Companies Amendment Act 2003
COMPANIES AMENDMENT ACT 2003

1

BERMUDA
2003 : 1

COMPANIES AMENDMENT ACT 2003

[Date of Assent: 12 February 2003]

[Operative Date: 14 February 2003]

ARRANGEMENT OF SECTIONS

1 Short title

2 Amendment of section 2

3 Amendment of section 4A

4 Amendment of section 25

5 Amendment of section 26

6 Amendment of section 40

7 Amendment of section 42

8 Amendment of section 42A

9 Amendment of section 65

10 Amendment of section 84
11 Amendment of section 87

12 Insertion of sections 87A and 87B
13 Amendment of section 129
14 Amendment of section 129A

15 Amendment of section 161
16 Insertion of Part X1VB
17 Amendment of section 273

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18 Amendment of Second Schedule

19 Substitution of Ninth Schedule
20 Savings

21 Transitional provisions
22 Commencement

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:

Short title
1 This Act may be cited as the Companies Amendment Act 2003.

Amendment of section 2
2 Section 2 of the Companies Act 1981 (in this Act referred to as
“the principal Act”) is amended by inserting in its proper alphabetical
position, the following word and its definition—

““competent regulatory authority” means any authority
appointed by the Minister by notice in an appointed
newspaper;”.

Amendment of section 4A
3 Section 4A of the principal Act is amended

(a) by deleting subsection (1) and substituting the following
subsection

"(1) No company shall carry on any restricted
business activity set out in the Ninth Schedule without
the consent of the Minister.";

(b) by deleting subsections (5) and (6); and

(c) by inserting immediately after subsection (8), the
following new subsections

"(9) Where a company carries on any restricted 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.

(10) If a company makes default in obtaining the
Minister's consent as required by subsection (1), the
company and every officer of the company who is in

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default shall be liable to a fine of one hundred dollars for
every day during which the default continues.".

Amendment of section 25
4 Section 25 of the principal Act is amended in subsection (1) by
deleting the expression “competent regulatory authority” and its
definition.

Amendment of section 26
5 Section 26 of the principal Act is amended by deleting
subsections (1) and (1A), and substituting the following subsections

"(1) Subject to subsection (1A) and to any other enactment no
company shall offer shares to the public unless prior to such
offer it publishes in writing a prospectus, and prior to or as soon
as reasonably practicable after publication of such a prospectus,
the company shall file with the Registrar, a copy signed by or on
behalf of all of the directors or provisional directors of the
company.

(1A) It is not necessary to publish and file a prospectus under
subsection (1), at any time or in any circumstances, where—

(a) the shares are listed on an appointed stock exchange
and the rules of the appointed stock exchange do not
require the company to publish and file a prospectus at
such time or in such circumstances; or

(b) the company is subject to the rules or regulations of a
competent regulatory authority and such rules or
regulations do not require the company to publish and
file a prospectus at such time or in such circumstances,
except where exemption from publication and filing of a
prospectus is given by reason of the offer being made
only to persons who are resident outside the jurisdiction
of the authority.".

Amendment of section 40
6 Section 40 of the principal Act is amended by deleting
subsection (2A).

Amendment of section 42
7 Section 42 of the principal Act is amended by deleting
subsection (2) and substituting the following subsection

"(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 or determined in accordance with the

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bye-laws of the company; however, no redemption of preference
shares may be effected if, on the date on which the redemption is
to be effected, there are reasonable grounds for believing that the
company is, or after the redemption would be, unable to pay its
liabilities as they become due.".

Amendment of section 42A
8 Section 42A of the principal Act is amended by deleting
subsection (2) and substituting the following subsection—

"(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, except that the terms and manner of
the purchase need not be provided by, or determined in
accordance with, the bye-laws as provided in section 42 (2).".

