Bermuda: A Corporate & Finance Overview

Evolving Regulatory Frameworks in Bermuda: Implications for Finance Transactions

Introduction

Bermuda continues to play a significant role in cross-border finance transactions, particularly in acquisition finance, structured finance, fund finance, capital markets issuances and insurance-linked securities. While Bermuda does not have a material domestic lending market, Bermuda entities are frequently used as holding companies, issuers and obligors in international financings originating in the United States, Europe and Asia.

Bermuda’s legal system is based on English common law, as modified by local statute, principally the Companies Act 1981 and related legislation. The Supreme Court of Bermuda, and in particular its Commercial Court division, regularly determines complex multi-jurisdictional disputes, restructurings and enforcement proceedings involving international groups.

Recent developments relevant to finance practitioners include the implementation of corporate income tax under the Corporate Income Tax Act 2023, the coming into force of the Beneficial Ownership Act 2005 and continued refinement of Bermuda’s digital asset regulatory framework.

Corporate income tax and its impact on finance structures

Introduction of the Corporate Income Tax Act 2023

With effect for fiscal years beginning on or after 1 January 2025, the Corporate Income Tax Act 2023 (CITA) imposes a 15% corporate income tax on certain Bermuda-based entities defined as “Bermuda Constituent Entities”. CITA applies to entities that are members of multinational enterprise groups with consolidated annual revenues of EUR750 million or more, as reflected in the consolidated financial statements of the ultimate parent entity. The regime is designed to align with the OECD Pillar Two global minimum tax framework (the “GloBE Rules”). Entities below the EUR750 million threshold remain outside the scope of CITA.

Relevance to financing transactions

The introduction of corporate income tax does not alter Bermuda’s core company law framework under the Companies Act 1981, nor does it affect the mechanics of taking security, registering charges or enforcing creditor rights. For in-scope groups, however, tax modelling now forms part of structuring considerations for Bermuda holding companies and intermediate financing vehicles. Finance documents increasingly address representations relating to CITA compliance and potential tax liabilities where relevant.

Secured lending and creditor rights

Security and registration

Bermuda remains a creditor-friendly jurisdiction. Security is commonly taken over:

• shares in Bermuda companies;
• bank accounts;
• receivables; and
• other contractual rights.

Under the Companies Act 1981, charges created by a Bermuda company may be registered with the Registrar of Companies. Registration establishes priority by reference to the time of registration and is a common feature of secured financings involving Bermuda obligors.

There have been no significant legislative or regulatory changes in the past year affecting the rights of secured creditors.

Enforcement and restructuring

The Commercial Court regularly deals with enforcement proceedings and restructuring applications, including:

• schemes of arrangement;
• provisional liquidation proceedings used in cross-border restructurings; and
• winding-up petitions involving international groups.

Bermuda courts have demonstrated a willingness to co-operate with foreign courts in cross-border insolvency matters, reflecting the jurisdiction’s international focus. Given that most financings involving Bermuda entities are originated in major onshore jurisdictions, transaction volumes and restructuring activity are influenced primarily by broader global market conditions rather than domestic economic factors.

Corporate transparency and regulatory alignment

Beneficial Ownership Act 2005

The Beneficial Ownership Act 2005 (the “BO Act”), which came into force on 3 November 2025, consolidates Bermuda’s beneficial ownership regime into a single statute and expands transparency requirements in line with international standards. The BO Act applies to a broad range of Bermuda legal entities, including companies incorporated under the Companies Act 1981, limited liability companies and certain partnerships.

A beneficial owner is generally identified by reference to a 25% ownership or control threshold, subject to statutory interpretation and specific rules. Enhanced verification requirements apply, including submission of government-issued identification and corroborating documentation.

These reforms are intended to ensure that beneficial ownership information is accurate, reliable and accessible to competent authorities, consistent with Financial Action Task Force (FATF) standards.

Administration and disclosure

Responsibility for maintaining the central beneficial ownership register has transferred from the Bermuda Monetary Authority (the BMA) to the Registrar of Companies. The Registrar may disclose information through statutory gateways to domestic and international competent authorities and certain obliged entities.

For lenders and transaction counsel, enhanced transparency requirements have increased the emphasis on up-front KYC and compliance diligence in finance transactions.

Digital assets and finance

Regulatory framework

Bermuda continues to develop its regulatory framework for digital asset businesses. The BMA acts as the integrated financial services regulator and supervises licensed digital asset businesses operating in or from Bermuda.

The Digital Asset Business (Custody of Client Assets) Rules 2025, effective from February 2025, introduced enhanced safeguards for digital asset businesses holding client assets. Key requirements include:

• segregation of client assets from proprietary assets;
• annual independent review of client asset controls; and
• a priority waterfall governing asset distribution in the event of default.

These developments are particularly relevant for secured lenders and counterparties dealing with licensed digital asset businesses.

Anticipated digital identity legislation

Proposed Digital Identity Service Provider legislation is expected to introduce a regulatory framework for digital identity service providers. This forms part of Bermuda’s broader strategy to maintain high AML/ATF (CFT) standards while supporting fintech innovation.

Outlook for 2026

Bermuda’s role in international finance remains closely linked to cross-border activity in the United States, Europe and Asia. While the introduction of corporate income tax marks a structural change, it has not altered Bermuda’s established company law framework or creditor protections.

The jurisdiction’s common law foundation, experienced Commercial Court and established charge registration regime continue to support its use in secured finance, structured finance and capital markets transactions. In parallel, enhanced transparency requirements under the Beneficial Ownership Act 2005 and continuing developments in digital asset regulation demonstrate Bermuda’s alignment with international regulatory standards.

Finance practitioners can therefore expect continued use of Bermuda entities in cross-border structures in 2026, with tax compliance, transparency and regulatory diligence forming an increasingly prominent part of transaction structuring and documentation.