy holding shares in such company conferring the right to vote at such meeting, being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all such shares conferring such right.

(6) Where, in accordance with subsection (5), a poll is de manded, and subject to any rights or restrictions for the time being law fully attached to any class of shares, every member present in person or by proxy at such meeting shall have one vote for each share of which he is the holder or for which he holds a proxy or in the case of a company limited by guarantee he shall have one vote for himself and one vote for each mem ber for whom he holds a proxy and such votes shall be counted in such manner as the bye-laws of the company may provide or, in default of such provision, as the chairman may direct and the result of such poll shall be deemed to be the resolution of the meeting at which the poll was demanded and shall replace any previous resolution upon the same matter which has been the subject of a show of hands.

(7) A poll demanded, in accordance with subsection (5), for the purpose of electing a chairman, or on a question of adjournment, shall be taken forthwith and a poll demanded on any other question shall be taken at such time at such meeting as the chairman may direct.

(8) In the case of an equality of votes, whether on a show of hands or on a poll, the chairman of the meeting at which such show of hands takes place, or at which such poll is demanded, shall unless the bye-laws of the company otherwise provide, be entitled to a second or casting vote.

(9) Nothing contained in this section shall be construed as prohibiting a member who is the holder of two or more shares from appointing more than one proxy to represent him and vote on his behalf, whether on a show of hands or on a poll, at a general meeting of the company or at a class meeting.

[section 77 amended by 1992:51 effective 1 July 1992; and by 1994:22 effective 13 July 1994]

Resolution in writing

77A (1) Subject to subsection (6), anything which may be done by resolution of a company in general meeting or by resolution of a meeting of any class of the members of a company, may, without a meeting and without any previous notice being required, be done by resolution in writing signed by, or, in the case of a member that is a corporation whether or not a company within the meaning of this Act, on behalf of, all the members of the company who at the date of the resolution would be entitled to attend the meeting and vote on the resolution.

(2) A resolution in writing may be signed by, or, in the case of a member that is a corporation whether or not a company within the meaning of this Act, on behalf of, all the members of a company, or any class thereof, in as many counterparts as may be necessary.

(3) For the purposes of this section, the date of the resolution is the date when the resolution is signed by, or, in the case of a member that is a corporation whether or not a company within the meaning of this Act, on behalf of, the last member to sign and any reference in any enactment to the date of passing of a resolution is, in relation to a resolution made in accordance with this section, a reference to such date.

(4) A resolution in writing made in accordance with this section is as valid as if it had been passed by the company in general meeting or by a meeting of the relevant class of members of the company, as the case may be; and any reference in any enactment to a meeting at which a resolution is passed or to members voting in favour of a resolution shall be construed accordingly.

(5) A resolution in writing made in accordance with this section shall constitute minutes for the purposes of sections 81 and 82.

(6) This section shall not apply to�

(a) a resolution passed pursuant to section 89(5); or

(b) a resolution passed for the purpose of removing a director before the expiration of his term of office under section 93.

[section 77A inserted by 1993:37 effective 13 July 1993]

Representation of corporations at meetings

78 (1) A corporation, whether a company within the meaning of this Act or not, may �

(a) if it is a member of another corporation, being a com pany within the meaning of this Act, authorize such per son as it thinks fit to act as its representative at any meeting of the company or at any meeting of any class of members of the company;

(b) if it is a creditor (including a holder of debentures), of another corporation, being a company within the mean ing of this Act, authorize such person as it thinks fit to act as its representative at any meeting of any creditors of the company held in pursuance of this Act or of any rules made thereunder, or in pursuance of the provi sions contained in any debenture or trust deed, as the case may be.

(2) A person authorized as aforesaid shall be entitled to exer cise the same powers on behalf of the corporation which he represents as that corporation could exercise if it were an individual shareholder, creditor or holder of debentures of that other company.

Circulation of members' resolution, etc.

79 (1) Subject to this section it shall be the duty of a company, on the requisition in writing of such number of members as is hereinafter specified, at the expense of the requisitionists unless the company oth erwise resolves �

(a) to give to members of the company entitled to receive notice of the next annual general meeting notice of any resolution which may properly be moved and is intended to be moved at that meeting;

(b) to circulate to members entitled to have notice of any general meeting sent to them any statement of not more than one thousand words with respect to the matter re ferred to in any proposed resolution or the business to be dealt with at that meeting.

(2) The number of members necessary for a requisition under subsection (1) shall be �

(a) either any number of members representing not less than one-twentieth of the total voting rights of all the members having at the date of the requisition a right to vote at the meeting to which the requisition relates; or

(b) not less than one hundred members.

(3) Notice of any such intended resolution shall be given, and any such statement shall be circulated, to members of the company en titled to have notice of the meeting sent to them by serving a copy of the resolution or statement on each such member in any manner permitted for service of notice of the meeting, and notice of any such resolution shall be given to any other member of the company by giving notice of the general effect of the resolution in any manner permitted for giving him notice of meetings of the company:

Provided that the copy shall be served, or notice of the effect of the resolution shall be given, as the case may be, in the same manner and, so far as practicable, at the same time as notice of the meeting and, where it is not practicable for it to be served or given at that time, it shall be served or given as soon as practicable thereafter.

Conditions to be met before company bound to give notice of resolu tion

80 A company shall not be bound under section 79 to give notice of any resolution or to circulate any statement unless �

(a) a copy of the requisition signed by the requisitionists, or two or more copies which between them contain the sig natures of all the requisitionists, is deposited at the reg istered office of the company�

(i) in the case of a requisition requiring notice of a resolution, not less than six weeks before the meeting; and

(ii) in the case of any other requisition, not less than one week before the meeting; and

(b) there is deposited or tendered with the requisition a sum reasonably sufficient to meet the company's expenses in giving effect thereto:

Provided that if, after a copy of the requisition requiring notice of a resolution has been deposited at the registered office of the company, an annual general meeting is called for a date six weeks or less after the copy has been deposited, the copy though not deposited within the time required by this subsection shall be deemed to have been properly de posited for the purposes thereof.

Minutes of proceedings to be kept

81 (1) Every company shall cause minutes of all proceedings of general meetings, of all proceedings of meetings of its directors and, where there are managers, of all proceedings of meetings of its managers to be entered in books kept for that purpose and such minutes shall be signed by the person presiding over the proceedings or over the pro ceedings at which the minutes are approved.

(2) Minutes prepared in accordance with subsection (1) shall be kept by the secretary at the registered office of the company and shall be evidence of the proceedings and until the contrary is proved, the proceedings shall be deemed to have been duly held and convened and the business conducted thereat shall be deemed to be valid.

(3) If a company fails to comply with subsection (1) the com pany and every officer of the company who is in default shall be liable to a default fine.

[Section 81 amended by 1996:21 effective 24 July 1996]

Inspection of minute books

82 (1) Minutes of general meetings of a company shall be open for inspection by any member or director of the company without charge for not less than two hours during business hours each day subject to such reason able restrictions as the company may impose.

(2) Any member or director shall be entitled to be furnished within seven days after he has made a request in that behalf to the company with a copy of any such minutes on the payment of a reasonable charge.

(3) If any inspection required under this section is refused or if any copy required under this section is not sent within the proper time, the company and every officer of the company who is in default shall be liable to a fine of ten dollars and further to a fine of ten dollars for each day there is a default.

(4) In the case of any such refusal or default, the Court may by order compel an immediate inspection of the minutes or direct that the copies required shall be sent to the persons properly requiring them.

[Section 82 amended by 1995:33 effective 7 July 1995 and by 1996:21 effective 24 July 1996]

Keeping of books of account

83 (1) Every company shall cause to be kept proper records of ac count with respect to �

(a) all sums of money received and expended by the com pany and the matters in respect of which the receipt and expenditure takes place;

(b) all sales and purchases of goods by the company;

(2) The records of account shall be kept at the registered office of the company or at such other place as the directors think fit, and shall at all times be open to inspection by the directors:

Provided that if the records of account are kept at some place outside Bermuda, there shall be kept at an office of the company in Bermuda such records as will enable the directors to ascertain with rea sonable accuracy the financial position of the company at the end of each three month period.

(3) If a company fails to comply with subsection (1) the com pany and every officer of the company shall be liable to a fine of five hundred dollars.

(4) In the case of records of account not being made available for inspection by a director the Court may by order compel immediate in spection of such records.

Financial statements to be laid before general meeting

84 (1) The directors of every company shall subject to section 88 at such intervals and for such period as this Act and the bye-laws of the company provide lay before the company in general meeting �

(a) financial statements for the period which shall include�

(i) a statement of the results of operations for the period;

(ii) a statement of retained earnings or deficit;

(iii) a balance sheet at the end of such period;

(iiiA) a statement of changes in financial position for the period;

(iv) notes to the financial statements and the notes thereto shall be in accordance with subsection (1A);

(v) such further information as required by this Act and the company's own Act of incorporation or its memorandum, and its bye-laws; and

(b) the report of the auditor as set out in section 90(2), in respect of the financial statements described in para graph (a).

(1A) The notes mentioned in subsection (1)(a)(iiiA) shall include a description of the generally accepted accounting principles used in the preparation of the financial statements which principles may be�

(a) those of Bermuda or a country or jurisdiction other than Bermuda; or

(b) such other generally accepted accoun ting principles as may be appointed by the Minister under subsection (5) for the purpose of this subsection,

and, where the generally accepted accounting principles used are other than those of Bermuda, the notes shall identify the generally accepted accounting principles so used.

(2) Financial statements shall before being laid before a general meeting of a company be signed on the balance sheet page by two of the directors of the company.

(3) Notwithstanding subsection (1) if at a general meeting at which financial statements should be laid the statements have not been so laid, it shall be lawful for the Chairman to adjourn the meeting for a period of up to ninety days or such longer period as the members may agree.

(4) Subject to subsection (3) if any director of a company fails to take all reasonable steps to comply with subsection (1) he shall be liable to a fine of one thousand dollars:

Provided that in any proceedings against a person in respect of an offence under this section, it shall be a defence to prove that he had reasonable ground to believe and did believe that a competent and reli able person was charged with the duty of seeing that this section was complied with and was in a position to discharge that duty.

(5) The Minister may, after consultation with the Institute of Chartered Accountants of Bermuda, appoint generally accepted accounting principles promulgated by an accounting standard setting body and shall cause the appointment to be published in an appointed newspaper.

[section 84 amended by 1992:51 effective 1 July 1992; by 1993:37 effective 13 July 1993; and by 1995:33 effective 7 July 1995]

85 [repealed by 1984:36]

Definition of subsidiary and holding companies

86 (1) For the purposes of this Act, a company is a subsidiary of another company only if �

(a) it is controlled by�

(i) that other company; or

(ii) that other company and one or more companies each of which is controlled by that other com pany; or

(iii) two or more companies each of which is con trolled by that other company; or

(b) it is a subsidiary of a subsidiary of that other company.

(2) For the purposes of this Act, a company is the holding com pany of another only if that other company is its subsidiary.

(3) For the purposes of this Act, one company is affiliated with another company only if one of them is the subsidiary of the other or both are subsidiaries of the same company or each of them is controlled by the same person.

(4) For the purposes of this section, a company is controlled by another company or person or by two or more companies only if �

(a) shares of the first-mentioned company carrying more than fifty per cent of the votes for the election of direc tors are held, otherwise than by way of security only, by or for the benefit of that other company or person or by or for the benefit of those other companies; and

(b) the votes carried by such shares are sufficient, if exer cised, to elect a majority of the board of directors of the first-mentioned company.

Right to receive copies of balance sheet etc.

87 (1) A copy of the financial statements of a company, including every document required by law or the bye-laws of the company shall be made available to every member of the company and if such financial statements and other documents are not sent to each member seven days before the general meeting any member may move a resolution at the general meeting that it be adjourned for seven days:

Provided that this subsection shall not require the making avail able of the financial statements and other documents to�

(a) any person not entitled to receive notices of general meetings;

(b) more than one of the joint holders of any shares or debentures;

(2) If default is made in complying with subsection (1) the com pany and every officer of the company who is in default shall be liable to a fine of one hundred dollars, and if, when any person makes a demand for any document with which he is by virtue of subsection (1) entitled to be furnished, default is made in complying with the demand within seven days after the making thereof, the company and every officer of the company who is in default shall be liable to a default fine, unless it is proved that that person has already made a demand for and been fur nished with a copy of the document:

Provided that it shall be a defence to any prosecution for the company or any officer to show that it was not possible to comply with subsection (1) owing to circumstances beyond the control of the company or the officer, as the case may be.