Amendment of section 65
9 Section 65 of the principal Act is amended—

(a) by deleting subsection (1) and substituting the following
subsection—

"(1) Every company shall keep a register of its
members and enter therein in respect of every member
becoming a member after the appointed day 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 each member,
distinguishing each share by its number so long as
the share has a number and, in respect of any
shares that are not fully paid, specifying the amount
paid or agreed to be considered as paid on such
shares; and

(b) in respect of any company that does not keep a
branch register pursuant to subsection (3), the date
at which each person was entered in the register as
a member.”; and

(b) by deleting subsection (3) and substituting the following
subsection —

"(3) A company the shares of which are listed on an
appointed stock exchange or have been offered to the
public pursuant to a prospectus filed under section 26

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or which is subject to the rules or regulations of a
competent regulatory authority, 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.”.

Amendment of section 84
10 Section 84 of the principal Act is amended in subsection (1) by
deleting paragraph (a)(iiiA), and inserting the following subparagraph—

"(iiiA) a statement of changes in financial position or
cash flows for the period;".

Amendment of section 87
11 Section 87 of the principal Act is amended by deleting
subsection (1) and substituting the following subsection—

"(1) Subject to sections 87A and 87B, 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 five days
before the general meeting any member may move a resolution
at the general meeting that it be adjourned for five days:

Provided that this subsection shall not require the making
available 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;

(c) any person whose address is not known to the
company.".

Insertion of sections 87A and 87B
12 The principal Act is amended by inserting the following new
sections immediately after section 87—

"Provision of summarised financial statements to
shareholders
87A (1) A company, the shares of which are listed on an
appointed stock exchange need not send financial statements as
required by section 87 (1) to members, but may instead send
them summarised financial statements.

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(2) The company shall make a copy of the summarised
financial statements available for inspection by the public at the
company's registered office in Bermuda.

(3) The summarised financial statements—

(a) shall be derived from the company's financial statements
for the relevant period; and

(b) shall include, in respect of that period—

(i) a summarised report of the statements referred
to in section 84(1)(a)(i), (ii), (iii), and (iiiA);

(ii) such further information extracted from the
financial statements as the board of directors
considers appropriate; and

(iii) a statement in a prominent position that it is
only a summarised version of the company’s
financial statements and does not contain
sufficient information to allow as full an
understanding of the financial position, results
of operations or changes in financial position or
cash flows of the company as would be provided
by financial statements.

(4) The summarised financial statements sent to the company’s
members shall be accompanied by

(a) the auditor's report on the summarised financial
statements prepared in accordance with the generally
accepted auditing standards referred to in section 90(2)
in respect of the financial statements; and

(b) a notice informing the member to whom the summarised
financial statements are sent how to notify the company
that he elects to receive financial statements for the
period referred to under section 84 for which the
statements are to be prepared or for subsequent periods
or both.

(5) In this section, "relevant period" means such period, referred
to in section 84, for which financial statements are required to
be presented to members in compliance with this Act or the
company's bye-laws.

Ascertainment of shareholders' election
87B (1) Where a company sends out summarised financial
statements, these statements, together with the auditor’s report

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and the notice specified in section 87A(4) shall be sent out not
less than twenty-one days before the general meeting referred to
in section 87(1).

(2) A company shall, subject to section 88, send copies of
the financial statements to any member who would otherwise be
entitled to receive such statements under section 87(1) within
seven days of receipt of the member’s election.”.

Amendment of section 129
13 Section 129 of the principal Act is amended in subsection (1)

(a) by deleting the words "or with the consent of the
Minister, by its memorandum"; and

(b) by deleting paragraph (e)(vi) and substituting the
following subparagraph

"(vi) as manager or agent for, or consultant or adviser to
any

(aa) exempted company or permit company which
is affiliated whether or not incorporated in Bermuda
with the exempted company; or

(bb) exempted partnership registered under the
Exempted Partnerships Act 1992 or overseas
partnership registered under the Overseas
Partnerships Act 1995 in which the exempted
company is a partner;".

