Companies Amendment Act 1996

Link to law: http://www.bermudalaws.bm/Laws/Annual%20Laws/1996/Acts/Companies%20Amendment%20Act%201996.pdf

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Companies Amendment Act 1996
The Laws of Bermuda
Annual Volume of Public Acts 1996 : 21

1

101

BERMUDA
1996 : 21

COMPANIES AMENDMENT ACT 1996

[Date of Assent 24 July 1996]

[Operative Date 24 July 1996]

WHEREAS it is expedient to amend the Companies Act 1981:

Be it enacted by The Queen's Most Excellent Majesty, by and
with the advice and consent of the Senate and the House of Assembly of
Bermuda, and by the authority of the same, as follows:

Citation
1 This Act which amends the Companies Act 1981 (hereinafter
referred to as "the principal Act") may be cited as the Companies
Amendment Act 1996.

Amends section 39A of principal Act
2 Section 39A of the principal Act is amended by inserting next
after subsection (2) the following—

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

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(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.".

Amends section 81 of principal Act
3 Section 81 of the principal Act is amended by deleting
subsection (2) and substituting the following—

"(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.".

Amends section 82 of principal Act
4 Section 82 of the principal Act is amended in subsection (1) by
deleting the words "shall be kept by the secretary at the registered office
of the company and".

Amends section 90 of principal Act
5 Section 90 of the principal Act is amended by inserting next after
subsection (3) the following—

"(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.".

Amends section 92A of principal Act
6 Section 92A of the principal Act is amended by deleting
subsection (6) and substituting the following—

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"(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.".

Amends section 98 of principal Act
7 Section 98(2) of the principal Act is amended in subsection (2) by
deleting the words "wilful negligence, wilful default,".

Inserts new section 98B in principal Act
8 The principal Act is amended by inserting next after section 98A
the following new section—

"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;

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(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.".

Amends section 104A of principal Act
9 Section 104A of the principal Act is amended—

(a) by deleting the heading to the section and substituting
the following—

"Survival of exempted company on amalgamation of
one or more exempted companies and one or more
foreign corporations"; and

(b) in subsection (1)—

(i) by deleting the words "An exempted company
and a body" and substituting the words "One or
more exempted companies and one or more
bodies";

(ii) by inserting next after the word "section" the
words "and in sections 104B and 104E"; and

(iii) by inserting immediately before the word
"hereinafter" the words "each such body".

Inserts new sections 104B-104G in principal Act
10 The principal Act is amended by inserting next after section
104A the following new sections—

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"Survival of foreign corporation on amalgamation of one or
more exempted companies and one or more foreign corpora-
tions
104B (1) One or more exempted companies and one or more
foreign corporations may apply to the Minister for consent to
amalgamate and continue as a foreign corporation (in this
section and in sections 104C and 104D referred to as "the
surviving corporation") to which the provisions of the laws of the
jurisdiction of incorporation of the surviving corporation shall
apply.

(2) An application for consent under subsection (1)
shall be in such form, and shall be accompanied by an
application fee and supported by such documents as the
Minister may determine and such documents shall include—

(a)(i) a certified copy of a resolution of the
shareholders or each class of shareholders
of each amalgamating company being an
exempted company (in this section and in
sections 104C and 104D referred to as an
"amalgamating exempted company")
passed in general meeting in accordance
with subsection 106(4A); provided that in
the case of a company having only one
shareholder, one shareholder present in
person or by proxy constitutes the
necessary quorum; or

(ii) if so authorised by the bye-laws, a
certified copy of a resolution of the Board
of Directors of each amalgamating
exempted company approving the
amalgamation and naming the country or
jurisdiction outside Bermuda of the
surviving corporation;

(b) a copy of each of the advertisements
required by section 104B(3);

(c) a statutory declaration signed by an officer
of each amalgamating exempted company
declaring that there are reasonable
grounds for believing that—

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(i) the amalgamating exempted
company is, and the surviving
corporation will be, able to pay its
liabilities as they become due;

(ii) the realizable value of the
surviving corporation's assets will
not be less than the aggregate of
its liabilities and issued capital of
all classes; and

(iii) either no creditor will be
prejudiced by the amalgamation
or adequate notice has been given
in accordance with section 108(4)
to all known creditors of such
company and no creditor objects
to the amalgamation otherwise
than on grounds that are frivolous
or vexatious;

(d) an irrevocable deed poll, executed by each
amalgamating exempted company and its
directors, pursuant to which—

(i) the amalgamating exempted com-
pany and each of its directors may
be served with legal process in
Bermuda in any proceedings
arising out of actions or omissions
of any amalgamating exempted
company occurring prior to the
amalgamation, and provision is
made for the appointment of a
person within Bermuda as agent
for the amalgamating exempted
company for the service of process
for a period of not less than three
years from the date of
amalgamation and for a signed
acceptance of the appointment; or

(ii) the amalgamating exempted
company and each of its directors

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may be served with legal process at a
specified address in the United
Kingdom, the United States of
America or any other country or
jurisdiction acceptable to the
Minister, and whereby the
amalgamating exempted company
and such directors submit to the
non-exclusive jurisdiction of the
courts of that country or
jurisdiction; and

(e) documentary proof, satisfactory to the
Minister, that each amalgamating
company being a foreign corporation (in
this section referred to as an
"amalgamating foreign corporation") has
obtained all necessary authorization
required under the laws of the country or
jurisdiction in which it was incorporated
to enable it to make the application.

