CAPTAIN OF INDUSTRY With the evolution of its prestigious Red Ensign Group registry and an exceptional services infrastructure, Bermuda is booming as an international shipping and yachting centre
2017 AMERICA’S CUP
Bermuda plays host
Advantages for HNWIs
SHIPPING EXPERTISE Shipping Solutions in Bermuda and around the Globe Bermuda is the jurisdiction of choice for many of the world’s leading ship owners and financiers, and Conyers sets the standard for offshore legal services in the industry. Our team of experts – the largest in Bermuda – consistently advises on the most significant shipping-related capital markets, vessel financing and registration transactions in the jurisdiction. For more information about our Bermuda Shipping team, please contact: DAVID ASTWOOD firstname.lastname@example.org +1 441 299 4937
MARCELLO AUSENDA email@example.com +1 441 299 4954
GUY COOPER firstname.lastname@example.org +1 441 299 4938
KATHLEEN MONIZ email@example.com + 1 441 298 7883
VICTOR RICHARDS firstname.lastname@example.org +1 441 299 4926
STEPHEN ROSSITER email@example.com +1 441 299 4915
BRITISH VIRGIN ISLANDS
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NATIONAL MUSEUM OF BERMUDA
CONTENTS 05 THE NEXT LEVEL Why this is a truly exciting time for Bermuda’s maritime sector 06 BERMUDA INFOGRAPHIC Key facts on the island’s offering 09 BUILDING ON FIRM FOUNDATIONS What’s behind Bermuda shipping’s rise? 13 PUTTING SHIPPING ON THE MAP How Bermuda became a global centre 15 Q&A: JAMES WATLINGTON An interview with the principal of Bermuda-based law firm Alexanders 18 LOOKING OUT FOR YOUR INTERESTS Bermuda’s lure as a financial jurisdiction 21 BERMUDA PROPERTY POLICY What overseas buyers need to know 22 LEGACY THAT KEEPS ON GIVING Hosting the 2017 America’s Cup
MARITIME COVER: GETTY IMAGES
BERMUDA BUSINESS DEVELOPMENT AGENCY bda.bm Editor Rosemary Jones Editorial Board Kevin Richards, Sean Moran, Lynesha Lightbourne PUBLISHED BY THINK Capital House, 25 Chapel Street, London NW1 5DH t +44 (0)20 3771 7200 www.thinkpublishing.co.uk Publisher Polly Arnold Account Manager Kieran Paul Editorial Director Matthew Rock Sub-editor Mike Hine Art Editor George Walker Advertising Manager Tony Hopkins t +44 (0)20 3771 7251 e firstname.lastname@example.org
PARTNERING TRADITION WITH INNOVATION he first edition of this special supplement highlighting Bermuda shipping looks both to the past and the future. It pays tribute to the island’s centuries-old maritime heritage and the vital role Bermuda ships played in the world of seaborne trade. It also examines what’s on the horizon, looking ahead to the 35th America’s Cup and the phenomenal legacy this giant of world sporting events will bring to one of Britain’s oldest remaining overseas territories. The 2017 regatta comes at a time when Bermuda’s economy is recording steady growth, and its all-important shipping industry is evolving in tandem. Our jurisdiction served as a vital mid-Atlantic port for more than 400 years, its famous sloops supporting maritime trade between the Caribbean, Canada, Europe and commercial capitals much further afield. Today, Bermuda is a globally respected financial centre with a Category 1 shipping registry; an impressive roster of ship ownership and management companies; P&I clubs; vessel-support industries; efficient certification and survey services; and an increasing number of world-class super-yacht facilities extending throughout the island’s 21 square miles. As an international financial centre, Bermuda is a nexus for reinsurance, trusts, funds, private-client business and family offices, offering ship owners a one-stop shop of associated services. It is a domicile known for its pool of world-class talent, reliable legal system, regulatory leadership and, through more than 90 treaty partnerships worldwide, compliance, transparency and cooperation. These factors set us apart from many competing offshore domiciles. It is thanks to both long-honed tradition and our market’s innovation that Bermuda’s identity – our ‘brand’ – is associated with sophistication and quality, the very same traits that distinguish the America’s Cup itself. Our government, along with the Bermuda Business Development Agency, looks forward to the new opportunities and GRANT GIBBONS extends a warm welcome to visiting vessels, as BERMUDA ECONOMIC well as to investors and companies looking to do DEVELOPMENT business here. MINISTER
C O N S O L I DAT E D GROUP
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For Information contact us at
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Par La Ville Place 14 Par-la-Ville Road Hamilton HM 08 Bermuda
Par La Ville Place 14 Par-la-Ville Road Hamilton HM 08 Bermuda
Tel: 441-295-8313 Fax: 441-292-1373
Tel: 441-295-8313 Fax: 441-292-1373
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TAKING SHIPPING TO THE NEXT LEVEL With the transition to a new authority model, this is a truly exciting time for Bermuda’s maritime sector, explains Francis Richardson
ermuda has been operating a shipping registry since 1789 – meaning the island has been in the business for well over two centuries. During the early years, Bermuda played a strategic role in the safety and security of British ships transiting the Atlantic Ocean and, since then, the registry has evolved, expanding its role and services to ships covering all the oceans of the globe. The Bermuda Ship Registry is a Category 1 member of the prestigious Red Ensign Group (REG), and the jurisdiction takes pride in the high standards of its ships, and the world-class service it provides to clients. As an REG Category 1 shipping registry, Bermuda can register ships of any type, age or size, subject to meeting the standards required for flagging-in to Bermuda.