[section 87 amended by 1992:51 effective 1 July 1992 and by 1993:37 effective 13 July 1993]

Power to waive laying of accounts and appointment of auditor

88 (1) Notwithstanding section 13(2)(c) and (d), sections 84, 87 and 89 if all members and directors of a company, either in writing or at a general meeting, agree that in respect of a particular interval no finan cial statements or auditor's report thereon need be laid before a general meeting or that no auditor shall be appointed to the close of the next an nual general meeting then there shall be no obligation to lay financial statements for such period or to appoint an auditor until the close of the next annual general meeting, as the case may be.

(2) For the purposes of subsection (1) all the members of a company shall be deemed to have agreed at a general meeting if either�

(a) all the members are present in person at the meeting and agree; or

(b) if some of the members are not present in person at the meeting then if the members present in person at the meeting agree and there are produced at the meeting statements in writing from the members not present in person stating that they agree.

[section 88 amended by 1993:37 effective 13 July 1993]

Appointment and disqualification of auditor

89 (1) The members of a company at the statutory meeting shall subject to section 88 appoint one or more auditors to hold office until the close of the next annual general meeting, and, if the members fail to do so, the directors shall forthwith make such appointment or appoint ments.

(2) The members of a company at each annual general meeting shall appoint one or more auditors to hold office until the close of the next annual general meeting, and, if an appointment is not so made, the auditor in office shall continue in office until a successor is appointed.

(3) A person, other than an incumbent auditor, shall not be capable of being appointed auditor at an annual general meeting unless notice in writing of an intention to nominate that person to the office of auditor has been given not less than twenty-one days before the annual general meeting; and the company shall send a copy of any such notice to the incumbent auditor, and shall give notice thereof to the members, either by advertisement in an appointed newspaper or in any other mode provided by the bye-laws of the company, not less than seven days before the an nual general meeting:

Provided that an incumbent auditor may by notice in writing to the secretary of the company waive the requirements of this subsection which shall then not have effect.

(3A) No person shall accept appointment or consent to be appointed as auditor of a company if he is replacing an auditor who has resigned, been removed or whose term of office has expired or is about to expire, or who has vacated office, until he has requested and received from that auditor a written statement of the circumstances and the reasons why, in that auditor's opinion, he is to be replaced.

(3B) Notwithstanding subsection (3A), a person may accept appointment or consent to be appointed as auditor of a company if, within fifteen days after making the request referred to in that subsection, he does not receive a written statement as requested.

(3C) No auditor of a company is in breach of any duty to which he is subject as auditor of that company by reason of his communicating in good faith to the person making the request referred to in subsection (3A) any information or opinion in response to such request.

(4) The directors may fill any casual vacancy in the office of auditor, but while the vacancy continues the surviving or continuing au ditor, if any, may act.

(5) The members, by a resolution passed by at least two-thirds of the votes cast at a general meeting of which notice specifying the in tention to pass such resolution was given, may remove any auditor be fore the expiration of his term of office, and shall by a majority of the votes cast at that meeting appoint another auditor in his stead for the remainder of his term:

Provided that, not less than twenty-one days before the date of the meeting, notice in writing of the proposed resolution is given to the incumbent auditor and to the auditor proposed to be appointed.

(5A) An auditor of a company who has resigned, been removed, or whose term of office has expired or is about to expire, or who has vacated office, shall be entitled�

(a) to attend the general meeting of the company at which he is to be removed or his successor is to be appointed;

(b) to receive all notices of, and other communications relating to, that meeting which a member is entitled to receive; and

(c) to be heard at that meeting on any part of the business of the meeting that relates to his duties as auditor or former auditor;

(6) The remuneration of an auditor appointed by the members shall be fixed by the members or by the directors, if they are authorized to do so by the members, and the remuneration of an auditor appointed by the directors shall be fixed by the directors.

(7) Subject to section 88 where for any reason no auditor is appointed, the Registrar may, on the application of any member, appoint one or more auditors to hold office until the close of the next annual gen eral meeting and fix the remuneration to be paid by the company for his or their services.

(8) Except as provided in subsection (9), no person shall be ap pointed as auditor of a company who is an officer or employee of that company or of an affiliated company or who is a partner, employer or employee of any such officer or employee.

(9) Upon the unanimous vote of the members of a company limited by guarantee, other than a mutual company present or repre sented at the meeting at which the auditor is appointed, an officer or employee of that company or an affiliated company, or a partner, em ployer or employee of an officer or employee may be appointed as auditor of that company, if he has no personal responsibility for the care of the funds of the company and is not concerned in the day to day manage ment or recording of its finances.

(10) A person appointed as auditor under subsection (9) shall indicate in his report to the members that he is an officer or employee of the company or an affiliated company or a partner, employer or employee of an officer or employee, as the case may be.

(11) Any oral or written statement made under subsection (3A) or (5A) by an auditor or former auditor enjoys qualified privilege.

(12) An appointment as auditor of a person who has not requested a written statement from the former auditor under subsection (3A) is voidable by a resolution of the shareholders at a general meeting.

[section 89 amended by 1998 : 35 effective 5 October 1998]

Annual audit

90 (1) The auditor shall audit any financial statements to be laid pursuant to section 84 as will enable him to report to the members.

(2) Based on the results of his audit under subsection (1) which audit shall be made in accordance with generally accepted auditing standards, the auditor shall make a report to the members.

(3) The generally accepted auditing standards referred to in subsection (2) may be those of Bermuda or a country or jurisdiction other than Bermuda or such other generally accepted auditing standards as may be appointed by the Minister under subsection (4) for the purpose of this subsection; and where the generally accepted auditing standards used are other than those of Bermuda, the report of the auditor shall identify the generally accepted auditing standards used.

(3A) No action shall lie against an auditor in the performance of any function as an auditor contemplated by this Act except in the instance of�

(a) the company who engaged the auditor to perform such function; or

(b) any other person expressly authorized by the auditor to rely on his work.

(4) The Minister may, after consultation with the Institute of Chartered Accountants of Bermuda, appoint generally accepted auditing standards promulgated by an audit standard setting body and shall cause the appointment to be published in an appointed newspaper.

[section 90 replaced by 1992:51 effective 1 July 1992; and amended by 1995:33 effective 7 July 1995, and by 1996:21 effective 24 July 1996]

Election of directors

91 (1) The affairs of the company shall be managed by not less than two directors who shall be individuals elected in the first place at the statutory meeting and thereafter at each annual general meeting of the company or elected or appointed by the members in such other manner and for such term as may be provided in the bye-laws.

(2) A general meeting of a company may authorize the directors of the company to elect or appoint on their behalf an individual or individuals to act as additional directors up to a maximum determined by the members in general meeting to those elected at the general meeting.

(2A) Any individual may be appointed an alternate director by or in accordance with a resolution of the members or by a director in such manner as may be provided in the bye-laws, and the individual so appointed shall have all the rights and powers of the director for whom he is appointed in the alternative, except that he shall not be entitled to attend and vote at any meeting of the directors otherwise than in the absence of such director.

(2B) An alternate director shall only be a director for the purposes of this Act and shall only be subject to the provisions of this Act insofar as they relate to the duties and obligations of a director when performing the functions of the director for whom he is appointed in the alternative.

(3) So long as a quorum of directors remains in office, unless the bye-laws of a company otherwise provide, any vacancy occurring in the board of directors may be filled by such directors as re main in office. If no quorum of directors remains the vacancy shall be filled by a general meeting of members.

(4) Every company shall have a president and a vice-president or a chairman and a deputy chairman who shall be directors of the company and may have such other officers who may or may not be directors and who shall be appointed in such manner and hold office for such period, as the bye-laws shall provide.

[section 91 amended by 1992:51 effective 1 July 1992; by 1993:37 effective 13 July 1993; and by 1994:22 effective 13 July 1994]

Representation of director by another director

91A (1) Subject to any express provision to the contrary in the bye-laws of the company, a director of the company may appoint another di rector of the company to represent him and to vote on his behalf at any meeting of the directors of the company:

Provided that a director so appointed �

(a) shall not be entitled to vote at any such meeting on be half of the director who appointed him if the director who appointed him is himself present at that meeting; and

(b) may, subject to paragraph (a), vote at any such meeting on his own behalf as well as on behalf of the director who appointed him.

(2) An appointment made under subsection (1) �

(a) shall not have effect unless notice thereof is given in writing to the secretary of the company by the director making the appointment;

(b) may be either general or in respect of a particular meet ing or meetings specified in the notice of appointment; and

(c) may be revoked at any time by notice in writing given to the secretary of the company by the director making the appointment.

Directors entitled to receive notice of meetings, etc.

91B (1) The directors of a company shall upon written request deposited at the registered office of the company be entitled to receive notice of, and to attend and be heard at, any or all general meetings.

(2) Notwithstanding section 75 (length of notice for calling meetings) a notice given under subsection (1) shall be valid if in all the circumstances, such notice is reasonable.

[section 91B inserted by 1992:51 effective 1 July 1992; and replaced by 1995:33 effective 7 July 1995]

Appointment of secretary

92 (1) The directors of a company shall appoint a secretary to the company who shall hold office in accordance with the bye-laws.

(2) Anything required or authorized to be done by or to the sec retary may, if the office is vacant or there is for any other reason no sec retary capable of acting, be done by or to any assistant or deputy secre tary or, if there is no assistant or deputy secretary capable of acting, by or to any officer of the company authorized generally or specially in that behalf by the directors.

92A (1) Subject to subsection (8), every company shall keep at its registered office a register of its directors and of ficers and the register shall, with respect to the particulars to be contained in it of those persons, comply with subsection (6).

(2) The company shall, within the period of fourteen days from the occurrence of �

(a) any change among its directors or in its officers; or

(b) any change in the particulars contained in the register, enter on its register the particulars of the change.

(3) The register shall during business hours (subject to such reasonable restrictions as the company may impose, so that not less than two hours in each day be allowed for inspec tion) be open for inspection by members of the public without charge.

(4) If an inspection required under this section is re fused, or if default is made in complying with subsection (1) or (2) the company which is in default shall be liable in respect of each offence to a default fine.

(5) In the case of a refusal or default, the Court may by order compel an immediate inspection of the register.

(6) The register shall contain the following particulars with respect to each director and officer�

(a) in the case of an individual, his present first name, surname and address; and

(b) in the case of a company, its name and registered office.

(6A) The register of a local company shall state whether any individual possesses Bermudian status within the meaning of the Bermuda Immigration and Protection Act 1956.[title 5 item 16]

(7) For the purposes of this section "officer" means�

(a) a president, vice-president, chairman or deputy chairman provided that each such person is a director, and

(b) a secretary.

(8) Any company whose objects are wholly and ex clusively charitable and which does not solicit funds from the public shall, on filing a copy of its memorandum of association and of its register of directors and officers with the Regis trar and on obtaining from the Registrar a confirmation of the filing, be exempt from the provisions of this section.

(9) Notwithstanding any other statutory provision the documents filed for the purposes of subsection (8) shall be treated as confidential by the Minister and any public officer having access to them.

[section 92A inserted by 1992:51 effective 1 July 1992 and amended by 1993:37 effective 13 July 1993 and by 1996:21 effective 24 July 1996]

Removal of directors

93 (1) Subject to its bye-laws the members of a company may at a special general meeting called for that purpose remove a director:

Provided that notice of any such meeting shall be served on the director concerned not less than fourteen days before the meeting and he shall be entitled to be heard at such meeting:

Provided further that nothing in this section shall have effect to deprive any person of any compensation or damages which may be payable to him in respect of the termination of his appointment as a di rector or of any other appointment with the company.

(2) A vacancy created by the removal of a director at a special general meeting may be filled at that meeting by the election of another director in his place or in the absence of any such election by the other directors.

