Bermuda company formation, with substance.

The Bermuda exempted company is the cornerstone of international business in the jurisdiction. Regulated under the Companies Act 1981, these entities are designed for international investors seeking a stable, common-law environment. Unlike many offshore jurisdictions, Bermuda requires a high level of transparency; even the formation of a standard holding company involves vetting by the Bermuda Monetary Authority (BMA). This upfront scrutiny is a strategic advantage, as it bestows a level of institutional credibility that simplifies downstream banking and brokerage onboarding.

Our mandate typically begins with the classification of the entity's purpose to determine the applicability of the Economic Substance Act 2018. For investment funds, we facilitate the choice between an exempted company or a limited partnership, often utilising the Segregated Accounts Companies Act to provide statutory ring-fencing between asset classes. The BMA's oversight ensures that the jurisdiction maintains its 'white-listed' status with global bodies like the OECD and EU. For principals, this means a Bermuda structure is built to withstand the pressures of global tax transparency initiatives. We manage the entire lifecycle from the initial reservation of name at the Registrar of Companies (ROC) to the drafting of bespoke bye-laws and the appointment of necessary resident representatives. This ensures the structure aligns with the principal's master holding strategy across Asia or Europe.

Bermuda has positioned itself as the preeminent jurisdiction for regulated digital finance through the Digital Asset Business Act 2018 (DABA). Managed by the BMA, DABA provides a comprehensive framework for activities including token issuance, exchange operations, and custodial services. Unlike the 'wait and see' approach of other regions, the BMA offers a tiered licensing system—Class F (Full), Class M (Modified), and Class T (Test)—allowing firms to scale their regulatory footprint as they grow.

Xavion Capital advises on the strategic selection of the license class, focusing on the rigorous 'minimum criteria for licensing' which include corporate governance, risk management, and the protection of client assets. A DABA license is not a 'flag of convenience'; it requires real substance, including a physical office and resident staff with appropriate seniority. We bridge the gap between the principal’s vision and the BMA’s expectations, coordinating the detailed business plan, internal controls documentation, and cybersecurity audits required for a successful application. For token issuers and digital asset fund managers, a Bermuda DABA license provides a level of regulatory certainty that is highly valued by institutional investors and provides a clear path for legal cross-border distribution. This is particularly relevant for entities involved in the tokenisation of real-world assets (RWAs) where the nexus of insurance and finance is critical.

Economic substance (ES) is a critical pillar of any Bermuda-based structure. Under the Economic Substance Act 2018 and its subsequent amendments, any entity carrying out a 'relevant activity' must satisfy the ES test. These activities include banking, insurance, fund management, financing and leasing, headquarters, shipping, distribution and service centres, intellectual property, and holding entity activities. For fund managers and digital asset firms, the requirement to demonstrate that the entity is 'directed and managed' from Bermuda is paramount. This necessitates that board meetings take place in Bermuda with a quorum of directors physically present.

Xavion Capital provides a comprehensive substance audit for both new and existing structures. We ensure that 'core income-generating activities' (CIGA) are conducted within the jurisdiction and that the entity has an adequate physical presence, including premises and qualified employees. For holding companies involving only passive equity, the requirements are less onerous but still require strict adherence to statutory filings. Failure to comply with substance requirements can lead to significant financial penalties and, ultimately, the striking off of the company. We help clients navigate these requirements by coordinating with local office providers and professional directors to ensure that the governance framework is robust enough to satisfy BMA inspections and international tax auditors.

Bermuda's introduction of a 15% Corporate Income Tax (CIT) in 2025 marks a significant shift, yet it is surgically targeted at large Multi-National Enterprises (MNEs) with annual revenues exceeding €750 million. For the vast majority of our private wealth and boutique investment clients, Bermuda remains a tax-neutral jurisdiction. Even for those within the scope of the CIT, Bermuda’s framework includes 'qualified refundable tax credits' designed to maintain the island's competitiveness in key sectors like insurance and sustainable technology.

We advise on the long-term implications of this tax shift, particularly concerning the Global Anti-Base Erosion (GloBE) rules. Understanding the interplay between a Bermuda exempted company and the principal’s home jurisdiction is essential for effective tax planning. Bermuda’s lack of withholding taxes on interest, dividends, or royalties remains a core advantage for cross-border structuring. Furthermore, the island's commitment to the Common Reporting Standard (CRS) and FATCA ensures that all structures are transparent and compliant with global reporting norms. Our role is to ensure that the tax benefits sought at the time of formation are not compromised by misaligned operational practices. This includes regular reviews of the structure in light of evolving OECD Pillar Two developments, ensuring that your Bermuda entity remains an efficient component of your global tax architecture.

The Bermuda Monetary Authority (BMA) is the primary reason why sophisticated principals choose this jurisdiction. Its reputation for rigorous oversight, particularly in the insurance and reinsurance sectors (where Bermuda is a world leader), provides a 'halo effect' for all companies registered there. This regulatory depth is complemented by a highly professional ecosystem of legal, accounting, and corporate service providers who are well-versed in complex international transactions.

Xavion Capital acts as the lead advisor in this ecosystem, managing the various workstreams required to operationalise a Bermuda entity. This includes coordinating with the BMA on licensing, engaging with local banks like Clarien or Butterfield for corporate accounts, and ensuring that all statutory records are maintained at the registered office. For investment funds, we navigate the Investment Funds Act 2006, helping managers choose between 'Authorised' and 'Registered' fund statuses based on their target investor base. The common law legal system, with the Judicial Committee of the Privy Council in London as the final court of appeal, provides a level of legal certainty that is indispensable for high-value contracts and dispute resolution. Whether structuring a captive insurance vehicle, a digital asset exchange, or a master-feeder fund, our focus is on ensuring the structure is built on a foundation of regulatory excellence.