NEW BUSINESS MODEL
Traditionally, Bermuda’s registry has been administered by its Department of Maritime Administration, but, in 2015, the government approved a new business model that paved the way for the creation of a semi-autonomous unit. The new Bermuda Maritime and Shipping Authority will officially launch in 2016. As the global maritime industry is consistently evolving and striving for increased efficiencies and innovation, Bermuda, with its new business model, is positioning itself to ensure it meets the demands and needs of ship owners, ship operators and all of its clients. The transition to a new authority model is a continuation of the government’s initiative to transform the shipping registry – with the first step being the
FRANCIS RICHARDSON PERMANENT SECRETARY, MINISTRY OF TOURISM AND TRANSPORT
establishment of a London satellite office in 2014 to provide efficient, timely and cost-effective ship survey, certification and registration services to ship owners and ship operators. The London-based survey team services Bermuda ships calling into Europe, the Middle East, the Indian subcontinent, East Asia and Australasia, providing surveyor availability at short notice.
The Bermuda brand and product is well established and world renowned, a reputation the new Bermuda Maritime and Shipping Authority can leverage to expand its client base and increase the registry’s gross tonnage, while building and enhancing its high level of service to distinguish itself from the competition. Ship owners and operators can register ships in Bermuda with comfort and confidence, knowing
some of the advantages of registering their ships include a jurisdiction that has: • modern shipping legislation and regulations • shipping industry expertise • an English law-based legal system that provides for the application of legal principles and concepts well known to the shipping industry • extremely low port-state-control detention figures, as recorded by the Paris Memorandum of Understanding on Port State Control • high-level banking, IT, telecommunications, legal and accounting services • a sophisticated and stable regulatory framework. Bermuda also has the added advantage of being a blue-chip, first-class offshore financial jurisdiction. Over the years, many of the world’s leading owners, managers, builders, insurers, lawyers, accountants and bankers have selected Bermuda to develop financial structures and business models tailored to the specific requirements of the shipping industry. This is a truly exciting period for the maritime sector and stakeholders within Bermuda. Stakeholder feedback has been extremely positive and there is a collective view that the new authority can take advantage of strategic relationships to provide the Bermuda government with significant growth in this sector over time. In addition, it has the potential to transfer the success of the registry into a vibrant global shipping industry by encouraging and incentivising owners to invest in a physical presence on the island.
B E R M U DA : A WOR L D- CL AS S CENTRE FOR
BERMUDA SHIPS ARE BRITISH SHIPS AND FLY THE RED ENSIGN, ALTHOUGH THEY ARE NOT UK SHIPS, AND BERMUDA IS NOT A EUROPEAN UNION FLAG. THE BERMUDA SHIP REGISTRY IS PART OF THE WIDER RED ENSIGN GROUP, WHICH COLLECTIVELY PROVIDES HIGHQUALITY SHIP-REGISTRY SERVICES TO DISCERNING CLIENTS
USD29.7 USD31 BILLION USD6.98 TRILLION
THE WEALTH HELD BY THE WORLD’S 211,275 ULTRA-HIGHNET-WORTH INDIVIDUALS (UHNWIs)
THE WEALTH HELD BY THE 102 UHNWIs IN BERMUDA
TRILLION THE WEALTH HELD BY THE 46,635 UHNWIs BASED IN ASIA
AVERAGE YACHT ARRIVALS
850 PER YEAR
(data from BDA Radio 2009–2014)
-YEAR-OLD LEGISLATIVE SYSTEM
OF YACHTS ARRIVING ARE SUPER-YACHTS (more than 100ft or 35m)
OF ALL ARRIVALS ARE IN MAY AND JUNE
Gibb’s Hill Lighthouse
BERMUDA’S SHIP REGISTRY BERMUDA’S PRESTIGIOUS SHIP REGISTRY IS RENOWNED FOR THE QUALITY OF ITS SHIPS AND ITS EXCELLENT SERVICE STANDARDS Bermuda’s Ship Registry is a Category 1 member of the prestigious British Red Ensign Group (REG), supporting a worldwide portfolio of vessels. Bermuda Maritime Administration can register vessels of any type, age or size if they meet the necessary standards.
Ships or yachts registered in Bermuda fly the red ensign or the red ensign with Bermuda’s coat of arms. The REG includes the Isle of Man, Gibraltar, Cayman Islands, British Virgin Islands, Guernsey, Jersey, Anguilla, Turks and Caicos, Falkland Islands, St Helena, Montserrat and the UK, and collectively provides high-quality ship registration services.
Today’s Bermuda fleet consists of cruise ships; oil, gas and chemical tankers; container ships; bulk carriers; offshore vessels (FPSOs, FSOs and oil rigs); cruising yachts; and megayachts. The jurisdiction has extensive experience with large cruise ships, especially with the new generation of passenger ships embracing the ‘safe return to port’ concept.
665 MILES FROM THE US
LESS THAN 2 HOURS
6.5 HOURS TO LONDON BY PLANE
32˚ 17’ North 64˚ 47’ West
TO NEW YORK BY PLANE
DESTINATIONS SERVED BY DAILY DIRECT FLIGHTS FROM BERMUDA, INCLUDING NEW YORK AND LONDON
(Bermuda’s latitude and longitude)
St David’s Island Lighthouse
HOUR AHEAD OF NEW YORK
HOURS BEHIND LONDON
15.6°C LOWEST AVERAGE TEMPERATURE IN BERMUDA (FEBRUARY)
62 MILES OF COASTLINE
30.4°C HIGHEST AVERAGE TEMPERATURE IN BERMUDA (AUGUST)
24-HOUR TURNAROUND FOR SHIP REGISTRATION
BERMUDA SHIP REGISTRY
THE 2017 AMERICA’S CUP WILL BE THE 35th EDITION OF THE YACHT RACE. IT WILL BE HELD IN BERMUDA IN JUNE 2017 AND BE CONTESTED BETWEEN THE WINNER OF THE 2017 LOUIS VUITTON CUP AND ORACLE TEAM USA
Certified to the top (ISO 9001:2008) quality-management standards, Bermuda ranks high in the white list of the port-statecontrol regimes of both the Paris and Tokyo memoranda of understanding, and is recognised by the United States Coast Guard in its QUALSHIP 21 quality shipping programme.