Amendment of section 129A
14 Section 129A of the principal Act is amended in subsection (4) by
inserting immediately after paragraph (a) the following new paragraph

"(aa) business as an insurance manager or broker as defined
in the Insurance Act 1978 if the company is registered
under that Act to do so; or".

Amendment of section 161
15 Section 161 of the principal Act is amended

(a) by inserting immediately after paragraph (c) the following
new paragraph;

"(ca) the company carries on any restricted business
activity in contravention of section 4A;"; and

(b) by deleting paragraph (f) and substituting the following
paragraph

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"(f) the consent of the Minister, where under this Act
such consent was required, was obtained as a result of a
material misstatement in the application for consent;
or".

Insertion of Part XIVB
16 The principal Act is amended by inserting after Part XIVA, the
following new Part

"PART XIVB

POWERS TO ASSIST FOREIGN REGULATORY AUTHORITIES

Request for assistance by foreign regulatory authority
272B (1) The powers conferred by section 272C shall be
exercisable by the Minister for the purpose of assisting a foreign
regulatory authority which has requested assistance in
connection with inquiries being carried out by it or on its behalf.

(2) A "foreign regulatory authority" means an authority
which, in a country or territory outside Bermuda, exercises
regulatory functions corresponding to the regulatory functions of
the Bermuda Monetary Authority under the Bermuda Monetary
Authority Act 1969 or any regulatory function prescribed by the
Minister.

(3) The Minister may by Order, subject to the negative
resolution procedure, prescribe regulatory functions relating to
companies or financial services, for the purposes of this Part.

(4) The Minister shall not exercise the powers conferred by
section 272C unless he is satisfied that the assistance requested
by the foreign regulatory authority is for the purposes of its
regulatory functions.

(5) An authority's "regulatory functions" means any function
falling within subsection (2) or (3).

(6) In deciding whether to exercise the powers conferred by
section 272C the Minister shall take into account

(a) whether corresponding assistance would be given in
the requesting country or territory to an authority
exercising regulatory functions in Bermuda;

(b) whether the inquiries relate to the possible breach
of a law, or other requirement, which has no close

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parallel in Bermuda or involves the assertion of a
jurisdiction not recognized by Bermuda;

(c) the nature and seriousness of the matter to which
the inquiries relate;

(d) the importance to the inquiries of the information
sought in Bermuda;

(e) whether the assistance can be obtained by other
means; and

(f) whether it is in the public interest to give the
assistance sought.

(7) The Minister may decline to exercise the powers
conferred by section 272C unless the foreign regulatory
authority undertakes to make such contributions towards the
costs of meeting its request as the Minister considers
appropriate.

(8) The Minister shall decline to exercise the powers
conferred by section 272C(1)(c) if he is satisfied that a statement
given in the exercise of that power could be used in evidence
against the maker of the statement in proceedings under the law
of the jurisdiction of the foreign regulatory authority.

Power to require information or documents
272C (1) Where, in accordance with section 272B, the
Minister is satisfied that assistance should be provided pursuant
to a request by a foreign regulatory authority and that the
request is in relation to information in Bermuda that a person
has in his possession or under his control, the Minister may by
notice in writing served on the person

(a) require the person to furnish him at a specified
place and time with such information as the
Minister may require with respect to any matter
relevant to the inquiries to which the request
relates;

(b) require the person to produce to him at a specified
place and time such documents of such description
as he may specify;

(c) require the person to attend before him at a
specified time and place and answer any questions
or otherwise furnish any information with respect to
any matter relevant to the inquiries; or

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(d) require the person to give him such assistance in
connection with those inquiries as the person is
reasonably able to give.

(2) The Minister may make copies of documents furnished
him under subsection (1).

(3) Nothing in this section shall require the disclosure or
production by a person of information or documents which he
would be entitled to refuse to disclose or produce on grounds of
legal professional privilege in proceedings in Bermuda.