Undischarged bankrupt not to take part in management of a com pany

94 (1) If any person being an undischarged bankrupt in any country acts as director of, or directly or indirectly takes part in or is concerned in the management of, any company except with the leave of the Court, he shall be liable on conviction on indictment to imprison ment for a term of two years, or on summary conviction to imprisonment for a term of six months or to a fine of five hundred dollars or to both such imprisonment and fine:

Provided that a person shall not be guilty of an offence under this section by reason that he, being an undischarged bankrupt, has acted as director of, or taken part or been concerned in the management of, a company, if he was on 1 July 1983 acting as a director of that com pany or taking part or being concerned in its management.

(2) The leave of the Court for the purposes of this section shall not be given unless notice of intention to apply therefor has been served on the Official Receiver, and it shall be the duty of the Official Receiver, if he is of opinion that it is contrary to the public interest that any such application should be granted, to attend on the hearing of and oppose the granting of the application.

Court may order that a convicted person shall not take part in the management of the affairs of a company

95 (1) Where any court convicts any person of an offence relating to the affairs of a company which, in the opinion of such court, involves dishonesty it may order that such person shall not directly or indirectly take part in or be concerned in the management of any company without leave of the Supreme Court.

(2) Section 94(2) shall apply to any application for leave under subsection (1).

(3) The same right of appeal shall lie in respect of an order made under subsection (1) as it does from a sentence of imprisonment.

(4) Any person who contravenes an order of a court made un der subsection (1) shall be liable to the punishments set out in section 94(1).

Prohibition of loans to directors without consent of members

96 (1) Without the consent of any member or members holding in the aggregate not less than nine-tenths of the total voting rights of all the members having the right to vote at any meeting of the members it shall not be lawful for a company to make a loan to any person who is its director or a director of its hold ing company, or to enter into any guarantee or provide any security in connection with a loan made to such person as aforesaid by any other person:

Provided that nothing in this section shall apply either �

(a) subject to subsection (2), to anything done to provide any such person as aforesaid with funds to meet expen diture incurred or to be incurred by him for the pur poses of the company or for the purpose of enabling him properly to perform his duties as an officer of the com pany; or

(b) in the case of a company whose ordinary business in cludes the lending of money or the giving of guarantees in connection with loans made by other persons, to anything done by the company in the ordinary course of that business.

(2) Proviso (a) to subsection (1) shall not authorize the making of any loan, or the entering into any guarantee, or the provision of any security, except either �

(a) with the prior approval of the company given at a general meeting at which the purposes of the expenditure and the amount of the loan or the extent of the guarantee or security, as the case may be, are disclosed; or

(b) on condition that, if the approval of the company is not given as aforesaid at or before the next following annual general meeting, the loan shall be repaid or the liability under the guarantee or security shall be discharged, as the case may be, within six months from the conclusion of that meeting.

(3) Where the approval of the company is not given as required by any such condition, the directors authorizing the making of the loan, or the entering into the guarantee, or the provision of the security, shall be jointly and severally liable to indemnify the company against any loss arising therefrom.

(4) A loan shall be deemed to be a loan to a director if it is made to �

(a) the spouse or children of a director; or

(b) to a company (other than a company which is a holding company or a subsidiary of the company making the loan) which a director, his spouse or children own or control directly or indirectly more than twenty per cent of the capital or loan debt.

(5) For the purposes of this section a loan shall not be deemed to have been made in the ordinary course of business of a company if it has not been made on normal commercial terms in respect of interest rates, repayment terms and security.

(6) This section applies to a mutual company.

[section 96 amended by 1992:51 effective 1 July 1992]

Duty of care of officers

97 (1) Every officer of a company in exercising his powers and dis charging his duties shall �

(a) act honestly and in good faith with a view to the best interests of the company; and

(b) exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circum stances.

(2) Every officer of a company shall comply with this Act, the regulations, and the bye-laws of the company.

(3) [deleted 1995:33]

(4) Without in any way limiting the generality of subsection (1) an officer of a company shall be deemed not to be acting honestly and in good faith if �

(a) he fails on request to make known to the auditors of the company full details of �

(i) any emolument, pension or other benefit that he has received or it is agreed that he should re ceive from the company or any of the company's subsidiaries; or

(ii) any loan he has received or is to receive from the company or any of its subsidiaries;

(b) he fails to disclose at the first opportunity at a meeting of directors or by writing to the directors �

(i) his interest in any material contract or proposed material contract with the company or any of its subsidiaries;

(ii) his material interest in any person that is a party to a material contract or proposed material contract with the company or any of its sub sidiaries.

(5) For the purposes of this section �

(a) a general notice to the directors of a company by an offi cer of the company declaring that he is an officer of or has a material interest in a person and is to be regarded as interested in any contract with that person is a suffi cient declaration of interest in relation to any such con tract;

(b) the word "material" in relation to a contract or proposed contract shall be construed as relating to the materiality of that contract or proposed contract in relation to the business of the company to which disclosure must be made;

(c) an interest occurring by reason of the ownership or di rect or indirect control of not more than 10% of the cap ital of a person shall not be deemed material.

(5A) An officer is not liable under subsection (1) if he relies in good faith upon �

(a) financial statements of the company represented to him by another officer of the company; or

(b) a report of an attorney, accountant, engineer, appraiser or other person whose profession lends credibility to a statement made by him.

(6) Any officer of a company who fails to make known a matter he is required to make known under subsection (4) shall be liable to a fine of one thousand dollars.

(7) Nothing in this section shall be taken to prejudice any rule of law or any bye-law restricting officers of a company from having any interest in contracts with the company.

[Section 97 amended by 1995:33 effective 7 July 1995]

Exemption, indemnification and liability of officers, etc.

98 (1) Subject to subsection (2), a company may in its bye-laws or in any contract or arrangement between the company and any officer, or any person employed by the company as auditor, exempt such officer or person from, or indemnify him in respect of, any loss arising or liability attaching to him by virtue of any rule of law in respect of any negligence, default, breach of duty or breach of trust of which the officer or person may be guilty in relation to the company or any subsidiary thereof.

(2) Any provision, whether contained in the bye-laws of a company or in any contract or arrange ment between the company and any officer, or any person employed by the company as auditor, exempting such officer or person from, or in demnifying him against any liability which by virtue of any rule of law would otherwise attach to him in respect of any fraud or dishonesty of which he may be guilty in relation to the company shall be void:

Provided that�

(a) nothing in this section shall operate to deprive any per son of any exemption or right to be indemnified in re spect of anything done or omitted to be done by him while any such provision was in force; and

(b) notwithstanding anything in this section, a 'company may, in pursuance of any such provision as aforesaid indemnify any such officer or auditor against any liabil ity incurred by him in defending any proceedings, whether civil or criminal in which judgment is given in his favour or in which he is acquitted or when relief is granted to him by the Court under section 281.

[Section 98 amended by 1995:33 effective 7 July 1995, and by 1996:21 effective 24 July 1996]

Insurance of officers

98A A company may purchase and maintain insurance for the benefit of any officer of the company against any liability incurred by him under section 97(1)(b) in his capacity as an officer of the company or indemnifying such an officer in respect of any loss arising or liability attaching to him by virtue of any rule of law in re spect of any negligence, default, breach of duty or breach of trust of which the officer may be guilty in relation to the company or any sub sidiary thereof and nothing in this Act shall make void or voidable any such policy.

[Section 98A amended by 1995:33 effective 7 July 1995]

Liability of auditor or officer

98(B) (1) Where an auditor or an officer is found liable to any person for damages arising out of the performance of any function as such auditor or officer as contemplated by this Act, then the following provisions of this section shall apply.

(2) An auditor or officer may be liable jointly and severally only if it is proved that he knowingly engaged in fraud or dishonesty.

(3) In any case other than that contemplated by subsection (2) hereof, the liability of the auditor or officer, as the case may be, shall be determined as follows�

(a) the Court shall determine the percentage of responsibility of the plaintiff, of each of the defendants, and of each of the other persons alleged by the parties to have caused or contributed to the loss of the plaintiff. In considering the percentages of responsibility, the Court shall consider both the nature of the conduct of each person and the nature and extent of the causal relationship between the conduct and the loss claimed by the plaintiff;

(b) the liability of the auditor or officer, as the case may be, shall be equal to the total loss suffered by the plaintiff multiplied by the auditor's or officer's, as the case may be, percentage of responsibility as determined under paragraph (a) hereof.

(4) No auditor or officer whose liability is determined under subsection (3) hereof shall have any liability in respect of any judgement entered against any other party to the action.

(5) Except where agreed in writing between the parties, where the liability of an auditor or officer has been determined in accordance with subsection (3) no other person shall have any right to recover from such auditor or officer any portion of any judgment entered against such other person in respect of the action.

[Section 98B inserted by 1996:21 effective 24 July 1996]

PART VII

ARRANGEMENTS, RECONSTRUCTIONS AND AMALGAMATIONS

Power to compromise with creditors and members

99 (1) Where a compromise or arrangement is proposed between a company and its creditors or any class of them or between a company and its members or any class of them, the Court may, on the application of the company or of any creditor or member of the company, or, in the case of a company being wound up, of the liquidator, order a meeting of the creditors or class of creditors, or of the members of the company or class of members, as the case may be, to be summoned in such manner as the Court directs.

(2) If a majority in number representing three-fourths in value of the creditors or class of creditors or members or class of members, as the case may be, present and voting either in person or by proxy at the meeting, agree to any compromise or arrangement, the compromise or arrangement shall if sanctioned by the Court, be binding on all the cred itors or the class of creditors, or on the members or class of members, as the case may be, and also on the company or, in the case of a company in the course of being wound up, on the liquidator and contributories of the company.

(3) An order made under subsection (2) shall have no effect until a copy of the order has been delivered to the Registrar for registra tion, and a copy of every such order shall be annexed to every copy of the memorandum of association of the company issued after the order has been made.

(4) If a company makes default in complying with subsection (3), the company and every officer of the company who knowingly or wil fully authorizes or permits the default shall be liable to a fine of ten dol lars for each copy in respect of which default is made.

Information as to compromise with creditors and members

100 (1) Where a meeting of creditors or any class of creditors or of members or any class of members is summoned under section 99 there shall �

(a) with every notice summoning the meeting which is sent to a creditor or member, be sent also a statement ex plaining the effect of the compromise or arrangement and in particular stating any material interests of the di rectors of the company whether as directors or as mem bers or as creditors of the company or otherwise, and the effect thereon of the compromise or arrangement, in so far as it is different from the effect on the like inter ests of other persons; and

(b) in every notice summoning the meeting which is given by advertisement, be included either such a statement as aforesaid or a notification of the place at which and the manner in which creditors or members entitled to attend the meeting may obtain copies of such a state ment as aforesaid.

(2) Where the compromise or arrangement affects the rights of debenture holders of the company, the said statement shall give the like explanation as respects the trustees of any deed for securing the issue of the debentures as it is required to give as respects the company's direc tors.

(3) Where a notice given by advertisement includes a notifica tion that copies of a statement explaining the effect of the compromise or arrangement proposed can be obtained by creditors or members entitled to attend the meeting, every such creditor or member shall, on making application in the manner indicated by the notice, be furnished by the company free of charge with a copy of the statement.

(4) Where a company makes default in complying with any re quirement of this section, the company and every officer of the company who knowingly or wilfully authorizes or permits the default shall be liable to a fine of one thousand dollars, and for the purpose of this subsection any liquidator of the company and any trustee of a deed for securing the issue of debentures of the company shall be deemed to be an officer of the company:

Provided that a person shall not be liable under this subsection if that person shows that the default was due to the refusal of any other person, being a director or trustee for debenture holders, to supply the necessary particulars as to his interests.

(5) It shall be the duty of any director of the company and of any trustee for debenture holders of the company to give notice to the company of such matters relating to himself as may be necessary for the purposes of this section, and any person who makes default in comply ing with this subsection shall be liable to a fine of two hundred dollars.

Reconstruction of companies

101 (1) Where an application is made to the Court under section 99 for the sanctioning of a compromise or arrangement proposed between a company and any such persons as are mentioned in that section, and it is shown to the Court that the compromise or arrangement has been proposed for the purposes of or in connection with a scheme for the re construction of any company or companies and that under the scheme the whole or any part of the undertaking or the property of any company concerned in the scheme (in this section referred to as "a transferor company") is to be transferred to another company (in this section re ferred to as "the transferee company"), the Court may, subject to subsec tion (2), either by the order sanctioning the compromise or arrangement or by any subsequent order, make provision for all or any of the following matters �

(a) the transfer to the transferee company of the whole or any part of the undertaking and of the property or liabilities of any transferor company;

(b) the allocation or appropriation by the transferee com pany of any shares, debentures, policies or other like interests in that company which under the compromise or arrangement are to be allotted or appropriated by that company to or for any person;

(c) the continuation by or against the transferee company of any legal proceedings pending by or against any trans feror company;

(d) the dissolution, without winding up, of any transferor company;

(e) the provision to be made for any persons, who within such time and in such manner as the Court directs dis sent from the compromise or arrangement;

(f) such incidental, consequential and supplemental mat ters as are necessary to secure that the reconstruction or amalgamation shall be fully and effectively carried out.