The BERMUDA SLOOP ship design is highly regarded for its speed and manoeuvrability. The Bermuda sloop HMS Pickle, one of the fastest vessels in the Royal Navy, carried the news of the victory at Trafalgar and the death of Admiral Nelson to England
1789 The Bermuda Ship Registry has existed since 1789. It was launched by Her Majesty’s Customs to facilitate the registration of Bermuda sloops INCOME, DIVIDENDS, PROFITS, CAPITAL GAINS, CORPORATION, INHERITANCE OR GIFT TAX
The registry was re-established in 1980, with contemporary legislation and maritime conventions extended by the UK government. It is respected for its high service standards
Bermuda enacted its own Merchant Shipping Act in 2002 and, through global treaties, is party to relevant major United Nations, International Maritime Organisation and International Labour Organisation conventions that have been extended to Bermuda by the UK government.
THE SHORELINE PROMISE • • •
To provide the most robust COFR product available At a price that will not be bettered Delivered with exceptional service
This promise is made possible because our COFR facility: 1 Is a not for profit entity enabling our COFRS to be delivered at cost. All premiums received are paid on to our reinsurers who provide 100% protection; and 2 Offers a progressive retroactive policyholder dividend program that rewards members substantially for their loyalty; and 3 Is beneficially owned for our shipowning members governed by a board that comes from their ranks; and 4 Is dedicated to providing 365 days a year, 24 hours a day responsive service, supported by an industry leading interactive website; and 5 Is always listening and reacting to the ever changing needs of its members. I would like to encourage all our members and their brokers to contact me on +1-441-297-9734, or email@example.com, to get full and up to date information on policyholder dividends and other important aspects of the Shoreline COFR product.
Marilyn Feldman – President Shoreline Managers Ltd. 44 Church Street, PO Box HM 2064, Hamilton HM HX, Bermuda
The imminent evolution of its shipping registry and a solid services infrastructure make Bermuda a growing global shipping centre
proven international financial centre, Bermuda aptly demonstrated its prowess in shipping when it attracted Team Tankers International to its global ship registry. The holding company for the chemical tanker operator relocated its ship-owning entities from Singapore to Bermuda in January 2015 and incorporated its group holding company on the island. The concomitant move of 14 Team Tankers ships from the Singapore to the Bermuda Ship Registry marked the single biggest transaction ever recorded for the Bermudian registry. Kevin Kilcullen, Team Tankers’ Chief Financial Officer, says the company was attracted by Bermuda’s stable and predictable legislative and regulatory conditions: ‘Of specific concern to our status as an international ship owner and operator, Bermuda is an internationally recognised and respected flag state. We are proud to have a significant number of our vessels under Bermuda’s flag.’ Blessed with a subtropical climate, and with a reputation for friendly and hospitable locals, the island nation of Bermuda has a great deal to offer shipping. Beauty here is more than skin deep: underneath its picturesque exterior lies a diligent and industrious core
with a strong connection to the maritime industry, multiplying its attraction to global shipping companies. Boasting a long-serving maritime services sector with roots in a 1962 Act of Parliament, Bermuda already has a proven track record in risk solutions. Its insurance market is second only to Lloyd’s of London, and there is a great deal of capacity for marine insurance and reinsurance in Bermuda. Now, ship owners are increasingly being drawn to the island, attracted by a flag that ranks highly on the Paris Memorandum of Understanding on Port State Control’s (the Paris MoU’s) white list. The British Overseas Territory is building on this first-class reputation to propel its shipping industry forward, transitioning its maritime department into a semi-independent unit in 2016. The process will allow Bermuda the opportunity to further promote the blue-chip credibility of its ship registry and, in doing so, underline the growing popularity of Bermuda as a base for worldwide shipping companies.
Ardmore Shipping chose Bermuda as its headquarters at its incorporation in 2013. Ardmore owns and operates a fleet of mid-size product and chemical tankers ranging from 17,500–50,300 deadweight. At its core is a modern, high-quality fleet, operated through key long-term commercial relationships. Chief Executive Officer Anthony Gurnee says that Ardmore is not alone in realising the benefits of a base in Bermuda: ‘We, along with many of the other international shipping companies
THE COMMISSIONER’S HOUSE, ROYAL NAVAL DOCKYARD, BERMUDA
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that have their main operating offices in Europe or the US, have our headquarters in Bermuda.’ He describes the benefits of a headquarters in Bermuda as threefold: ‘First, I think it’s a model system that works for global shipping; second, the infrastructure and services – legal and accounting, for example – are excellent; third, there are lots of flight connections to US east-coast cities, particularly New York and Boston. This is important for companies like us, that have a lot to do with North America. ‘Bermuda is a very business-friendly environment, and the people we’re around are highly professional and know a great deal about shipping. They understand how international shipping works, and there’s a body of knowledge in Bermuda about maritime law and shipping-company administration that is extremely helpful.’
Established in 1789, the island’s international shipping registry is a Category 1 member of the Red Ensign Group and supports a worldwide portfolio of vessels. Bermuda’s registered fleet includes large cruise ships, container ships, bulk carriers, offshore vessels, cruising yachts, super-yachts, and oil, gas and chemical tankers. Bermuda is acknowledged for its support of key international shipping conventions and has enacted legislation covering, among many others, the International Convention for the Safety of Life at Sea, 1974 ; International Regulations for Preventing Collisions at Sea , 1972; International Convention for the Prevention of Pollution from Ships, 1973; International Convention on Standards of Training, Certification and Watchkeeping for Seafarers, 1978; and the Maritime Labour Convention, 2006. As pressure increases on shipping companies to only undertake business with countries that comply with
Anthony Gurnee, CEO, Ardmore Shipping:
‘There’s a body of knowledge in Bermuda about maritime law and shipping-company administration that is extremely helpful’
international doctrines, the appeal of Bermuda is hard to resist. High standards are also important. Bermuda meets the Paris MoU’s criteria for a low-risk ship. This beneficial ship risk profile means that ships flying the Bermudian flag will be low priority for inspection and will benefit from longer intervals between inspections under the Paris MoU, one of the world’s largest and most respected memoranda of understanding (MoUs) on port state control. Team Tankers is not alone in placing value on Bermuda’s flag-state operations. Concordia Maritime (Bermuda) General Manager Angelique Burgess considers the real-time response given by Bermuda’s flag-state administration to be critical for the shipping industry. ‘The flag administration is known for its high safety standards, and that is of the utmost importance when our ships call in ports, and very critical for acceptability among our customers, such as national and major oil companies,’ confirms
Burgess. ‘When we talk about port-statecontrol reports, Bermuda ranks high on the Paris and Tokyo MoUs’ white lists. ‘We’ve found working with them to be a good relationship; they are always willing to assist. The Registrar of Shipping is very flexible when it comes to shipping transactions, and this is good for business, particularly when it requires coordination of individuals in many different time zones,’ she adds. Burgess also highlights easy access to legal services as an attraction in Bermuda. The country’s legal system is based on UK maritime law, which is renowned for its judgements.
