Bermuda Incorporations
The principal statute governing the formation and operation of Bermuda companies is The Companies Act 1981 ("the Act") as from time to time amended.
There are 4 types of Company that can be incorporated in Bermuda, each having different constitutional characteristics.
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A Company Limited by Shares
A company incorporated with the liability of the members of the company limited to the amount (if any) unpaid on the shares owned by them as specified in the companies Memorandum. This is the most common type of company incorporated under Bermuda law.
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A Company Incorporated with Unlimited Liability
The liability of the company's members will be unlimited. While the company has all the usual characteristics of a company (e.g. board of directors etc.) it has the characteristics of a partnership, (i.e. unlimited liability)
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A Company Limited by Guarantee
A company incorporated with liability that is limited by guarantee of the members, as to such amount as each individual member undertakes to contribute to the assets of the company in the event of the company being wound up as specified in the Memorandum of the Company. This type of company is commonly used for charitable or "social" purposes and do not pay dividends.
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A company limited by guarantee may only be formed if:-
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a. |
its purpose is charitable or is otherwise social or useful, its profits or income are to be used in promoting its purposes and no dividends will be paid; or
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b. |
it is a mutual company, that is, a company deemed to engage in or carry on insurance or reinsurance business on the mutual principle where the members who are exposed to some contingency associate themselves together by contributing by way of premiums.
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This type of Company will automatically dissolve on the expiration of a period, or upon the occurrence of a specific event, as specified in it's Memorandum of Association. |
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