(2) No order shall be made under subsection (1) for the transfer to the transferee company of the whole or any part of the undertaking or of the property or liabilities of any transferor company unless notice of the application for the sanctioning of the compromise or arrangement of which the order is to form a part is given in writing to the Minister and an affidavit signifying the consent of the Minister to the making of the order has been lodged with the Court.

(3) Where an order under this section provides for the transfer of property or liabilities, that property shall, by virtue the order, be transferred to and vest in, and those liabilities shall, by virtue of the or der, be transferred to and become the liabilities of, the transferee com pany, and in the case of any property, if the order so directs, freed from any charge which is by virtue of the compromise or arrangement to cease to have effect.

(4) Where an order is made under this section, every company in relation to which the order is made shall cause a copy thereof to be delivered to the Registrar for registration within seven days after the making of the order, and if default is made in complying with this sub section, the company and every officer of the company who knowingly or wilfully authorizes or permits the default shall be liable to a fine of two hundred dollars.

(5) In this section "property" includes all assets, rights and powers of every description, and "liabilities" includes duties.

Power to acquire shares of shareholders dissenting from scheme or contract approved by majority

102 (1) Where a scheme or contract involving the transfer of shares or any class of shares in a company (in this section referred to as "the subject company") to another company, whether a company within the meaning of this Act or not (in this section referred to as "the transferee company"), has, within four months after the making of the offer in that behalf by the transferee company been approved by the holders of not less than nine-tenths in value of the shares whose transfer is involved, other than shares already held at the date of the offer by, or by a nomi nee for, the transferee company or its subsidiary, the transferee company may, at any time within two months after the expiration of the said four months, give notice to any dissenting shareholder that it desires to ac quire his shares, and when such a notice is given the transferee com pany shall, unless on an application made by the dissenting shareholder within one month from the date on which the notice was given the Court thinks fit to order otherwise, be entitled and bound to acquire those shares on the terms on which, under the scheme or contract, the shares of the approving shareholders are to be transferred to the transferee company:

Provided that where shares in the subject company of the same class or classes as the shares whose transfer is involved are al ready held as aforesaid to a value greater than one-tenth of the aggregate of their value and that of the shares, other than those already held as aforesaid, whose transfer is involved, the foregoing provisions of this subsection shall not apply unless�

(a) the transferee company offers the same terms to all holders of the shares, other than those already held as aforesaid, whose transfer is involved, or, where those shares include shares of different classes, of each class of them; and

(b) the holders who approve the scheme or contract, besides holding not less than nine-tenths in value of the shares, other than those already held as aforesaid, whose transfer is involved, are not less than three-fourths in number of the holders of those shares.

(2) Where, in pursuance of any such scheme or contract as aforesaid, shares in a company are transferred to another company or its nominee, and those shares together with any other shares in the first-mentioned company held by, or by a nominee for, the transferee com pany or its subsidiary at the date of the transfer comprise or include nine-tenths in value of the shares in the first-mentioned company or of any class of those shares, then�

(a) the transferee company shall within one month from the date of the transfer, unless on a previous transfer in pursuance of the scheme or contract it has already com plied with this requirement, give notice of that fact to the holders of the remaining shares or of the remaining shares of that class, as the case may be, who have not assented to the scheme or contract; and

(b) any such holder may within three months from the giv ing of the notice to him, himself give notice requiring the transferee company to acquire the shares in question,

and where a shareholder gives notice under paragraph (b) with respect to any shares, the transferee company shall be entitled and bound to ac quire those shares on the terms on which under the scheme or contract the shares of the approving shareholders were transferred to it, or on such other terms as may be agreed or as the Court on the application of either the transferee company or the shareholder thinks fit to order.

(3) Where a notice has been given by the transferee company under subsection (1) and the Court has not, on an application made by the dissenting shareholder, ordered to the contrary, the transferee com pany shall, on the expiration of one month from the date on which the notice has been given, or, if an application to the Court by the dissenting shareholder is then pending, after that application has been disposed of, transmit a copy of the notice to the subject company together with an instrument of transfer executed on behalf of the shareholder by any per son appointed by the transferee company and on its own behalf by the transferee company, and pay or transfer to the subject company the amount or other consideration representing the price payable by the transferee company for the shares which by virtue of this section that company is entitled to acquire, the subject company shall thereupon register the transferee company as the holder of those shares.

(4) Any sums received by the subject company under this section shall be paid into a separate bank account, and any such sums and any other consideration so received shall be held by that company on trust for the several persons entitled to the shares in respect of which the said sums or other consideration were respectively received.

(5) In this section "dissenting shareholder" includes a share holder who has not assented to the scheme or contract and any share holder who has failed or refused to transfer his shares to the transferee company in accordance with the scheme or contract.

[section 102 amended by 1998 : 35 effective 5 October 1998]

Holders of 95% of shares may acquire remainder

103 (1) The holders of not less than ninety-five per cent of the shares or any class of shares in a company (hereinafter in this section referred to as the "purchasers") may give notice to the remaining share holders or class of shareholders of the intention to acquire their shares on the terms set out in the notice. When such a notice is given the pur chasers shall be entitled and bound to acquire the shares of the re maining shareholders on the terms set out in the notice unless a re maining shareholder applies to the Court for an appraisal under subsec tion (2):

Provided that the foregoing provisions of this subsection shall not apply unless the purchasers offer the same terms to all holders of the shares whose acquisition is involved.

(2) Any shareholder to whom a notice has been given under subsection (1) may within one month of receiving the notice apply to the Court to appraise the value of the shares to be purchased from him and the purchasers shall be entitled to acquire the shares at the price so fixed by the Court.

(3) Within one month of the Court appraising the value of any shares under subsection (2) the purchasers shall be entitled either �

(a) to acquire all the shares involved at the price fixed by the Court; or

(b) cancel the notice given under subsection (1).

(4) Where the Court has appraised any shares under subsec tion (2) and the purchasers have prior to the appraisal acquired any shares by virtue of a notice under subsection (1) then within one month of the Court appraising the value of the shares if the price of the shares they have paid to any shareholder is less than that appraised by the Court they shall either �

(a) pay to such shareholder the difference in the price they have paid to him and the price appraised by the Court; or

(b) cancel the notice given under subsection (1) and return to the shareholder any shares they have acquired and the shareholder shall repay the purchasers the purchase price.

(5) No appeal shall lie from an appraisal by the Court under this section.

(6) The costs of any application to the Court under this section shall be in the discretion of the Court.

(7) In this section "price" shall include not only monetary price but also the monetary value of any shares or other securities offered by the purchasers in exchange for the shares to be acquired.

Amalgamation of companies

104 (1) Two or more companies which are registered in Bermuda, may subject to section 4A amalgamate and con tinue as one company:

Provided that if the amalgamated company is to be a local com pany it shall comply with the Third Schedule.

(2) [deleted]

[section 104 amended by 1992:51 effective 1 July 1992; and amended by 1998 : 35 effective 5 October 1998]

Amalgamation of exempted company and foreign corporation and continuation as an exempted company

104A (1) One or more exempted companies and one or more bodies incorporated outside Bermuda (each such body hereinafter in this section and in sections 104B and 104D referred to as a "foreign corporation") may amalgamate and continue as an exempted company registered in Bermuda to which the provisions of this Act and any other relevant laws of Bermuda shall apply.

(2) A foreign corporation shall obtain all necessary authorizations, if any, required under the laws of the jurisdiction in which it was incorporated or is presently registered in order to enable it to amalgamate and continue as an exempted company registered in Bermuda, and shall file with the Registrar documentary proof of such authorizations.

(3) [deleted]

(4) The provisions of sections 105 to 109, mutatis mutandis, apply to an amalgamation under this section in the same way as they apply to an amalgamation under section 104.

(5) [deleted]

[Section 104A inserted by 1994:22 effective 13 July 1994, and amended by 1996:21 effective 24 July 1996; and amended by 1998 : 35 effective 5 October 1998]

Amalgamation of exempted company and foreign corporation and continuation as a foreign corporation

104B (1) One or more exempted companies and one or more foreign corporations may amalgamate and continue as a foreign corporation (in this section and sections 104C and 104D referred to as "the amalgamated corporation") to which the laws of the jurisdiction in which it is proposed that the amalgamated corporation will continue (in this section and sections 104C and 104D referred to as "the foreign jurisdiction") shall apply.

(2) An exempted company shall not amalgamate pursuant to subsection (1) unless�

(a) an officer of such company has made a statutory declaration to the effect that there are reasonable grounds for believing that�

(i) such company is, and the amalgamated corporation will be, able to pay its liabilities as they fall due;

(ii) the realizable value of the amalgamated corporation's assets will not be less than the aggregate of its liabilities and issued share capital and share premium account of all classes; and

(iii) either no creditor of such company will be prejudiced by the amalgamation or adequate notice has been given in accordance with section 104D(4) to all known creditors of such company and no creditor objects to the amalgamation otherwise than on grounds that are frivolous or vexatious;

(b) an irrevocable deed poll is executed by such company and its directors, pursuant to which�

(i) such company and each of its directors may be served with legal process in Bermuda in any proceeding arising out of actions or omissions of such company occurring prior to the amalgamation, and provision is made for the appointment of a person within Bermuda as agent for such company for the service of process for a period of not less than three years from the effective date of the amalgamation and for a signed acceptance of the appointment; or

(ii) such company and each of its directors may be served with legal process at a specified address in the United Kingdom, the United States of America or any appointed jurisdiction, and whereby such company and such directors submit to the non-exclusive jurisdiction of the courts of that country or jurisdiction;

(c) each foreign corporation which is amalgamating has obtained all necessary authorizations, if any, required under the laws of the jurisdiction in which it was incorporated or is presently registered to enable it to so amalgamate;

(d) the foreign jurisdiction is an appointed jurisdiction; and

(e) not more than three months prior to the effective date of the amalgamation�

(i) each exempted company which is amalgamating shall advertise in an appointed newspaper; and

(ii) each foreign corporation which is amalgamating shall advertise in a national newspaper in the jurisdiction in which it was incorporated or is presently registered,

its intention to amalgamate and continue as a company in the foreign jurisdiction.

[Section 104B inserted by 1996:21 effective 24 July 1996; and replaced by 1998 : 35 effective 5 October 1998]

Documents to be filed on amalgamation and continuation as a foreign corporation

104C (1) An exempted company shall not amalgamate pursuant to section 104B unless on or before the effective date of the amalgamation such company files with the Registrar a notice of the amalgamation which shall contain or have attached thereto the following information:

(a) the effective date of the amalgamation;

(b) the name of the foreign jurisdiction;

(c) the address of the registered office or the principal business address of the amalgamated corporation in the foreign jurisdiction;

(d) a copy of the statutory declaration required pursuant to section 104B(2)(a); and

(e) a copy of the irrevocable deed poll required pursuant to section 104B(2)(b).

(2) Within thirty days after the date of the issue thereof, the amalgamated corporation continuing as a result of an amalgamation pursuant to section 104B shall file with the Registrar a copy of the certificate of amalgamation issued by the appropriate authority of the foreign jurisdiction, or, if no such certificate of amalgamation is issued, such other documentary evidence of the amalgamation as shall be issued by such authority.

(3) The documents filed with the Registrar pursuant to subsections (1) and (2) shall be open to public inspection.

[Section 104C inserted by 1996:21 effective 24 July 1996; and replaced by 1998 : 35 effective 5 October 1998]

Provisions applicable to amalgamation and continuation as a foreign corporation

104D (1) The provisions of sections 105 to 107 shall apply, with the necessary changes, to an amalgamation pursuant to section 104B in the same way as they apply to an amalgamation pursuant to section 104, except that the provisions of section 106 shall apply only to amalgamating exempted companies.