A STEP ABOVE
Arthur Jones, Chief Financial Officer at The Consolidated Group of Companies, a leader in providing financial, management and administration services to the shipping industry in Bermuda, recognises the importance of a robust operating environment: ‘Bermuda’s reputation is a step above that of many other
10 TRUST BERMUDA 2016
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BERMUDA MOVES TO WELCOME MORE SUPER-YACHTS ith confirmation that Bermuda will play host to the 2017 America’s Cup, a number of significant legislative changes have been approved that promise to propel super-yachting in the country. America’s Cup Bermuda Ltd – the organisation responsible for delivering the Bermuda government’s responsibilities as outlined in the Host Venue Agreement between the Bermuda government and the America’s Cup Event Authority – has been working on this new legislation, the most significant of which relates to super-yacht charter legislation. Bermuda Yacht Services Director Mark Soares has been actively lobbying to encourage super-yachting in Bermuda over a number of years. He explains the changes: ‘A broker will now be able to charter for the first time ever in Bermuda, so this means that foreign-flagged vessels that are certified to charter by their flag state will be able to charter in Bermuda, with some restrictions.’ Chartering is a key component of the global yachting industry and some major yacht-charter brokers have expressed an interest in offering super-yacht charters in Bermuda, proving there is an untapped potential market. Bermuda is an attractive destination for yachting, says Soares, who says the America’s Cup brings Bermuda the opportunity to develop ‘a very promising industry’. He adds: ‘Both a cohesive policy that is welcoming to yachts and careful promotion are essential to the success of this industry in Bermuda.’ While these changes are initially only approved for one month before and one month after the 2017 America’s Cup, the expectation is that the regulatory changes will be taken forward as legacy changes. ‘This is a massive step forward for yachting in Bermuda,’ says Soares. ‘As far as industry is concerned, Bermuda is making significant changes in yachting policy, and the first step is to try it out for the America’s Cup. Bermuda has recognised that there is a benefit to being more open to yachting, and we are going to encourage super-yachts to charter here.’
jurisdictions. There is a long history of high-profile ship owners choosing Bermuda as their corporate base, and with the “offshore world” regularly the target for media and governmental attention, Bermuda has been proactive in entering into agreements with dozens of countries to permit the exchange of information on beneficial ownership.’ While Jones acknowledges that favourable taxation laws are a lure to some, they are not Bermuda’s only attraction: ‘Every company has its own reason for establishing a base in Bermuda; taxation is important, but not the only reason. The presence on the island of lawyers, accountants, insurers and commercial managers with specific expertise in the shipping industry makes Bermuda the ideal one-stop shop.’ The island’s picturesque surroundings also attract companies. Situated in the warm Gulf Stream current in the Atlantic Ocean, Bermuda contains the world’s most northerly group of coral islands. Gurnee describes Bermuda as ‘absolutely delightful’ for company meetings, including board meetings. Ardmore also holds client events and investment meetings on the island. Hanne Kudahl-Laursen, Team Tankers’ Group Treasury Manager, says she ‘absolutely loves’ living in Bermuda: ‘The Bermudians are very open, loving and welcoming, and this particular social behaviour is infectious; expats have fully embraced the Bermudian way.’ Like Ardmore, Team Tankers holds its annual general meeting in Bermuda every November. While its corporate directors seem to enjoy all of the company’s board meetings, Kilcullen says they really look forward to attending the one in Bermuda, proving that the country offers both brains and beauty when it comes to catering to shipping businesses. CARLY FIELDS IS A FREELANCE JOURNALIST AND EDITOR SPECIALISING IN THE MARITIME SECTOR
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Bermuda Sloop Foundation STV Spirit of Bermuda 12 Wesley Street, Hamilton, Bermuda
Changing Lives One Voyage at a Time
PUTTING SHIPPING ON BERMUDA’S One lawyer’s suggestion that registration of ships in Bermuda would benefit foreign ship owners from a tax perspective helped establish the island as an offshore financial jurisdiction
hipping was the first industry to put Bermuda on the international business map in the 1950s, largely through the efforts of David Graham, a former partner at Conyers Dill & Pearman, at the time a small firm in Bermuda, comprising just three lawyers. Graham was the first to suggest that registration of ships in Bermuda could be advantageous for foreign ship owners from a tax perspective, a strategy directly responsible for an immediate increase of ships on the Bermuda Ship Registry. Ultimately, the same rationale drove Bermuda to become a major offshore financial jurisdiction. In November 1955, The Times printed a letter complaining about unfair tax treatment of British oil-tanker owners compared with their Greek counterparts who used Panamanian and Liberian open registers. Graham responded to the letter, arguing that ‘British’ ships were not necessarily ‘UK-owned’, and British ship owners were not necessarily UK ship owners or subject to UK taxation. Graham argued that no other part of the Commonwealth subjected British ship owners to such high taxation rates, and that Bermuda, then a ‘Crown Colony’,
