Flexible ISAC law to offer client solutions

  • Laura Burns of Appleby

    Laura Burns of Appleby


Final consultations are now taking place in respect of the Incorporated Segregated Accounts Companies 2019 (Bill), which is expected to appear on the statute books soon.

The draft Bill is the result of a collaboration between the Bermuda Government and private sector participants.

This article assumes that the legislation, when enacted, will be in substantially the same form as the draft Bill.

The ISAC Act has been on the legislative agenda since John Rankin, the Governor, announced in his Speech from the Throne on September 8, 2017 that incorporated segregated accounts legislation would be drafted, tabled and enacted.

It is a stand-alone piece of legislation and a companion statute to The Segregated Accounts Companies Act 2000 (SAC Act).

Bermuda has been a pioneer in developing cell company structures and concepts. The Bermuda cell company regime initially took the form of Private Acts and subsequently progressed through the promulgation of the SAC Act, which enables assets and liabilities of a segregated account to be legally separate from both the assets and liabilities of the company’s general account and the company’s other segregated accounts.

A key feature of both a segregated accounts company and an incorporated segregated accounts company is that the assets of each individual segregated account, or cell, will not be available to the creditors of any other cell.

Moreover, it is possible for individual cells to be subject to winding-up proceedings while the ISAC or SAC, as the case may be, and the other cells remain unaffected.

Under the SAC Act, the statutory divisions between accounts do not create separate bodies corporate.

The ISAC Act, conversely, is distinguished by the creation of separate bodies corporate.

As with segregated accounts of a SAC, it will be possible for ISACs and their incorporated segregated accounts to contract with one another and/or the ISAC itself.

Each ISA will have its own board of directors, separate from the board of the ISAC (though there is no prohibition on common directors sitting on both ISAC and ISA boards).

In keeping with separate legal company status, an ISA will be able to hold assets, sue and be sued in its own name and otherwise have many of the attributes of a non-cellular company.

ISACs enable corporate group structures to be created, but with lower administration costs than a traditional group of non-cellular companies.

Due to the process of creating incorporated cells, ISACs will provide robust segregation of assets and liabilities.

ISACs will be governed by the requirements of the Companies Act 1981 (except where otherwise provided in the ISAC law) and licensed and regulated appropriately as an insurer or a fund.

The ISAC adds further dimension to the segregation of assets in Bermuda. Providers may wish to expand the range of their services by offering them through the medium of both a SAC and ISAC structure, in order to cater to the circumstances of particular clients.

In this way, the ISAC is a new corporate cell structure that is flexible, and which offers a wide range of solutions to clients.

The introduction of the ISAC Act meets today’s demands for flexibility and speciality, serving to strengthen our Bermuda offering and products including rent-a-captives, life insurance and ILS.

Laura Burns is an Associate on the Corporate Team at Appleby. A copy of this column is available on the firm’s web site at www.applebyglobal.com. This column should not be used as a substitute for professional legal advice. Before proceeding with any matters discussed here, persons are advised to consult with a lawyer

You must be registered or signed-in to post comment or to vote.

Published Jun 6, 2019 at 8:00 am (Updated Jun 6, 2019 at 12:10 am)

Flexible ISAC law to offer client solutions

What you
Need to
Know
1. For a smooth experience with our commenting system we recommend that you use Internet Explorer 10 or higher, Firefox or Chrome Browsers. Additionally please clear both your browser's cache and cookies - How do I clear my cache and cookies?
2. Please respect the use of this community forum and its users.
3. Any poster that insults, threatens or verbally abuses another member, uses defamatory language, or deliberately disrupts discussions will be banned.
4. Users who violate the Terms of Service or any commenting rules will be banned.
5. Please stay on topic. "Trolling" to incite emotional responses and disrupt conversations will be deleted.
6. To understand further what is and isn't allowed and the actions we may take, please read our Terms of Service
7. To report breaches of the Terms of Service use the flag icon

  • Take Our Poll

    • "What is the most significant reason for Bermuda residents choosing to leave the island?"
    • Too small
    • 3%
    • Different way of life
    • 4%
    • Cost of living
    • 77%
    • Gang activity and general crime
    • 3%
    • Jobs/professional advancement
    • 8%
    • Education
    • 2%
    • Attitudes towards gays
    • 3%
    • Total Votes: 5235
    • Poll Archive

    Today's Obituaries

    eMoo Posts