(2) The effect of an amalgamation pursuant to section 104B shall be the same as in the case of an amalgamation pursuant to section 104A, except insofar as the laws of the foreign jurisdiction otherwise provide.

(3) The effective date of an amalgamation pursuant to section 104B shall be the date that the amalgamation is effective pursuant to the laws of the foreign jurisdiction.

(4) For the purposes of section 104B(2)(a), adequate notice is given if�

(a) a notice in writing is sent to each known creditor having a claim against the company that exceeds $1,000; and

(b) notice is published in an appointed newspaper stating that such company intends to amalgamate with any specified exempted companies or one or more specified foreign corporations, or both, and that a creditor of such company may object to the amalgamation within thirty days from the date of the notice.

[Section 104D inserted by 1996:21 effective 24 July 1996; and replaced by 1998 : 35 effective 5 October 1998]

Effect of amalgamation of company under section 104B

104E [Repealed]

[Section 104E inserted by 1996:21 effective 24 July 1996; and repealed by 1998 : 35 effective 5 October 1998]

Minister's refusal to grant consent

104F [Repealed]

[Section 104F inserted by 1996:21 effective 24 July 1996; and repealed by 1998 : 35 effective 5 October 1998]

Regulations

104G [Repealed]

[Section 104G inserted by 1996:21 effective 24 July 1996; and repealed by 1998 : 35 effective 5 October 1998]

Amalgamation agreement

105 (1) Each company proposing to amalgamate shall enter into an agreement setting out the terms and means of effecting the amalgama tion and, in particular, setting out �

(a) the provisions that are required to be included in the memorandum;

(b) the name and address of each proposed director of the amalgamated company;

(c) the manner in which the shares of each amalgamating company are to be converted into shares or other secu rities of the amalgamated company;

(d) if any shares of an amalgamating company are not to be converted into securities of the amalgamated company, the amount of money or securities that the holders of such shares are to receive in addition to or instead of se curities of the amalgamated company;

(e) the manner of payment of money instead of the issue of fractional shares of the amalgamated company or of any other securities which are to be received in the amalga mation;

(f) whether the bye-laws of the amalgamated company are to be those of one of the amalgamating companies and, if not, a copy of the proposed bye-laws; and

(g) details of any arrangements necessary to perfect the amalgamation and to provide for the subsequent man agement and operation of the amalgamated company.

(2) If shares of one of the amalgamating companies are held by or on behalf of another of the amalgamating companies, the amalgama tion agreement shall provide for the cancellation of such shares when the amalgamation becomes effective without any repayment of capital in re spect thereof, and no provision shall be made in the agreement for the conversion of such into shares of the amalgamated company.

Shareholder approval

106 (1) The directors of each amalgamating company shall submit the amalgamation agreement for approval to a meeting of the holders of shares of the amalgamating company of which they are directors and, subject to subsection (4), to the holders of each class of such shares.

(2) A notice of a meeting of shareholders complying with sec tion 75 shall be sent in accordance with that section to each shareholder of each amalgamating company, and shall �

(a) include or be accompanied by a copy or summary of the amalgamating agreement; and

(b) subject to subsection (2A), state�

(i) the fair value of the shares as determined by each amalgamating company; and

(ii) that a dissenting shareholder is entitled to be paid the fair value of his shares.

(2A) Notwithstanding subsection (2)(b)(ii), fai-lure to state the matter referred to in that subsection does not invalidate an amalgamation.

(3) Each share of an amalgamating company carries the right to vote in respect of an amalgamation whether or not it otherwise carries the right to vote.

(4) The holders of shares of a class of shares of an amalgamating company are entitled to vote separately as a class in respect of an amalgamation if the amalgamation agreement contains a provision which would constitute a variation of the rights attaching to any such class of shares for the purposes of section 47.

(4A) The provisions of the bye-laws of the company relating to the holding of general meetings shall apply to general meetings and class meetings required by this section provided that, unless the bye-laws otherwise provide, the resolution of the share holders or class must be approved by a majority vote of three-fourths of those voting at such meeting and the quorum necessary for such meeting shall be two persons at least holding or representing by proxy more than one-third of the issued shares of the company or the class, as the case may be, and that any holder of shares present in person or by proxy may demand a poll.

(5) An amalgamation agreement shall be deemed to have been adopted when it has been approved by the shareholders as provided in this section.

(6) Any shareholder who did not vote in favour of the amalgamation and who is not satisfied that he has been offered fair value for his shares may within one month of the giving of the notice referred to in subsection (2) apply to the Court to appraise the fair value of his shares.

(6A) Subject to subsection (6B), within one month of the Court appraising the fair value of any shares under subsection (6) the company shall be entitled either�

(a) to pay to the dissenting shareholder an amount equal to the value of his shares as appraised by the Court; or

(b) to terminate the amalgamation in accordance with subsection (7).

(6B) Where the Court has appraised any shares under subsection (6) and the amalgamation has proceeded prior to the appraisal then, within one month of the Court appraising the value of the shares, if the amount paid to the dissenting shareholder for his shares is less than that appraised by the Court the amalgamated company shall pay to such shareholder the difference between the amount paid to him and the value appraised by the Court.

(6C) No appeal shall lie from an appraisal by the Court under this section.

(6D) The costs of any application to the Court under this section shall be in the discretion of the Court.

(7) An amalgamation agreement may provide that at any time before the issue of a certificate of amalgamation the agreement may be terminated by the directors of an amalgamating company, notwith-standing approval of the agreement by the shareholders of all or any of the amalgamating companies.

[Section 106 amended by 1994:22 effective 13 July 1994]

Short form amalgamation

107 (1) A holding company and one or more of its wholly-owned subsidiary companies may amalgamate and continue as one company without complying with sections 105 and 106 if�

(a) the amalgamation is approved by a resolution of the di rectors of each amalgamating company; and

(b) the resolutions provide that �

(i) the shares of each amalgamating subsidiary company shall be cancelled without any repay ment of capital in respect thereof;

(ii) the memorandum shall be the same as the memorandum of the amalgamating holding company; and

(iii) no securities shall be issued by the amalga mated company in connection with the amalga mation.

(2) Two or more wholly-owned subsidiary companies of the same holding company may amalgamate and continue as one company without complying with sections 105 and 106 if �

(a) the amalgamation is approved by a resolution of the di rectors of each amalgamating company; and

(b) the resolutions provide that �

(i) the shares of all but one of the amalgamating subsidiary companies shall be cancelled without any repayment of capital in respect of such shares;

(ii) the memorandum shall be the same as the memorandum of the amalgamating subsidiary company whose shares are not cancelled.

(iii) [repealed by 1992:51]

(3) The amalgamating companies may elect to combine their respective authorized share capitals and in the resolutions approving the amalgamation they shall state whether or not they so elect.

(4) [deleted by 1996:21]

(5) [deleted by 1996:21]

[section 107 amended by 1992:51 effective 1 July 1992, by 1996:21 effective 24 July 1996; and by 1998 : 35 effective 5 October 1998]

Registration of amalgamated companies

108 (1) Subject to subsections (2) and (3) after the amalgamation of companies has been adopted, the amalgamated company shall on appli cation be registered by the Registrar and a certificate of amalgamation issued to the company.

(2) Any application for the registration of an amalgamated company shall be accompanied by �

(a) a certified copy of the resolution or other authority, if any, of each amalgamating company

(b) the registered address of the amalgamated company;

(d) the documents referred to in subsection (3).

(3) An application for registration of an amalgamated company shall have attached to it a statutory declaration by an officer of each amalgamating company that establishes to the satisfaction of the Regis trar that there are reasonable grounds for believing that�

(a) each amalgamating company is and the amalgamated company will be able to pay its liabilities as they become due;

(b) the realizable value of the amalgamated company's as sets will not be less than the aggregate of its liabilities and issued capital of all classes; and either

(d) adequate notice has been given to all known creditors of the amalgamating companies and no creditor objects to the amalgamation otherwise than on grounds that are frivolous or vexatious.

(4) For the purposes of subsection (3)(d), adequate notice is given if �

(a) a notice in writing is sent to each known creditor having a claim against the company that exceeds one thousand dollars; and

(b) a notice is published in an appointed newspaper stating that the company intends to amalgamate with one or more specified companies in accordance with this Act and that a creditor of the company may object to the amalgamation within thirty days from the date of the notice.

[Section 108 amended by 1994:22 effective 13 July 1994; and by 1998 : 35 effective 5 October 1998]

Effect of certificate of amalgamated companies

109 On the date shown in a certificate of amalgamation�

(a) the amalgamation of the amalgamating companies and their continuance as one company shall become effec tive;

(b) the property of each amalgamating company shall be come the property of the amalgamated company;

(d) an existing cause of action, claim or liability to prosecu tion shall be unaffected;

(e) a civil, criminal or administrative action or proceeding pending by or against an amalgamating company may be continued to be prosecuted by or against the amalga mated company;

(f) a conviction against, or ruling, order or judgment in favour of or against, an amalgamating company may be enforced by or against the amalgamated company; and

(g) the certificate of amalgamation shall be deemed to be the certificate of incorporation of the amalgamated company; however, the date of incorporation of a company is its original date of incorporation and its amalgamation with another company does not alter its original date of incorporation.

[section 109 amended by 1992:51 effective 1 July 1992; and by 1998 : 35 effective 5 October 1998]

PART VII

THE INVESTIGATION OF THE AFFAIRS OF A COMPANY AND THE PRO TECTION OF MINORITIES

Investigation of the affairs of a company

110 (1) Subject to subsection (10) the Minister may at any time of his own volition or on the application of that proportion of the members of a company, as in his opinion warrants the application, based in re spect of a company limited by shares, or other company having a share capital, on their shareholding, appoint one or more inspectors to investigate the affairs of the company and to report thereon in such manner as he may direct.

(2) The application by the members of a company shall be sup ported by such evidence as the Minister may require for the purpose of showing that the applicants have good reason for, and are not actuated by malicious motives in requiring the investigation; and the Minister may, before appointing an inspector require the applicants to give secu rity for payment of the costs of the inquiry.

(3) All officers and agents of the company shall produce to the inspector all books and documents in their custody or power.

(4) An inspector may examine on oath the officers and agents of the company in relation to its business, and may administer an oath accordingly.

(5) Where any officer or agent refuses to produce any book or document that under this section it is his duty to produce, or to answer any question relating to the affairs of the company, he shall be liable to a default fine and the court convicting him may order him to produce to the inspector the books or documents in respect of which he was con victed.

(6) Any person who fails to obey an order of a court made un der subsection (5) requiring the production of any books or documents shall be guilty of contempt of Court and may be punished accordingly.

(7) On the conclusion of the investigation the inspector shall report his opinion to the Minister, and a copy of the report shall be for warded by the Minister to the company and a further copy may in his discretion, at the request of the applicants for the investigation, be deliv ered to them.

(8) All expense of and incidental to the investigation shall be defrayed by the applicants, unless the Minister directs that they be paid by the company.

(9) A copy of a report made under this section shall be admis sible in any legal proceeding as evidence of the opinion of the inspector in relation to any matter contained in the report.

(10) The Minister shall not have the power under this section to appoint an inspector to investigate the affairs of an exempted company or a permit company.

[section 110 amended by 1994:22 effective 13 July 1994]

Alternative remedy to winding up in cases of oppressive or prejudi cial conduct

111 (1) Any member of a company who complains that the affairs of the company are being conducted or have been conducted in a manner oppressive or prejudicial to the interests of some part of the members, including himself, or where a report has been made to the Minister un der section 110, the Registrar on behalf of the Minister, may make an application to the Court by petition for an order under this section.

(2) If on any such petition the Court is of opinion�

(a) that the company's affairs are being conducted or have been conducted as aforesaid; and

(b) that to wind up the company would unfairly prejudice that part of the members, but otherwise the facts would justify the making of a winding up order on the ground that it was just and equitable that the company should be wound up,

the Court may, with a view to bringing to an end the matters complained of, make such order as it thinks fit, whether for regulating the conduct of the company's affairs in future, or for the purchase of the shares of any members of the company by other members of the company or by the company and, in the case of a purchase by the company, for the reduc tion accordingly of the company's capital, or otherwise.