(4) A statement by a person in compliance with a
requirement imposed by this section shall not be used in
evidence against him.

(5) Where a person claims a lien on a document, its
production under this section is without prejudice to his lien.

(6) In this section "documents" includes information
recorded in any form; and, in relation to information recorded
otherwise than in legible form, the power to require its
production includes power to require the production of a copy of
it in legible form.

Exercise of powers by officer
272D (1) The Minister may authorize any of his officers or any
other competent person to exercise on his behalf any of the
powers conferred by section 272C.

(2) No such authority shall be granted except for the
purpose of investigating

(a) the affairs, or any aspect of the affairs, of a person
specified in the authority; or

(b) a subject matter so specified;

being a person who, or a subject matter which, is the subject of
the inquiries being carried out by or on behalf of the foreign
regulatory authority.

(3) No person shall be bound to comply with a requirement
imposed by a person exercising powers by virtue of an authority
granted under this section unless he has, if required, produced
evidence of his authority.

(4) Where the Minister authorizes a person other than one
of his officers to exercise powers by virtue of this section, that
person shall make a report to the Minister in such manner as he

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may require on the exercise of those powers and the results of
exercising them.

Penalty for failure to comply with requirement
272E (1) A person who without reasonable excuse fails to comply
with a requirement imposed on him under section 272C commits
an offence and is liable on summary conviction to a fine of
$2,500 or to imprisonment for 6 months or to both.

(2) A person who in purported compliance with a
requirement under section 272C, furnishes information which is
false or misleading in a material particular commits an offence
and is liable on summary conviction to a fine of $10,000 or to
imprisonment for one year or to both.".

Amendment of section 273
17 Section 273 of the principal Act is amended in subsection (4) by
inserting immediately after the word "84", the words "and any
summarised financial statements referred to in section 87A".

Amendment of Second Schedule
18 The Second Schedule to the principal Act is amended

(a) by deleting the words "Subject to section 4A," and
capitalising the word "a" where it first appears; and

(b) by deleting the proviso to that Schedule.

Substitution of the Ninth Schedule
19 The Ninth Schedule to the principal Act is repealed and the
following is substituted

"NINTH SCHEDULE (section 4A)

RESTRICTED BUSINESS ACTIVITIES

Restricted business activities are

(a) operating a financial institution as defined in section
1(1) of the Bermuda Monetary Authority Act 1969; or

(b) providing by way of business any of the following
services to the general public, but excluding the
provision of such services to companies, whether or not
incorporated in Bermuda, affiliated with the company
providing the services

(i) providing money transmission services;

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(ii) cashing cheques which are made payable to
customers;

(iii) operating a bureau de change, whereby cash in
one currency is exchanged for cash in another
currency;

(iv) issuing, selling or redeeming money orders or
traveller's cheques for cash;

(v) issuing and administering means of payment by
credit or debit cards;

(vi) administering means of payment over the
internet; and

(vii) offering of professional services as a barrister,
solicitor, medical practitioner, architect, dental
practitioner, public accountant, optometrist,
optician, professional surveyor, nurse, health
service provider or any profession or occupation
specified under the First Schedule to the
Professions Supplementary to Medicine Act
1973.

Savings
20 (1) A consent granted by the Minister before the coming into
operation of this Act to have objects that enable a company to carry on
restricted business activities shall continue to have effect on the same
conditions and with the same effect as if section 3 of this Act had not
been enacted.

(2) Notwithstanding section 13 of this Act, a consent granted
by the Minister under section 129 before the coming into force of this Act
shall continue to have effect on the same conditions and with the same
effect.

Transitional provisions
21 Where immediately before the coming into operation of this Act a
company's application for the Minister's consent to have objects that
enable the company to carry on restricted business activities has not
been finally determined, that application for consent is to be continued,
completed or otherwise determined as if section 3 of this Act had not
been enacted.

Commencement
22 This Act shall come into force on the 14th day of February 2003.

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