subjected British ship owners to no taxation at all. Furthermore, Graham stated that benefits derived by others from operation through Liberian companies and Liberian-registered ships could be matched by British subjects operating through, for example, resident Bermuda companies and British ships registered in Bermuda. In 1955, British tax rates on shipping were as high as 48 per cent, and the prospect of no taxation at all was very appealing to British ship owners. Following publication of Graham’s letter, Conyers Dill & Pearman received numerous inquiries from interested parties. However, if Bermuda was to welcome UK shipping, approval would be needed from the British government. HM Treasury approval was required before a business could move itself out of British taxation to settle elsewhere, as the move would result in the loss of taxation to the British government. Graham travelled to London to meet with HM Treasury, and argued that the loss of taxation revenues would be minimal, as company dividends would be taxable on their repatriation to the UK, and that crucial benefits would accrue from the diversification of the Bermuda economy. Bermuda could not be expected to survive on tourism alone and, as a Crown Colony,
Graham argued, Bermuda had needed Britain’s financial support during and after the Second World War. The chance to enhance Bermuda’s shipping registry and develop a secondary means of revenue might reduce the likelihood of the need for British economic assistance in the future. HM Treasury baulked at losing business it already had, so a compromise was reached, by which treasury approval would not be needed if a British company was entering into a new business from, rather than transferring existing business to, Bermuda. At the time, it was believed, the future of the international shipping trade lay in tankers, with the ownership of large commercial vessels vested in individual subsidiary companies, in which profits are distributed up the corporate chain and liabilities are ‘ring-fenced’ from potentially damaging other business interests. Soon after Treasury approval was granted to Bermuda, P&O, Britain’s largest shipping company, arranged for its tanker fleet to be registered in Bermuda, and other British ship owners soon followed suit. The British government came to understand that Graham’s proposal served to extend, rather than curtail, British interests. Allowing the UK fleet to migrate to the Bermuda flag kept the vessels on an ultimately British register, with the Bermuda company providing tax relief. By the end of 1956, the Bermuda Ship Registry had become one of the largest in the world. The practice of Conyers Dill & Pearman grew rapidly in tandem with that development, eventually including the corporate and legal work of many of the shipping companies that were flocking to Bermuda. Today, the Bermuda Ships Registry has gross tonnage of more than 11 million and is thriving. Conyers Dill & Pearman, meanwhile, has grown, too – from a trio of practitioners to the only international law firm headquartered in Bermuda, with 133 lawyers in eight jurisdictions. Shipping remains an integral practice area that continues to grow. The success of both institutions, as well as the success of Bermuda generally as an offshore financial centre, can largely be attributed back to Graham’s foresight and determination more than half a century ago. VICTOR RICHARDS IS AN ASSOCIATE AT CONYERS DILL & PEARMAN
Register in Bermuda! A Yachtsman’s Paradise! AlexAnder MAnAgeMent ltd ❚ Ship and Yacht Registration on the Bermuda Shipping Registry ❚ Incorporations & Continuations ❚ General Corporate Administration ❚ Ship Finance ❚ Commercial Contracts and Transactions “Spirit of Bermuda” – Bermuda’s own sail-training vessel – supported by Alexanders
❚Maritime & Shipping law through our associated law firm
Alexanders Barristers & Attorneys Belvedere Building, 69, Pitts Bay Road, Pembroke, HM 08, PO Box HM 833, Hamilton HM CX, Bermuda Tel: (441) 292 9332 | Fax: (441) 292 2024 | Email: firstname.lastname@example.org Alexanders_Step_Supship_16.indd 1 bermuda_ad.indd 1
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Putting quality first James Watlington is principal of Bermuda-based law firm Alexanders and ship-management company Alexander Management, and a director of the Bermuda International Shipping Association. Bermuda Maritime spoke to him about the dedication to first-class service that underpins Bermuda’s popularity as a shipping jurisdiction TELL US ABOUT YOUR OWN FAMILY’S STRONG MARITIME LEGACY Bermuda’s Watlington family was full of merchant mariners – we had a dozen or so master mariners in our ranks during the 1700s and 1800s. In those days, you either fished, farmed, went to sea or became a public servant or merchant. We went to sea. It was a hard life. There was no refrigeration, and sailors had to contend with the relentless scourge of diseases like scurvy and yellow fever. When you read through our family narratives, it’s all in there; it’s a big part of our family history. HOW DO YOUR COMPANIES SERVICE THE SHIPPING SECTOR TODAY? We’re largely a corporate commercial practice; about 20 per cent of our business is related to shipping companies. These can range from
simple yacht-holding special purpose vehicles or New York Stock Exchangelisted major corporations, for which we act as Bermuda counsel. We cater to a lot of private-yacht market registrations and owner companies, providing a wide gamut of services. We deal with everything from registration facilities, crew-related matters and carriage-ofgoods-by-sea issues to documentation for ships arriving in different countries, ship finance, mortgages, charters, salvage issues and importation matters. WHY DO YOUR CLIENTS CHOOSE BERMUDA? There are both personal and professional reasons for choosing Bermuda. Largely, they’re here because it is a real place and you can get things done efficiently. My business has focused on large yachts, and these frequently have owners who have
other business interests in Bermuda. The fact that the jurisdiction is a premier international financial centre (IFC) allows owners access to a sophisticated one-stop shop. International companies here engage in all manner of commerce – they conduct transactions, and they own, license and receive profits, royalties and proceeds relating to property of all kinds. Ship owners who come to Bermuda receive good service for their vessels and they know what to expect. The Bermuda Ship Registry works seamlessly – they get a bill for their tonnage fees every year, and it’s paid. They have to do a survey occasionally. But everything is turned around quickly and the service is good. Some of my ship owners also have homes here, and they find the island an attractive place to live and stay. They like the lifestyle and they have a network of friends and colleagues in Bermuda.