(3) Where an order under this section makes an alteration in or addition to any company's memorandum or bye-laws, then, notwith standing anything in any other provision but subject to the provisions of the order, the company concerned shall not have power without the leave of the Court to make further alteration in or addition to the memoran dum or, bye-laws as so altered or added to accordingly.

(4) An office copy of any order under this section altering or adding to, or giving leave to alter or add to, a company's memorandum or bye-laws shall, within fourteen days after the making thereof, be deliv ered by the company to the Registrar for registration; and if a company makes default in complying with this subsection, the company and every officer of the company who is in default shall be liable to a default fine.

Preservation of the books and assets of a company

112 (1) The Registrar where the Minister has made an order under section 110(1) or where he has made an application under section 111(1) may apply to the Court ex parte for an order that the assets, books and papers of the company be preserved and not moved.

(2) If on any such application the Court is satisfied that there is a likelihood that the assets of the company will be transferred or that the books and papers of the company may be destroyed or removed it shall make an order that the assets of the company shall not be transferred to any other person, removed from Bermuda or otherwise dealt with and that the books or papers of the company shall not be destroyed or moved until a further order is made by the Court.

(3) Where an order under subsection (1) is served on a com pany the company may apply to the Court for the order to be discharged and the Court may �

(a) confirm the order;

(b) vary the order in such manner as it considers just; or

and in any case make such orders as it thinks desirable for the preser vation of the assets of the company and the custody, inspection and copying of the books and papers of the company.

(4) The company and any officer or employee of the company who acts in contravention of an order of the Court made under subsec tion (2) or (3) shall be guilty of contempt of Court.

PART IX

LOCAL COMPANIES

Interpretation of Part IX and Third Schedule

113 (1) In this Part and in the Third Schedule the following shall be deemed to be "Bermudian" �

(a) the Government or any corporation of which the majority of the directors, managers, or trustees are subject to ap pointment by the Governor or a Minister;

(b) any person who has Bermudian status by virtue of the law relating to immigration from time to time in force;

(c) a local company in which the percentage of shares bene ficially owned by Bermudians is not less than 80% of the total issued share capital of that company;

(cc) a local statutory corporation;

(d) any licensed bank, in so far as and so long as, it is com plying with section 3(1)(b), (c) and (d) of the Banks Act 1969 [title 17 item 20];

(e) a wholly owned subsidiary of a local company where such subsidiary was incorporated on or prior to 31 July 1996 so far, and for so long as, that local company is complying with the Third Schedule and for so long as it abides by all the obligations of its parent company and does nothing in Bermuda that its parent company is unable lawfully to do; and

(f) a trust of which the majority of the trustees are persons with Bermudian status by virtue of the law relating to immigration from time to time in force and the trust is established for the benefit of Bermuda, Bermudians or things Bermudian.

(2) For the purposes of subsection (1), a company shall be deemed to be a wholly owned subsidiary of another company if the latter company enjoys the beneficial interest in all the shares of the former company through beneficial ownership or as beneficiary under a trust, express or implied, or through a nominee shareholder, to the exclusion of any other person, and control in the former company cannot, by means of any arrangement, artifice or device, be exercised either directly or indirectly by persons who are not Bermudians.

(3) No share shall be deemed to be beneficially owned by a Bermudian if �

(a) that Bermudian is in any way under any obligation to exercise any right attaching to that share at the instance of, or for the benefit of, any person who is not Bermu dian; or

(b) that share is held jointly or severally with any person who is not Bermudian; or

(4) For the purposes of this Part, "local statutory corporation" means a corporation sole or a corporation aggregate, other than a com pany, incorporated by an Act, the principal functions of which relate to operations and affairs in Bermuda.

[section 113 amended by 1996:21 effective 24 July 1996; and by 1998 : 35 effective 5 October 1998]

Circumstances in which local company may carry on business

114 (1) No local company shall carry on business of any sort in Bermuda unless�

(a) it is a company which, at the relevant time, complies with Part I of the Third Schedule or is a wholly-owned subsidiary of such a company; or

(b) it is a company mentioned in Part II of the Third Sched ule; or

(c) it is licensed under section 114B and, at the relevant time is carrying on such business in accordance with the terms and conditions imposed in such licence, and not otherwise.

(2) Any local company that carries on business in contraven tion of subsection (1) shall be liable to a fine of one hundred dollars in respect of each day that it carries on business in contravention of the subsection.

(3) The Minister may by regulations amend Part I of the Third Schedule, and any such regulations shall be subject to affirmative reso lution procedure.

(4) Section 132 shall apply mutatis mutandis to any company mentioned in Part II of the Third Schedule as if it were an exempted company.

[section 114 amended by 1996:21 effective 24 July 1996]

Application for licence

114A (1) Any local company other than a company to which section 114(1)(a) or (b) applies, may apply to the Minister for a licence to carry on business in Bermuda.

(2) An application for a licence under this section shall be made to the Minister in such form and accompanied by such documents as the Minister may determine.

(3) Before an application is made, the local company shall not less than seven days prior to the date of application advertise its intention to apply for a licence under this section in an appointed newspaper.

[section 114A amended by 1992:51 effective 1 July 1992]

Granting and revocation of licence

114B (1) Subject to this section, the Minister may, in his discretion, grant a licence in respect of which application has been made under section 114A, but if the Minister is of opinion that it would not be in the public interest to grant a licence, he may refuse to grant one without giving any reason for so refusing.

(2) A licence issued under this section shall be for such dura tion and may be subject to such terms and conditions as the Minister may see fit to specify therein.

(3) The Minister shall, in deciding whether or not to grant a li cence to a local company to carry on business in Bermuda, have regard to�

(a) the economic situation in Bermuda and the due protec tion of persons already engaged in business in Bermuda;

(b) the nature and previous conduct of the company and the persons having an interest in the company whether as directors, shareholders or otherwise;

(d) the desirability of retaining in the control of Bermudians the economic resources of Bermuda.

(4) The Minister may at any time revoke a licence�

(a) for a contravention of any condition subject to which the licence is granted;

(b) if the company concerned is carrying on business in a manner detrimental to the public interest;

(d) if the company concerned goes into liquidation or is wound up or otherwise dissolved; or

(e) if the company concerned fails to comply with any direc tive or requirement issued by the Minister under this Act.

(5) Before revoking a licence under subsection (4)(e) the Minis ter shall give the company concerned notice in writing of his intention to do so specifying therein the grounds on which he proposes to revoke the licence and shall afford the company concerned an opportunity of sub mitting to him a written statement of objections to the revocation of the licence; and thereafter the Minister shall advise the company concerned of his decision in the matter.

(6) The Minister shall lodge with the Registrar a copy of every licence granted under this section and the licence shall be available for public inspection by members of the public at the office of the Registrar during normal business hours.

[section 114B amended by 1998 : 35 effective 5 October 1998]

Fees payable by local licensed company

114C (1) Every local company to which a licence is granted under this Act shall, upon the issue of such licence, pay to the Government a fee of one thousand dollars.

(2) On or before the 31st day of January of every year after the year in which a licence has been granted to a local company, that com pany shall, during the subsistence of such licence, pay to the Govern ment a fee of one thousand dollars.

(3) Any licensed local company which fails to pay the fee pro vided by this section shall be guilty of an offence and liable on conviction by a court of summary jurisdiction to a fine not exceeding one hundred dollars for each month during which such fee remains unpaid.

(4) The Minister shall publish annually in the Gazette the name of every licensed local company that has paid the fee provided by this section.

Hotel companies

115 (1) In relation to any hotel company the Minister shall exercise his powers under section 114B after consultation with the Minister re sponsible for tourism.

(2) Notwithstanding any provision of a private Act restricting the transfer of shares in any hotel company, the Minister may, without prejudice to his powers under section 114B(2) impose conditions on the grant of a licence to a hotel company restricting the transfer of shares in the company without the consent of such authority as the Minister may specify.

(3) Where a hotel company is a subsidiary of a corporation in corporated outside Bermuda the Minister may without prejudice to his powers under section 114B, revoke a licence in the event of the transfer of effective control of the corporation to persons who are not Bermudi ans.

(3a) Section 114B(5) shall apply to the revocation of a licence under subsection (3) as it applies to the revocation of a licence under section 114B(4).

(4) In this section�

"hotel" has the meaning given in section 1 of the Hotels (Licensing and Control) Act 1969 [title 17 item 2];

"hotel company" means a company whose principal business in Bermuda is the ownership or the operation of a hotel in Bermuda.

Penalty for improper exercise of voting rights

116 (1) Any person who, after a notice has been served upon him under sub-paragraph (2) of paragraph 2 of Part l of the Third Schedule, exercises any voting rights or fails to divest himself of his shares within three years, or within such further period as the Minister may allow un der the proviso to that sub-paragraph shall be liable to a fine of one thousand dollars.

(2) A court when convicting any person under subsection (1) of failing to divest himself of any shares shall, if the person convicted still holds the shares, fix a date by which he shall divest himself of the shares and if he fails so to do by such date he shall be guilty of a further offence and shall be liable to a fine of one hundred dollars for each day he has held the shares since the date the Court ordered him to divest himself of them.

(3) If any person fails to divest himself of any shares after hav ing been found guilty of a further offence under subsection (2) he shall be guilty of contempt of court and the Court may summarily deal with him for such contempt until such time as he does divest himself of the shares.

(4) It shall be a good defence to a prosecution under subsection (2) for the owner to show that the company had at the relevant time ceased to carry on business in Bermuda or that the shares were valueless and that he was, therefore, unable to divest himself of them.

Return of shareholdings

117 (1) Before any local company limited by shares, or other company having a share capital, first commences business the company shall forward to the Registrar a return of shareholdings in the company as at the date of making the return signed by two directors of the company.

(2) Every local company limited by shares, or other company having a share capital, shall, not later than the 31st March each year after the year in which the company first commenced business, forward to the Registrar a return of shareholdings in the company as at the 31st day of December of the immediately pre ceding year signed by two directors:

Provided that the Registrar may in any particular case grant an extension of time for compliance with this subsection if he is satisfied that non-compliance is not wilful or is due to circumstances beyond the control of the directors of the company.

(3) A return of shareholdings under this section �

(a) shall contain the following particulars �

(i) the number and par value of each class of shares issued by the company;

(ii) the voting and other rights attached to each class of shares;

(iii) a statement of the number and par value of each class of shares beneficially owned by Bermudi ans; and

(iv) a statement of the number and par value of each class of shares held by other persons; and

(b) may be combined with a return made for the purpose of the payment of annual tax.

(4) Any local company which fails to comply with this section shall be liable to a default fine.

(5) Any person who knowingly signs a return made for the pur poses of this section which is false in a material particular shall be liable on conviction by a court of summary jurisdiction to a fine of one thou sand dollars and on conviction on indictment to a fine of two thousand dollars.

[Section 117 amended by 1994:22 effective 13 July 1994]

Allotment and transfer of shares

118 (1) No allotment of shares in a local company shall be made by the officers of the company if such allotment will, to the knowledge or belief of them, or any of them, result in the number of shares beneficially owned by persons who are not Bermudians exceeding the amount such persons are entitled to own by virtue of the Third Schedule unless the prior written consent of the Minister is obtained.

(2) The officers of a local company shall decline to register any transfer of shares in the company if such transfer will, to the knowledge or belief of the officers, or any of them, result in the number of shares beneficially owned by persons who are not Bermudian exceeding the amount such persons are entitled to own by virtue of the Third Schedule unless the prior written consent of the Minister is obtained.

(3) No allotment of shares in a local company shall be made to any person unless the application for those shares sets out whether or not the applicant is Bermudian.

(4) No transfer of shares in a local company shall be registered unless the instrument of transfer of those shares sets out with respect to both the transferor and transferee whether or not they are Bermudian.

(5) Any officer of a local company who is knowingly a party to any allotment of shares contrary to subsection (1) or subsection (3) or who is knowingly a party to authorizing or permitting any transfer, or registration of a transfer, of shares contrary to subsection (2) or subsec tion (4), shall be liable on conviction by a court of summary jurisdiction to a fine of one thousand dollars and on conviction on indictment to a fine of two thousand dollars.

(6) Where it is stated in an application for allotment, or in an instrument of transfer, of shares in a local company that an applicant, transferor or transferee is Bermudian the officers of the company may request that person to furnish such proof of the correctness of such statement as the officers consider necessary; and, in the absence of such proof, the officers may decline to allot any shares or register the transfer.