(3) Not more than three months prior to an application
for the consent of the Minister under subsection (1)—

(a) an amalgamating exempted company shall
advertise in an appointed newspaper; and

(b) an amalgamating foreign corporation shall
advertise in a national newspaper in the country
or jurisdiction of incorporation,

its intention to amalgamate and continue as a company in the
named country or jurisdiction of incorporation of the
amalgamating foreign corporation.

(4) The provisions of sections 105 to 107 shall apply,
mutatis mutandis to an amalgamation under this section in the
same way as they apply to an amalgamation under section 104,
except that the provisions of section 106 shall apply only to an
amalgamating exempted company.

(5) The consent of the Minister shall be in such form
as the Minister may determine and shall be for such duration,
and may be subject to such terms and conditions, as the
Minister may specify therein.

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(6) Any documents required for the purposes of
subsection (2), other than those specified in paragraphs (a) to (e)
inclusive of that subsection, shall be treated as confidential by
the Minister or any public officer having access to them.

Documents to be filed
104C (1) Subject to obtaining the consent of the Minister
under section 104B(1), an amalgamating exempted company
shall within thirty days after the date of issue thereof file with
the Registrar a copy of the certificate of amalgamation issued by
the appropriate authority of the foreign country or jurisdiction
where the surviving corporation is incorporated, or, if no such
certificate of amalgamation is issued, such evidence of the
amalgamation as the Registrar considers acceptable and such
certificate of amalgamation or such evidence, as the case may
be, shall contain or have attached thereto the following
information—

(a) a copy of the irrevocable deed poll required by
section 104B(2)(d);

(b) the name of the country or jurisdiction of
incorporation of the surviving corporation; and

(c) the address of the registered office or the
principal business address of the surviving
corporation in the country or jurisdiction
mentioned in paragraph (b).

(2) The Registrar shall file the certificate of
amalgamation issued by the appropriate authority of the foreign
country or jurisdiction of incorporation of the surviving
corporation, or such documentary evidence of the amalgamation
as the Registrar considers acceptable, and such certificate shall
be a document open to public inspection.

(3) The effective date of the amalgamation is the date
shown in the certificate of amalgamation or other documentary
evidence referred to in section 104C(2) or as otherwise provided
by the laws of the country or jurisdiction of the surviving
corporation.

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Restrictions on company to be amalgamated
104D An exempted company shall not be amalgamated and
continued as a surviving corporation under the laws of any other
country or jurisdiction unless—

(a) the country or jurisdiction of incorporation of
the surviving corporation is approved by the
Minister for the purposes of sections 104B to
104G;

(b) the laws of the country or jurisdiction of the
surviving corporation provide in effect that when
an amalgamating exempted company is
amalgamated and continued as a surviving
corporation in that country or jurisdiction—

(i) the property of the amal-
gamating exempted company is
the property of the surviving
corporation;

(ii) the surviving corporation
continues to be liable for the
obligations of the amalgamating
exempted company;

(iii) any existing cause of action,
claim or liability in respect of
the amalgamating exempted
company is unaffected; and

(iv) any civil or administrative
action or proceedings pending
by or against the amalgamating
exempted company may be
continued by or against the
surviving corporation; and

(c) the Minister is satisfied—

(i) that there is no existing liability
to prosecution in Bermuda in
respect of an amalgamating
exempted company;

(ii) there is no criminal action or
proceeding pending in Bermuda

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against an amalgamating
exempted company; and

(iii) any conviction, or any ruling,
order or judgment against an
amalgamating exempted
company in Bermuda has been
enforced against such company.

Effect of amalgamation of company under section 104B
104E The effect of an amalgamation under section 104B is the
same as in the case of an amalgamation under section 104A,
except in so far as the laws of the country or jurisdiction of the
surviving corporation otherwise provide.

Minister's refusal to grant consent
104F Where the Minister refuses to grant his consent under
section 104B(1), he shall not be bound to assign any reason
therefor, and his decision shall not be subject to appeal or review
in any court.

Regulations
104G The Minister may make Regulations for carrying out the
purposes of sections 104B to 104F.".

Amends section 107 of principal Act
11 Section 107 of the principal Act is amended by deleting
subsections (4) and (5).