WHAT ARE BERMUDA’S ADDITIONAL STRENGTHS AS AN IFC? Our 400-year-old legal system – it has rights of appeal up to the Privy Council in London. That is very important, because participants in the process know they’ll get a fair shake, and there’s immense history and a huge body of law related to the industry. It breeds confidence. Confidentiality is another positive factor. And Bermuda’s tax-neutral status under our consumption-based tax system is also an attractive aspect. It’s not a very expensive proposition to set up a company here, either. You can start a company without heavy capitalisation (unless it’s an insurance company). A shipping company typically won’t require more than USD12,000 in capital, mostly for incorporation fees.
HOW IMPORTANT IS BERMUDA’S FIRST-CLASS REPUTATION? Several other jurisdictions that have attracted shipping companies in recent decades have run into reputational difficulties, despite their coordinated marketing campaigns. But not a lot happens in those jurisdictions. Bermuda, by contrast, has mind and management, and is heavily concerned with quality. Our registry is high quality. It’s very much focused on safety of vessels and quality of maintenance. Consequently, it’s at the top of the white list for registries. The advantage is that, if sailing a Bermuda-flagged vessel, the chances of getting pulled aside by a port state authority and given a serious once over are very low, because the authority will know the vessel has been inspected regularly and the standards are high. This is a boon to owners. Delays cost money. Avoiding delays by demanding quality is one of Bermuda’s top advantages to this industry. It’s reflective of what Bermuda stands for generally. We want to make sure we’re distinguished in that respect. Reputation is a large part of what we are all about in Bermuda, and companies that make their way here feel it is a very important factor. Safety, quality, reliability and relationships are key traits of the Bermuda market. WHAT WILL THE 2017 AMERICA’S CUP ACHIEVE FOR BERMUDA? The America’s Cup is heightening the island’s profile globally, and it will leave
‘Reputation is a large part of what we are all about in Bermuda. Safety, quality, reliability and relationships are key traits of our market’ a legacy of investment and improved infrastructure here. It also puts the island on the map as a major sailing destination. The attention has already attracted other major sailing events – the RC44 regatta, the M32 Series and the Amlin International Moth Regatta. Each of those events is a big deal, and they’ve created a fair bit of publicity for Bermuda. Lately, I’ve been fielding enquiries from people who want to bring their vessels here during the America’s Cup and charter their boats locally; Bermuda has relaxed its rules on this recently for the America’s Cup period. I’m also advising on the potential for a superyacht regatta to be held here during the America’s Cup. We’re expecting a number of large yachts and owners in Bermuda during that time, including several J-Class boats – vessels in the range of 150ft – so you’d have an identifiable class among the super-yacht community, as well as others. I want to see that happen, because it’s a great opportunity to provide hospitality to clients and guests. HOW ARE BERMUDA’S YACHT FACILITIES EVOLVING TO CATER TO SUCH EVENTS? There have been new marinas constructed in recent years, resulting in far greater capacity around the island for super-yachts – and these spaces are
bookable now. In the West End, there are spaces for super-yachts to tie stern-to at the Royal Naval Dockyard, adjacent to the America’s Cup Village. The Hamilton Princess hotel has undergone a major renovation, including the addition of world-class marina space. Vessels will also be able to come alongside at Hamilton’s docks. And in the East End, St George’s has been pushing for superyachts for the past couple of years, and developing modern marinas. If you’re en route to the Mediterranean or the Caribbean, it’s a great place to stop off for fuel and other necessities, which are competitively priced in Bermuda. YOU’VE BEEN A LONG-TIME SUPPORTER OF NON-PROFIT MARITIME ENTERPRISES FOCUSING ON YOUTH. WHY DO YOU FEEL PROJECTS LIKE THIS ARE IMPORTANT? I’ve been very involved in the sailing and yachting world locally, starting with the Bermuda Offshore Sail-Training Association, which took teenagers sailing around the island on weekends. I now support the Bermuda Sloop Foundation, which funds experiential learning for the island’s middle-schoolers aboard the Spirit of Bermuda. And I’m a director and the secretary at the Bermuda International Shipping Association, which has provided scholarships to help dozens of young Bermudians become qualified commercial captains or gain other qualifications. I think it’s massively important to allow young Bermudians to experience the sea and sailing, especially when they would not otherwise have that experience. I’m glad that a growing number of people see this and understand its value. Sailing provides discipline for youth, and also an appreciation for something that’s larger than you are in terms of the forces of nature and the power of teamwork. WILL THE AMERICA’S CUP INSPIRE BERMUDIAN YOUNGSTERS? I sincerely hope so. A substantial number of local children have been involved in sailing programmes – around 400 kids have gone through our yacht clubs’ Optimist dinghy courses over the past couple of years alone. Yachting has become a sport that crosses racial boundaries, and I’d like to see as many kids as possible involved in it.
Looking out for your interests
Bermuda is a popular choice of jurisdiction for high-net-worth individuals and families due to its security, discretion and global reputation for transparency and compliance ermuda is a uniquely sophisticated island known for high-end tourism and international finance. Comprising just 21 square miles, it offers a temperate climate and pristine natural environment, with beautiful beaches, reefs, golf courses, art galleries, museums and spas – and one of the highest standards of living in the world. Notably, it is a secure, discreet and exclusive jurisdiction, making it a popular home for high-net-worth individuals and a growing number of family offices.
WEALTH OF ATTRACTIONS
Bermuda has long-standing aviation and shipping registries. And, thanks to its highly developed infrastructure, top-tier regulation and low-tax system, Bermuda is also a centre for reinsurance, captive insurance, hedge funds, insurance-linked securities,
trusts and private-client business. The island’s wealth of cultural and sporting attractions – it is the host for the 2017 America’s Cup – also attracts global clients to reside and invest in this blue-chip domicile. Historically, forward-looking families structured the management of their wealth in Bermuda to safeguard personal assets and ensure the protection and proper succession of that wealth to future generations. Grounded in British common law, Bermuda’s 400-year-old legal system provides families with a pragmatic framework that they can trust, while lending access to sophisticated local service providers and practitioners. Decades ago, Bermuda was one of the first international trust jurisdictions. Today, as a premier international financial centre, it has world-recognised trustees and lawyers serving a broad spectrum of corporations and individuals.
