Bermuda has long served as a gateway to the US capital markets. As of the end of 2017, the combined market capitalisation of Bermuda companies listed on the NYSE and Nasdaq was approximately $240 billion. Elsewhere in the world, Bermuda remains a preferred jurisdiction for companies listed on the main board of the Hong Kong Stock Exchange, with approximately 25% of HKSE-listed companies being incorporated in Bermuda. In addition, Bermuda companies are to be found listed on many other major exchanges across the world including the London Stock Exchange, the Toronto Stock Exchange, the Oslo Børs and the Stock Exchange of Singapore
Amongst the Bermuda companies accessing capital markets, there has traditionally been strong representation from both shipping companies and insurers, reflecting the underlying strength of Bermuda’s ship registry and the island’s status as a domicile of choice for the international insurance/reinsurance market. Recent years have seen a diversification of issuers opting for a Bermuda company as a listing vehicle including in the biotech (Axovant Sciences, Myovant Sciences), information technology (IHS Markit), financial services (Lazard and The Bank of N.T. Butterfield & Son) and telecommunications (Liberty Latin America) industries. In recent years, the number of Bermuda companies pursuing an IPO on the NYSE or Nasdaq has remained relatively stable, with between 5 and 10 Bermuda companies completing an IPO on those exchanges each year.
Many listed Bermuda companies are outward-facing in the sense that little, if any, of their business is conducted in the domestic Bermuda economy. Businesses using Bermuda companies as a listing entity often do so in order to leverage Bermuda’s unique jurisdictional advantages. Organisations with multi-jurisdictional business find Bermuda’s tax neutrality and deference to onshore regulation to be conducive to the establishment of a holding company vehicle that can be used as an efficient way to raise public capital for an entire corporate group without adding unnecessary fiscal or regulatory complexity to the group’s operations. Bermuda law also permits public companies a degree of flexibility in structuring their corporate governance arrangements, as well as providing a suite of statutory tools under its company law, that may not be available in other jurisdictions. For example, Bermuda law permits companies to set their own criteria for the composition and proceedings of their boards of directors, to adopt varied takeover protections, and to formulate complex and novel capital structures.
Bermuda has served as a jurisdiction for establishing international companies longer than any other international financial centre, and has consistently demonstrated its commitment to meeting international standards of co-operation and transparency: since 2009, Bermuda has been on the Organization for Economic Cooperation and Development’s “white list” of countries meeting tax transparency standards. The strength of the island’s reputation and profile are repeatedly evidenced by onshore regulators’ familiarity with the jurisdiction, as well as by the fact that a large majority of the Fortune 100 companies maintain some presence in Bermuda.
This article was first published in Global Legal Insights’ Initial Public Offerings 2018.