(7) The officers of a local company may at any time enquire in writing of any person who owns a share in the company�

(a) whether or not he is Bermudian;

(b) whether or not he is the beneficial owner of the shares;

(c) whether or not he is in any way under any obligation to exercise any right attaching to that share at the instance of, or for the benefit of, another person, and, if so, the name of that other person and whether or not that other person is Bermudian; and

(d) whether he owns that share jointly or severally with an other person and, if so, the name of the other person who has such an interest and whether or not that other person is Bermudian,

and, if it is stated in any reply made to an enquiry under this subsection that any person is Bermudian, the officers may further require the per son making that statement to furnish such proof of the correctness of that statement as the directors consider necessary.

(8) Any person to whom a request is made, or to whom an en quiry is addressed, under this section shall reply in writing, within fourteen days after the receipt of the request or the enquiry and shall give the information required; and no person shall be liable for breach of any contract, trust or other obligation which is binding on him in law for supplying such information.

(9) Any person who fails to reply in accordance with subsection (7) or subsection (8) or who makes a reply or furnishes information or purported proof which is false in a material particular shall be liable on conviction by a court of summary jurisdiction to a fine of one thousand dollars and on conviction on indictment to a fine of two thousand dollars.

Minister may require information

119 (1) The Minister may at any time by notice in writing require the officers of a local company to forward to him such information as to the officers of and shareholdings (including the classes of shares and the voting and other rights attached to each class) in the local company as the Minister may specify.

(2) A notice under subsection (1) may require that the officers set out in writing within such period as may be specified in the notice the facts in relation to the officers, shareholdings and other matters re lating to the control of the company which the officers contend estab lishes that the local company is Bermudian controlled and such facts shall specify the extent to which the control of any corporate body hold ing shares in the local company is vested in Bermudians.

(3) If the officers of a local company fail to comply with the re-quirements specified in a notice issued under this section, or fail to com ply with the requirements thereof in such a manner as to establish, prima facie, that the company is Bermudian controlled, the company shall be deemed not to be Bermudian controlled until the contrary is proved.

Acquisition of land by local companies

120 (1) Without prejudice to paragraph 12 of the First Schedule, a local company may acquire and hold in its corporate name with the previous sanction in each case of the Minister, but not otherwise, any land in Bermuda, bona fide required for the purpose of the company, not ex ceeding in the whole the limit of its land holding powers specified in its memorandum.

(2) Notwithstanding subsection (1) of this section and section 7(1)(g) but subject to subsection (3) of this section, where a local company is licensed under the Trust Companies Act 1991, the company shall have the power to acquire and hold in its corporate name any land in Bermuda provided it holds such land in its capacity as trustee of any trust or settlement established by written instrument.

(3) Nothing in subsection (2) overrides any provision in Part VI of the Bermuda Immigration and Protection Act 1956 relating to the acquisition of land, or the holding of land, in trust.

[section 120 amended by 1997 : 21 effective 2 September 1997; and amended by 1998 : 35 effective 5 October 1998]

Companies to make declarations and pay annual tax

121 (1) Every local company shall within one month of filing its memorandum and thereafter not later than the 31st March of each year�

(a) send to the Registrar a declaration in writing by an offi cer of the company stating what the issued capital of the company will be when it commences business or if it is in business what the issued capital of the company was on the 1st of January of that year and, in the case of a company whose business includes the management of any unit trust scheme, stating the number of unit trust schemes managed by the company on the first day of each calendar year; and

(b) pay the appropriate fee, if applicable, and the appropriate annual tax as shown in Part I of the Fifth Schedule:

Provided that, where the filing of the memorandum is effected after the 31st August in any year, the fee payable, if applicable, and tax payable in respect of that year shall be half the fee, if applicable, and half the tax shown in the Schedule.

(2) If a company fails to send a declaration to the Registrar in compliance with subsection (1)(a) or pay the appropriate fee, if applicable, and the annual tax the company and every officer of the company shall be liable to a default fine.

(3) It shall be lawful for the Registrar, in any case where a company has not made a declaration and payment in accordance with subsection (1) and where he is satisfied that such non-payment is not due to wilful neglect or default, to accept payment of the sum due to gether with a penalty of one hundred and fifty dollars, and in any such case sub section (2) shall not apply.

(4) In addition to any penalty it may incur if a company fails to pay the appropriate fee, if applicable, and the annual tax within three months of it becoming due it shall cease to carry on business until the fee, if applicable, and the tax and any penalty it may have incurred have been paid.

(5) Any company that carries on business in contravention of subsection (4) shall be liable to a fine of one hundred dollars in respect of each day that it carries on business in contravention of that subsection.

(6) If any question arises as to the appropriate fee, if applicable, and the annual tax payable by a lo cal company the decision of the Minister as to what fee, if applicable, and tax are payable shall be final.

(7) The Minister may from time to time by order vary the fees shown in Part I of the Fifth Schedule. Any such order shall be subject to affirmative resolution procedure.

[section 121 amended by 1992:51 effective 1 July 1992; and amended by 1998 : 14 effective 1 April 1998}

Accountant General may call for auditor's certificate

122 (1) The Accountant General may by notice in writing require a company to produce the certificate of an auditor approved by him setting out the issued capital of that company on the first day of January of such year as the Accountant General may specify in the notice.

(2) If a company without lawful excuse fails to comply with subsection (1), then that company shall be deemed to be liable for the maximum annual tax payable by a company pursuant to this Act in re spect of the year to which the notice relates unless that company satis-fies the Accountant General that it is liable to a lesser sum by way of an nual tax.

Recovery of annual tax

123 Annual tax and any penalty payable pursuant to this Act may be recovered by the Accountant General in a court of summary jurisdiction as a civil debt, irrespective of the amount so payable.

Companies in liquidation

124 (1) The liability of a company to annual tax shall not be af fected by reason only of the fact that it is being wound up:

Provided that, where it is shown to the satisfaction of the Accountant General that in any year the income of a company being wound up is less than twelve hundred dollars, the company shall not be liable to annual tax in respect of that year and the Accountant General shall re fund to that company the annual tax, if any, paid in respect of that year.

(2) The Accountant General may require the production of such audited or other accounts and such other documents as may be reason able to determine whether the exemption provided in this section shall have effect.

(3) The Accountant General may enter into such arrangement with the liquidator or Official Receiver, as the case may be, for the sus pension of the payment of annual tax during the winding up of a com pany pending the determination of whether the exception provided by this section shall have effect and in that event the failure by the com pany to pay annual tax during the period of its winding up shall not, if the company complies with the provisions of any such arrangement at tract any penalty.

Certain companies exempt from tax

125 (1) A company shall be exempt from the payment of annual tax in any year if it satisfies the Accountant General that it is �

(a) a company limited by guarantee and is not a mutual company; or

(b) that it is operated for a charitable purpose; or

(c) that the company does not pursue any commercial en terprise for profit and that the income during each of the past years since its incorporation has not exceeded five hundred dollars.

(2) A company shall not be deemed to be operated for a chari table purpose for the purposes of subsection (1) if �

(i) it has power to engage or engages in any com mercial enterprise otherwise than in furtherance of its charitable objects;

(ii) any dividend has at any time been paid on any of its share capital;

(iii) any interest has been paid on any capital em ployed other than capital employed in further ance of its charitable purpose; or

(iv) any person is employed or remunerated for ser vices otherwise than for services in furtherance of its charitable or reasonable administrative purposes.

Interpretation of sections 121 to 125

126 For the purposes of sections 121 to 125 unless the context oth erwise requires �

"issued capital" means in relation to �

(a) any company limited by shares, or other company having a share capital, the aggregate of the nominal value of the shares actually issued by the company whether or not the shares so issued are fully paid up; and

(b) in the case of a mutual company the nominal value of the reserve fund;

"year" means a calendar year.

[section 126 amended by 1994:22 effective 13 July 1994]

PART X

EXEMPTED COMPANIES

Meaning of exempted company

127 For the purposes of this Act, an exempted company means a company which does not comply with the requirements of this Act in re spect of a local company and which �

(i) was recognised as an exempted company on 30 June 1983;

(ii) is a company registered under this Act and stated in its memorandum to be an exempted company;

(iii) is a company incorporated by virtue of a private Act enacted after 30 June 1983 and is declared by its incorporating Act to be an exempted com pany for the purposes of this Act.

[section 127 amended by 1998 : 35 effective 5 October 1998]

Exempted company to be an exempted undertaking

128 (1) An exempted company shall be an exempted undertaking for the purposes of the Exempted Undertakings Tax Protection Act 1966 [title 17 item 12].

(2) An exempted company shall be subject to the provisions of this Act and to the provisions of law save where otherwise expressly pro vided in this or any other Act.

Restriction on acquisition of property

129 (1) Unless otherwise authorized by its incorporating Act or any other Act or, with the consent of the Minister, by its memorandum an exempted company shall not have power �

(a) to acquire and hold land in Bermuda except�

(i) land required for its business by way of lease or tenancy agreement for a term not exceeding fifty years; or

(ii) with the consent of the Minister granted in his discretion, land by way of lease or tenancy agreement for a term not exceeding twenty-one years in order to provide accommodation or recreational facilities for its officers and employees;

(b) except as provided by section 144 to take any mortgage of land in Bermuda;

(c) to acquire any bonds, or debentures secured on any land in Bermuda except bonds or debentures issued by the Government or a public authority;

(d) [deleted by 1996:21]

(e) to carry on business of any kind or type whatsoever in Bermuda either alone or in partnership or otherwise ex cept �

(i) carrying on business with persons outside Bermuda;

(ii) doing business in Bermuda with an exempted undertaking in furtherance only of the business of the exempted undertaking carried on exterior to Bermuda;

(iii) buying or selling or otherwise dealing in shares, bonds, debenture stock obligations, mortgages or other securities or investments issued or created by an ex empted undertaking, or a local company, or any partnership which is not an exempted undertaking;

(iv) transacting banking business in Bermuda with and through a bank licensed under the Banks Act 1969 [title 17 item 20];

(v) effecting or concluding contracts in Bermuda, and exercising in Bermuda all other powers, so far as may be necessary for the carrying on of its business with persons outside Bermuda;

(vi) as manager or agent for, or consultant or adviser to, the business of an exempted undertaking whether or not such business is the sole busi ness of the exempted company provided that the company has an object to enable it to carry on the kind or type of business as specified in this subparagraph;

(vii) carrying on the business of re-insuring risks undertaken by any company incorporated in Bermuda and permitted to engage in insurance and re-insurance business; or

(viii) in accordance with subsection (7)�

(aa) marketing of shares or dealing with the holders of shares of an exempted company where the exempted company is a mutual fund;

(bb) marketing interests in or dealing with holders of interests in a limited partnership in respect of which the exempted company is a general partner;

(cc) marketing units in or dealing with holders of units in a unit trust scheme in respect of which the exempted company is a manager.

(1A) Nothing in subsection (1)(e) shall prohibit an exempted company from effecting or concluding contracts or arrangements with persons in Bermuda for the supply of goods and services to the company necessary for the purpose of enabling the company to carry on its busi ness with persons outside Bermuda.

(2) Notwithstanding anything in any Act under authority of which an exempted company is incorporated such a company shall not engage or carry on the business of conveying or arranging for the conveyance of passengers, goods or mails by ships whether such conveyance is within the waters of Bermuda except �

(i) where the ship is owned, operated or chartered by or on behalf of an exempted company;

(ii) where the conveyance is of a passenger em ployed by the exempted company or of goods which are or are to become the property of the exempted company; or

(iii) when the business is negotiated by a local com pany.

(3) Notwithstanding anything in this Act an exempted company on 1 July 1983 having in its memorandum among its objects an object empowering the company to reinsure all or any risks undertaken by the company shall be deemed in addition to have and always to have had the power to accept insurance and reinsurance of any risks of another ex empted company similarly empowered.

(4) Notwithstanding anything in this Act, any object in the memorandum of an exempted company empowering the company to en gage in retail trade in Bermuda, including retail trade with another ex empted company or an exempted undertaking or any other person, shall be void to the extent that it purports so to empower that exempted com pany.

