Economic substance rules bring encouragement
New rules on economic substance have led some companies to consider bringing more work to the island.
Ben Wright, the senior manager, financial services, at professional services firm EY Bermuda, said it was one of the positives from Bermuda’s economic substance regulations that came into force this year to fulfil European Union requirements.
Mr Wright added that businesses and corporations that valued the country for its intellectual capital and regulatory environment had examined what they could do over and above the economic substance requirements.
He said: “Economic substance can be an anchor to bring other work into Bermuda that may have been completed elsewhere.”
Mr Wright added that there had been conversations “with managers reaching out to discuss bringing work back into the jurisdiction”.
Mr Wright was speaking at an Alternative Investment Management Association Bermuda webinar, organised by the Bermuda Business Development Agency.
The event was focused on digital assets and economic substance, with Mr Wright as moderator.
Some corporate board meetings that should have been held on the island ended up as virtual meetings using teleconferencing because of the Covid-19 pandemic travel restrictions.
Natalie Neto, a partner at law firm Walkers Bermuda and a webinar panellist, said clients had been focused on how to satisfy economic substance requirements, such as physical presence requirements at some meetings, when travel restrictions were in force.
She added that the Registrar of Companies had issued a notice that it would consider the circumstances where meetings could not be held in Bermuda.
Ms Neto said: “The new normal is moving towards digitisation and holding virtual meetings and handling things in a much more virtual way. In many ways, we have new laws that don’t take that into account.
“This is the new normal. People are used to working flexibly, working from home and having virtual meetings.”
The panellists also discussed digital assets and how Bermuda has handled the sector.
Moad Fahmi, a senior adviser on fintech at the Bermuda Monetary Authority, said the country was an early adopter and had gained experience in the sector as it helped to transition the industry.
He added that growth of knowledge and the BMA’s knowledge of the sector was something that could not be easily replicated.
Mr Fahmi said that Bermuda legislation could be copied by others, but the transformation needed to support the digital asset industry at the regulatory level was more difficult.
He added: “We have thought about what a regulator of the future looks like and we have leveraged knowledge we have from industry to build that.”
Mr Fahmi said: “Everyone realises that the world is going to be transformed. Physical interactions are going to be different, probably leaving a bigger space for digital interaction.
“We are launching a few pilots on how to better interact digitally. We want to facilitate as much as possible doing business in this digital environment.”
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