Amends section 113 of principal Act
12 Section 113 of the principal Act is amended in subsection (1)(e)
by inserting next after the words "local company" where they first appear
the words "where such subsidiary was incorporated on or prior to 31
July 1996".

Amends section 114 of the principal Act
13 Section 114 of the principal Act is amended in subsection (1)(a)
by inserting next after the word "Schedule" the words "or is a wholly-
owned subsidiary of such a company".

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Amends section 129 of principal Act
14 Section 129 of the principal Act is amended in subsection (1)—

(a) by deleting paragraph (d); and

(b) in paragraph (e)(iii) by inserting next after the words
"exempted undertaking" the words ", or a local company,
or any partnership which is not an exempted
undertaking".

Repeals and replaces section 130 of principal Act
15 Section 130 of the principal Act is repealed and replaced by the
following—

"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

(c) have a secretary who is ordinarily resident in
Bermuda and a resident representative; 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.

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(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;

(c) act as agent for the service of process in
Bermuda.

(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.

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(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

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shall render the resident representative or the company liable on
conviction to a fine not exceeding five thousand dollars.".

Amends section 133 of principal Act
16 Section 133 of the principal Act is amended in subsection (4)—

(a) by deleting the full stop at the end of paragraph (b) and
substituting the words "; or"; and

(b) by inserting the following as paragraph (c)—

"(c)the company is buying or selling or otherwise
dealing in shares, bonds, debenture stock
obligations, mortgages or other securities issued
or created by an exempted undertaking, or a
local company, or any partnership which is not
an exempted undertaking.".

Amends section 143 of principal Act
17 Section 143 of the principal Act is amended—

(a) by deleting paragraph (d); and

(b) in paragraph (e)(iii) by inserting next after the words
"exempted undertaking" the words ", or a local company,
or any partnership which is not an exempted
undertaking".

Repeals and replaces sections 201 and 201A of principal Act
18 Sections 201 and 201A of the principal Act are repealed and
replaced by the following—

"Circumstances in which a company may be wound up
voluntarily
201 A company shall be wound up voluntarily—

(a) when the company resolves in general meeting
that the company be wound up voluntarily; or

(b) pursuant to section 201A.

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Appointment of liquidator and dissolution of company of
limited duration
201A (1) A company shall be wound up voluntarily upon the
expiration of the period fixed for the duration of the company by
its incorporating Act or its memorandum or upon the occurrence
of the event on the occurrence of which its incorporating Act or
its memorandum provides that the company is to be dissolved
and thereafter the company shall be dissolved in accordance
with this Part.

(2) Where a company is being wound up pursuant to
subsection (1)—

(a) references in this Part to the resolution
for voluntary winding up shall be
deemed to be references to the
expiration of the period, or the
occurrence of the event, referred to in
subsection (1);

(b) section 216(1) shall be read as requiring
the meeting of the creditors of the
company to be summoned within thirty
days of the expiration of the period, or
the occurrence of the event, referred to
in subsection (1);

(c) sections 208(1), 216(5) and 230 shall
not apply to the company.

(3) Subject to section 227, where a company is being
wound up pursuant to subsection (1) by way of members'
voluntary winding up, within ninety days after the expiration of
the period, or the occurrence of the event, referred to in that
subsection the members of the company shall appoint one or
more liquidators for the purpose of winding up the affairs, and
distributing the assets, of the company, and may fix their
remuneration, and in the absence of such an appointment
within that time period, the Official Receiver shall be the
liquidator.

(4) Where a company is being wound up pursuant to
subsection (1) by way of a creditor's voluntary winding up and
no liquidator has been appointed within ninety days after the

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expiration of the period, or the occurrence of the event, referred
to in subsection (1), the Official Receiver shall be the liquidator.".

Amends section 202 of principal Act
19 Section 202 of the principal Act is amended in subsection (1) by
deleting the words "pursuant to section 201" and substituting the word
"voluntarily".

Amends section 204 of principal Act
20 Section 204 of the principal Act is amended in the proviso to that
section by deleting the words "in the case of a voluntary winding up
under section 201(b)".

Amends section 206 of principal Act
21 Section 206 of the principal Act is amended in subsection (1) by
deleting the words "pursuant to section 201(b)".

Amends section 272A of principal Act
22 Section 272A of the principal Act is amended—

(a) in subsection (1)—

(i) by deleting the words" only with effect from and
after the coming into operation of Regulations
made under this section"; and

(ii) by inserting next after the word "instrument" the
words "by an appointed agent or in accordance
with Regulations made under this section"; and

(b) in subsection (4)—

(i) by inserting the following as paragraph (a)—

"(a)"appointed agent" means a person
appointed by the Minister for the
purposes of this section;"; and

(ii) by re-numbering paragraphs (a), (b) and (c) as
paragraphs (b), (c) and (d) respectively; and

(c) by inserting the following as subsection (11)—

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"(11) The Minister shall cause the appointment of an
appointed agent to be published in an appointed
newspaper.".

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