Incorporation of Bermuda Companies

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5. Capital Structure

The Companies Act, 1981, as amended (the "Companies Act") provides that a company must have at least a minimum capital of US$12,000 (or its equivalent in another foreign currency) and that all shares should have a par value. A company limited by shares may issue common shares or any other type of shares including preference shares. The designation of "preference" was applied to all those shares that had attached to them preferences or rights over common shares.

The Companies Act permits a company, if authorised by a general meeting and by its bye-laws, to divide its shares into special classes and attach thereto any preferential, deferred, qualified or special rights, privileges or conditions.

The proportion of the share capital of the corporation which is to consist of common shares will depend on the proposed method of financing the company.

The minimum share capital of US$12,000 (or its equivalent in another foreign currency) must be subscribed, but there is no requirement that this capital be actually paid up. Where the shares are held by a nominee company, it is usually a stipulated requirement of that nominee that the capital be paid up, for the avoidance of any further contingent liability on its part. This capital may be used for business purposes of the company, including the settlement of incorporation costs and subsequent administration fees.

6. Financial Statements/Audits

Bermuda companies are required to have audited financial statements approved by the shareholders at the annual general meeting of the Company.

Such audited statements can be waived under the Companies Act if all the shareholders and directors agree to such a waiver.

7. Corporate Administration Services

This firm arranges for corporate services to be provided by Richmond Corporate Services Ltd. ("RCSL"), a service company affiliated with the law firm. Under the Corporate Services Agreement entered into between the company and RCSL, the parties agree that RCSL will provide the following services:

(i) Bermuda resident directors (if required);

(ii) Company Secretary (to maintain the corporate records of the    client company);

(iii) Maintaining the Minute Book, Share Register and Register of Directors & Officers;

(iv) Providing Registered Office facilities for the client company;

(v) Liaising with Government Departments with respect to annual filings and any changes to the constitutional documents of the company;

(vi) Liaising with Banks and other service providers such as accountants and auditors.

These corporate administrative services are provided to clients in consideration of the payment of an annual administration fee. Further details on the fee is set out in the Schedule of Fees attached as Annexure "B".

Included in the bundle of services provided by RCSL is the maintaining of the Share Register and Register of Directors and Officers both of which are deemed to be public documents that are open to inspection by members of the public during normal office hours.

Under the Companies Act, a Bermuda exempted company is required to maintain at its Registered Office in Bermuda, records of its financial affairs so as to show a true accounting in each and every financial year. It is also required that the Bye-laws of the Company make provision for an annual audit. Audited accounts need not be filed with any Government authority and such accounts are not deemed to be public documents.

In the case of an ordinary exempted company,there is a nominal minimum fee that is payable annually in advance.

A copy of the Standard Corporate Services Agreement covering the provision of corporate administration services can be provided upon request.

Company Limited by Guarantee

The Bermuda company law structure permits the incorporation of companies for charitable or other socially useful purposes such as art, science, religion, sport or education.  These companies are called "Companies limited by guarantee".

Such a company is defined under the Companies Act as 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.  The Companies Act specifically provides that such companies may not distribute income or pay dividends to their members.

For further information on Companies Limited by Guarantee, please contact lmw@richmond.bm.

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