‘Bermuda has huge potential to attract international wealth,’ says Joe Field, Senior International Partner at Withersworldwide. ‘It is particularly well suited to multi-jurisdictional families and can provide a very attractive base for high-income family members, especially for those with children attending schools in the eastern US or Canada.’ Indeed, Bermuda offers a wide range of advantages to anyone seeking a stable, sophisticated domicile. These include a convenient location between North American and European time zones; access to onshore centres via daily direct flights to London, New York, Miami, Toronto and other gateway cities; a dual-currency system permitting both Bermudian and American dollars to be used interchangeably; and a tax-neutral, consumption-based environment with no income, capital gains or corporate taxes (payroll tax, import duties, social
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insurance and customs duties are levied on goods and services – a major component of the island’s tax revenues). Bermuda’s trustees have extensive experience with complex private-client structures, charitable and philanthropic vehicles, commercial trusts, limited partnerships, family offices and private trust companies. Its practitioners and other professional service providers are accustomed to working with clients, legal counsel, accountants and professional advisers located throughout the world. But today, and especially in the family office space, customers are seeking more than just a trustee. Bermuda, with its breadth of services and intellectual capital, is an ideal location for family offices because it offers a full complement of ancillary solutions customised to specific needs. These include investment and wealth management; administration, philanthropic and fiduciary services; and specialised insurance, risk and compliance advisory expertise.
A GLOBAL LEADER
Captive insurance companies are increasingly popular tools for wealth preservation and succession planning for high-net-worth individuals and family offices – another Bermuda advantage. Bermuda’s captive insurance market is the global leader, with 800 companies generating nearly USD50 billion in annual gross written premiums. The presence of commercial insurance and reinsurance companies in the domicile allows captive owners and operators to access open-market underwriting capacity not found in other jurisdictions. ‘As a pre-eminent fi nancial centre, it makes sense that Bermuda is attractive to family offices, which are global in nature and require fullsuite fiduciary services,’ notes Clare Spearing, Head of Private Banking at Clarien Bank, Bermuda. ‘Bermuda is a serious player in this space thanks to a long list of advantages over other jurisdictions – namely, its convenient access and time zone; depth of talent and expertise; sophisticated commercial infrastructure; and well-respected environment. As families become more dispersed globally, Bermuda offers the benefit of a safe, accessible domicile
with a stable government and sensible legal and regulatory systems.’ With shifting political pressures in recent years on non-domiciled (non-dom) residents in the UK, and increasing uncertainty about the future of non-dom taxation status, Bermuda offers an attractive solution for affected individuals. The jurisdiction has the infrastructure and ‘Western lifestyle’ advantages of London and other large urban centres, as well as the expertise to manage asset-protection structures in as sophisticated an environment as they are used to. Bermuda is well suited to accommodating this highly mobile group of international high-net worth-individuals, many of whom – tech entrepreneurs, venture capitalists and shipping magnates, for example – fi nd the island not only a pleasant place to live, but also a natural base from which to grow their global enterprises. Recent updates to Bermuda’s laws have also made it easier for high-networth individuals to live there. Anyone over the age of 18, of good character and conduct, and with sustainable means or an annual income, can take advantage of the more flexible immigration options now available. These include permission to reside on an annual basis, residential certificates, work permits and permanent residency certificates.
‘Bermuda has a long list of advantages over other jurisdictions – namely, its convenient access and time zone; depth of talent and expertise; sophisticated commercial infrastructure; and well-respected environment’
Under Bermudian property ownership laws, a minimum purchase value for international purchasers is about USD3.25 million for private homes, or USD700,000 for condominiums. Licence fees amount to 8 per cent of the purchase price for private homes, and 6 per cent for condominiums. International buyers may also buy property in developments designated as hotel residences and tourist accommodation.
COMMITMENT TO COMPLIANCE
Bermuda recognises that jurisdictional reputation, linked to transparency and compliance standards, is an increasingly important factor that decision-makers consider when choosing appropriate domiciles for family offices. As the global regulatory landscape continues to evolve, high-net-worth individuals are aligning themselves with partners that have demonstrated a commitment to the highest of international standards – and Bermuda is among these. The island is respected worldwide for its strong record on compliance and tax transparency. It adheres to US and UK anti-money laundering and antiterrorist fi nancing requirements – and its jurisdiction has no banking secrecy laws. Privacy is respected, however, with a centrally held beneficial ownership registry dating back to the 1940s that shares information only with legitimate international authorities in accordance with well-defi ned request procedures. Bermuda is globally recognised for more than 90 treaty partnerships and its regulator’s top-quality supervisory system. Indeed, in 2016, the European Union awarded Bermuda full equivalence with its own Solvency II insurance regulatory regime. Also in 2016, the island adopted Organisation for Economic Co-operation and Development (OECD) standards for base erosion and profit-shifting compliance. The Bermuda government signed the Declaration to the Multilateral Competent Authority Agreement for the Exchange of Country-by-Country Reports, putting Bermuda in good standing with OECD member states in compliance.
KEVIN RICHARDS AND SEAN MORAN ARE BUSINESS DEVELOPMENT MANAGERS FOR INTERNATIONAL COMMERCE AND TRUST & PRIVATE CLIENT SECTORS, RESPECTIVELY, AT THE INDEPENDENT BERMUDA BUSINESS DEVELOPMENT AGENCY
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ways Bermuda is appealing to overseas property buyers To further stimulate demand for both residential and commercial property, the Bermuda government has introduced additional legislative and policy changes that make purchasing property much more attractive for overseas buyers seeking to relocate to the island
REDUCED RENTAL VALUE THRESHOLDS
From a residential perspective, the minimum ARV threshold (annual rental value, assessed by the government) for large, standalone executive homes has been reduced from USD153,000 to USD126,000 as it relates to overseas buyers. Although the minimum threshold equates to a purchase price of around USD3 million, overseas buyers have more inventory from which to choose. In addition, overseas buyers can now purchase two residential properties (previously only one was permitted).