(5) If an exempted company does anything in contravention of subsection (1), then the land, merchandise, stocks, shares bonds, debentures, securities, property or other interests so acquired or dis posed of, taken or held, shall be liable to escheat under the Escheats Act 1871 [title 8 item 103] or under any other Act relating to escheat.

(6) In any proceedings for escheat under subsection (5), the question whether any land, merchandise, stocks, shares bonds, deben tures, securities, property or other interests have been taken, acquired, disposed of or held in contravention of subsection (1) shall be decided as a question of fact.

(7) For the purposes of subsection (1)(e)(viii), an exempted company shall be deemed to be marketing, or dealing with holders of shares, interests or units if it undertakes any of the following activities in Bermuda, that it to say,�

(i) the offering of such shares, interests or units for subscription or purchase by way of a prospectus or otherwise;

(ii) the acceptance of subscriptions for, or of offers to purchase, or of applications to redeem, such shares, interests or units;

(iii) the distribution of shareholder, limited partnership or unitholder information to holders of such shares, interests or units;

(iv) the making known, by way of advertisement or otherwise, that it may be contacted at a particular address in Bermuda for the purpose of communicating with the holders of such shares, interests or units or the distribution and collection of shareholder, limited partnership or unitholder information;

(v) any other dealing with the holders of such shares, interests or units with respect to any such shares, interests or units held by them.

{section 129 amended by 1992:51 effective 1 July 1992, by 1994:22 effective 13 July 1994, by 1996:21 effective 24 July 1996, by 1997 : 21 effective 2 September 1997, by 1998 : 8 effective 23 March 1998; and by 1998 : 35 effective 5 October 1998]

Circumstances in which exempted company may carry on business in Bermuda

129A (1) Except as provided in subsection (4), no exempted company shall carry on business in Bermuda unless the Minister, on application made by the company in such form as the Minister may determine, grants a licence to the company empowering it so to do or to carry on in Bermuda a business or an activity prohibited by section 129(1) or (2):

Provided that such a licence shall not authorize an exempted company to engage in retail trade in Bermuda with any other person.

(1A) The company shall not less than seven days prior to an application for a licence under subsection (1) advertise its intention to apply for a licence under this section in an appointed newspaper.

(2) A licence issued under subsection (1) shall be for such du ration and may be subject to such terms and conditions as the Minister may see fit to specify therein.

(3) Section 114B(3), (4) and (5) and section 114C shall apply mutatis mu tandis to an exempted company licensed under this section.

(4) An exempted company shall not require a licence to carry on in Bermuda�

(a) a business or activity specified as an exception in section 129(1)(a) to (e) (inclusive); or

(b) trust business as defined in the Trust Companies Act 1991[title 17 item 6] if�

(i) the exempted company holds under the Trust Companies Act 1991 a licence which is in force; and

(ii) the settlor of the trust being managed or administered in Bermuda by the exempted company is not ordinarily resident in Bermuda at the date of creation of the settlement.

(4A) The Minister shall lodge with the Registrar a copy of every licence granted under this section and the licence shall be available for inspection by members of the public at the office of the Registrar during normal business hours.

(5) An exempted company which contravenes the provisions of subsection (1) shall be guilty of an offence and liable on summary conviction to a fine not exceeding $500 for each day the offence continues or on conviction on indictment to a fine not exceeding $1,500 for each day the offence continues.

[section 129A amended by 1992:51 effective 1 July 1992, by 1993:37 effective 13 July 1993; and by 1998 : 35 effective 5 October 1998]

Requirements for officers or representatives in Bermuda

130 (1) Subject to subsection (2), every exempted company shall�

(a) have a minimum of two directors, other than alternate directors, ordinarily resident in Bermuda; or

(b) have a secretary who is ordinarily resident in Bermuda and a director, other than an alternate director, who is ordinarily resident in Bermuda; or

(d) in the case of a company the shares of which are listed on an appointed stock exchange, have a resident representative.

(2) The requirements of subsections 1(b) and 1(c) shall not be satisfied if the secretary of a company is also appointed as the director or the resident representative referred to in such subsections.

(3) For the purposes of this section, the secretary shall be an individual ordinarily resident in Bermuda but an exempted company may appoint, in addition to a secretary, assistant or deputy secretaries, whether individuals or corporations and whether or not resident in Bermuda.

(4) A resident representative of a company, other than an exempted company, the shares of which are listed on an appointed stock exchange, or any wholly-owned subsidiary of such company, shall be an individual ordinarily resident in Bermuda but any exempted company may appoint, in addition, assistant or deputy resident representatives, whether individuals or corporations and whether or not resident in Bermuda.

(5) A resident representative shall:

(a) be entitled to attend, to be heard at, and to receive minutes of all proceedings of, all meetings of the directors and members of the company or of any committee of such directors;

(b) upon giving notice to the company of an address for the purposes of receipt of notices, be entitled to receive notice of any meeting of the directors or members, or any committee of such directors; but accidental omission to give such notice shall not invalidate any action taken at any such meetings;

(6) It shall be the duty of the resident representative in any circumstances where the resident representative becomes aware that�

(a) the company has committed a breach of any provision of this Act or any regulation made hereunder which will have a material effect on the affairs of the company; or

(b) any issue or transfer of shares of the company has been effected in contravention of any other statute regulating the issue or transfer of shares,

to make a written report to the Registrar within thirty days of becoming so aware and the report shall contain all relevant particulars unless before such report is made the company has remedied such breach or contravention.

(7) Where the shares of an exempted company are listed on an appointed stock exchange and that exempted company complies with the requirement specified in subsection (1)(d), the resident representative shall�

(a) within thirty days of becoming aware that the shares of the company have ceased to be listed on an appointed stock exchange, make a written report to the Registrar setting out all particulars in respect of such cessation;

(b) be entitled to file all documents, and make all applications required or permitted by this Act;

(c) maintain at his or its office in Bermuda originals or copies of minutes of all proceedings of meetings of directors and members of the company, all financial statements required to be prepared by the company under this Act together with the auditor's report thereon, and all records of account required by section 83 to be kept in Bermuda.

(8) So long as the shares of an exempted company are listed on an appointed stock exchange, the provisions of subsections (1)(d), (7)(b) and (7)(c) shall apply to a wholly owned subsidiary of such company which, in accordance with subsection (1)(d), has a resident representative.

(9) For the purposes of section 92A only, "officer" shall include a resident representative.

(10) The duty of the resident representative under subsections (6) and (7) shall be owed to the Registrar and no resident representative shall be liable to the company or any other person for any report made by the resident representative pursuant to subsections (6) or (7) or any failure or purported failure to make any report under those subsections.

(11) The Minister may make regulations providing for the qualifications of a secretary for the purposes of this section; and any such regulations shall be subject to the affirmative resolution procedure.

(12) Wilful failure by the resident representative to comply with any of the provisions of this section shall be an offence and shall render the resident representative or the company liable on conviction to a fine not exceeding five thousand dollars

[section 130 substituted by 1996:21 effective 24 July 1996]

Annual fees

131 (1) Subject to subsections (2A) and (2B), every exempted company shall within one month of filing its memorandum with the Registrar and thereafter during the month of January each year �

(a) send to the Registrar a declaration in writing signed on behalf of the company �

(i) stating what is or is intended to be the principal business of the company and, in the case of a company whose business is to include the management of any unit trust scheme, stating the number of unit trust schemes intended to be managed by the company; and

(ii) further stating �

(aa) where the company is one limited by shares, or other company having a share capital �

1 the amount of the company's authorized share capital; and

2 the amount of the company's share premium account; and

3 the amount of the company's assessable capital, that is to say, the total of the amounts at 1 and 2 above; and

4 the amount of the company's assessable capital expressed in Bermuda area currency, where the amount of the company's assessable capital is not already so expressed; and

5 the exchange rate used to convert into Bermuda area currency the company's assessable capital, where that capital is denominated in a currency other than Bermuda area currency; and

6 the appropriate fee payable in respect of the company according to Part II of the Fifth Schedule; and

(bb) where the company is a mutual company �

1 the amount of the company's assessable capital, that is to say, the amount of the company's reserve fund; and

2 the amount of the company's assessable capital expressed in Bermuda area currency, where that amount is not already so expressed; and

3 the exchange rate used to convert into Bermuda area currency the company's assessable capital, where that capital is denominated in a currency other than Bermuda area currency; and

4 the appropriate fee payable in respect of the company according to Part II of the Fifth Schedule.

For the purposes of this paragraph �

(iii) the information called for thereby shall�

(aa) where it is to be given upon the incorporation of the company, be given as at the date of the filing of the company's memorandum;

(bb) where it is to be given in January in any year in relation to a company which was incorporated after 31st August of the next preceding year, be given as at the date of the filing of the company's memorandum;

(cc) in any other case, be given as at 31st August of the year next preceding the year in which the information is given, except that the date to be taken for converting a company's assessable capital into Bermuda area currency shall�

A in the case of a company limited by shares, or other company having a share capital, be the latest of the following dates, that is to say, the date of the filing of the company's memorandum and the date on which the company's authorized share capital was last lawfully altered; and

B in the case of a mutual company, be the later of the following dates, that is to say, the date of the filing of the company's memorandum and the date on which the company's reserve fund was last lawfully altered;

(iv) the exchange rate for converting into Bermuda area currency on any day a currency that is not Bermuda area currency shall be the middle market rate for that currency on that day as determined, in accordance with the provisions of section 15(4) of the Stamp Duties Act 1976 [title 14 item 24] mutatis mutandis, by the Registrar, whose determination shall in any case be final and conclusive;

(v) currency of the United States of America shall be converted into Bermuda area currency at par;

(vi) where a calculation produces a fraction of a dollar, the result shall be rounded up to the next whole dollar; and

(vii) "authorized capital", in relation to a company, means the amount stated in the company's memorandum as the company's authorized capital, as lawfully altered from time to time; and

(b) pay the appropriate fee as shown in Part II of the Fifth Schedule:

Provided that, where the memorandum is filed after the 31st August in any year, the fee payable in respect of that year shall be half of that fee.

(2) If a company fails to comply with subsection (1), the company and every officer of the company shall be liable to a default fine.

(2A) A company liable to pay the fees provided for in paragraph 1(A)(b) of Part II of the Fifth Schedule must pay those fees in addition to any other fee that the company is liable to pay under subsection (1).

(2B) A company liable to pay a fee pursuant to paragraph 1(A)(c) of Part II of the Fifth Schedule is not liable to pay any other fee prescribed by subsection (1).

(3) It shall be lawful for the Registrar, in any case where a company has failed to comply with subsection (1) and he is satisfied that such non-compliance is not the result of wilful neglect or default, to accept late compliance and payment of the sum due to gether with a penalty of three hundred dollars and in such case sub section (2) shall not apply.

(4) In addition to any penalty it may incur if a company fails to pay the appropriate fee within three months of it becoming due it shall cease to carry on business until the fee and any penalty it may have in curred have been paid.

(6) If any question arises as to the appropriate fee payable by an exempted company the decision of the Minister as to what fee is payable shall be final,

(7) The Minister may from time to time by order vary all or any of the fees shown in Part II of the Fifth Schedule. Any such order shall be subject to affirmative resolution procedure.

[section 131 amended by 1990:57 effective 1 September 1990, by 1994:22 effective 13 July 1994, by 1998 : 14 effective 1 April 1998; and by 1998 : 35 effective 5 October 1998]

Investigation of affairs of exempted company

132 (1) The Minister may at any time appoint one or more inspec tors to investigate the affairs of an exempted company and to report on them in such manner as he may direct.

(2) All expenses of and incidental to the investigation shall be defrayed by the exempted company unless the Minister otherwise di rects.

(3) Every officer, agent or employee of the company shall pro duce to the inspector such books or documents as the inspector may re quire for the purpose of his investigation.

(4) Any officer, agent or employee of the exempted company who, in the course of an investigation of the affairs of the company�

(a) refuses to produce any book or document required by the inspector to be produced; or

(b) refuses to answer any question relating to the affairs of the company,

shall be liable to a fine of one hundred dollars.

(5) The inspector may take evidence upon oath in investigating the affairs of the exempted company, and for that purpose may admin ister an oath or affirmation.

(6) Any investigation under this section shall be held in private unless the company requests that it be held in public.

(7) The inspector may from time to time report to the Minister and shall on the completion of his investigation report to him and shall send copies of such reports to the

Bermuda Consolidated Legislation

Companies Act 1981