Business Report
Bermuda's Bank of Butterfield
will be Exempt from
60/40 Rule
by Mandy Robinson,
Tax-news.com
Bermuda's Minister of Finance, Eugene Cox,has instructed the Registrar of Companies Department to preparea section 114B licence for the Bank of NT Butterfield & Son,which means that the bank will soon be relieved of its requirementto uphold the 60/40 Bermudian ownership rule.
The 60/40 ownership rule means that anycompany which is listed as a local company must be owned by a60 per cent majority of Bermudians or Bermudian companies - theother 40 per cent can be owned by people or institutions fromoutside Bermuda. But the protectionist rule has prevented thebank from gaining access to international capital via a US Nasdaqlisting.
In a press release, the bank said that althoughit is well capitalised and has a strong and highly liquid balancesheet, relief from the requirements of the 60/40 rule will enablethe bank to raise additional capital should it be required tofacilitate further acquisitions overseas or in Bermuda.
The move follows the Bermudian government'sdecision to relieve the Bank of Bermuda from the 60/40 rule inDecember of last year and there has been some speculation thatthe decision was influenced by pressure from the OECD, which wantsall offshore centers to create a level playing field for domesticand foreign players by removing two-tier tax and legal structures.
Previously, the Bermudian media quoted EugeneCox as saying: 'The OECD has stated very clearly that it considersthe existence of two tiers of business structures within a jurisdiction,with different rules and restrictions applying to each, to bea potentially harmful tax practice.'