INCREASED CHOICE OF CONDOMINIUMS
Qualified overseas buyers are now able to purchase any privately developed condominium with an ARV of USD25,800. Previously, supply in this market segment was restricted through policy, but recent changes have opened the market up considerably, giving overseas buyers more choice in terms of design, location and price. Overseas buyers can now purchase two condominiums.
LOWER LICENCE FEES
During the height of the market, overseas buyers paid alien licence fees of 25 per cent of the purchase price for homes, and 18 per cent for condominiums. To ensure the island competes favourably from a global perspective, the Bermuda government has significantly reduced the fees, to 8 per cent for standalone homes, and 6 per cent
for condominiums. The government has extended these competitive licence fee rates to 30 September 2016, at which time they will increase to 12.5 per cent and 8 per cent respectively.
ABUNDANT COMMERCIAL OPPORTUNITIES
From an investment perspective, the government has the authority to permit international companies domiciled in Bermuda, with a physical presence, to purchase both residential and commercial property for their own purposes. If you wish to own, rather than rent, there are great opportunities to purchase commercial properties. Prices are affordable, thanks in part to the post-2008 commercial property market correction, and there is a variety of commercial inventory from which to choose.
NEW LUXURY RESIDENTIAL INVENTORY
A number of announcements have been made around new luxury residential
inventory, including the passage of government legislation and planning approvals relating to several proposed hospitality and residential developments. The proposed new residential inventory will be available to overseas buyers and will satisfy a segment of the market seeking new-build, high-specification residential units with luxury, branded hotel facilities and amenities. Morganâ€™s Point, for example, has announced that it has received planning approval to develop 149 branded luxury condominiums and a five-star boutique hotel. A planned mega-yacht marina will also add significant value for buyers who wish to own waterfront property in Bermuda. These new developments will provide our market with much-needed luxury inventory and more choice for our overseas buyers. BRIAN E MADEIROS IS PRESIDENT OF COLDWELL BANKER BERMUDA REALTY
Celebrating heritage at the America’s Cup With its shipping prestige, ideal sailing conditions and broadcast-friendly time zone, Bermuda is the perfect host for the 2017 America’s Cup — and its sailing heritage continues to be celebrated, writes Carly Fields he grand fore-and-aft rigging of Bermuda’s famous sailing sloops against the sleek racing lines of the AC-class catamarans are the perfect juxtaposition of Bermuda’s sailing past and future. The high, raked masts of the Bermuda sloop were a familiar sight in the waters off the island in the 18th and 19th centuries, and their popularity was such that shipbuilding became one of the primary trades in Bermuda. Building on these roots, a strong shipping community flourished and today’s established Bermudian maritime industry is a testament to those pioneering beginnings. Next year, more than three centuries after the sloop changed the history of ship design, Bermuda plays host to the 2017 America’s Cup. Specifically designed for the race, a different but no less impressive innovation will be gracing Bermudian waters: a fleet of 45ft–50ft wing-sail catamarans. Sam Hollis, Chief Operating Officer at the America’s Cup Event Authority, explains why Bermuda won the bid against stiff competition from San Diego and Chicago: ‘Bermuda offers several advantages as a host venue for the America’s Cup. It offers superb sailing conditions, with varied weather conditions
PHOTO: AMERICA’S CUP EVENT AUTHORITY
that challenge sailors and designers. This is in conjunction with very little current, which often makes race courses very biased and advantageous to the leading boat.’ Bermuda is also in an ideal time zone for global television broadcasters, especially those in Europe, the Americas and Asia. Early- to mid-afternoon racing in Bermuda can be broadcast live in daylight hours almost anywhere in the world. Added to which, its geographical location means it is easy to get to from the US and Europe. Hollis highlights the ease of doing business in Bermuda as a further
positive: ‘We are very happy with the reception and support that we have received from all Bermuda stakeholders, especially the America’s Cup Bermuda (ACBDA) team, led by Chairman Peter Durhager, Chief Executive Officer Mike Winfield and Minister Grant Gibbons.’ Infrastructure preparations are ahead of schedule on all the major projects, he adds, with Oracle Team USA, SoftBank Team Japan and Artemis Racing having all built team bases with support from the ACBDA. While Bermuda’s shipping heritage wasn’t a decisive factor in its selection as host, the fact that Bermudians have a strong connection to the sea and are comfortable on the water was viewed as a positive in support of its bid. ‘We were delighted to see Bermudians come out in force to support the event in more than a thousand spectator boats when we staged the Louis Vuitton America’s Cup World Series Bermuda in October 2015,’ says Hollis. ‘The enthusiasm of Bermudians for the America’s Cup cannot be overstated. All teams have been welcomed here with open arms, as have the families who have moved here. This is, in part, due to Bermuda’s shipping heritage and island tradition.’ That sailing heritage continues to be celebrated in Bermuda through the Spirit of Bermuda, a purpose-built sail-training vessel based on the unique sloops constructed by Bermudians back in the 1700s. Tying the old to the new, the 118ft, 92-gross-tonnage Spirit of Bermuda is owned and operated by the Bermuda Sloop Foundation and acts as a floating classroom for Bermuda youth. Promoting experiential learning through sail-training, the Bermuda Sloop Foundation strives to create awareness of, and pathways to, technical, mechanical and marine-related careers for young Bermudians. The Foundation targets 12- to 14-year-olds and, to date, more than 4,000 young Bermudians have benefitted from the Spirit of Bermuda programme. The sail-training ship will be competing in the 2017 Antigua Bermuda Race, organised by the Royal Bermuda Yacht Club in early May 2017. It’s designed as a passage race to Bermuda to arrive in time for the month-long America’s Cup celebrations, where the past and future will connect in the pristine Bermudian waters.
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Published on Jun 1, 2016
With the evolution of its prestigious Red Ensign Group registry and an exceptional services infrastructure, Bermuda is booming as an interna...