Swan says 60:40 switch doomed to failure
The government plan to boost foreign investment by turning the 60:40 rule designed to guarantee Bermudian control of island companies on its head is doomed to failure, a former Premier predicted yesterday.
Curtis Dickinson, the finance minister, said in his Budget speech that overseas interests would be allowed to control up to 60 per cent of companies that operate on the island under proposed new legislation — but that boards of directors would still have to be 60 per cent Bermudian.
However, Sir John Swan, a businessman and the country’s longest-serving premier, said: “Directors run the company. If I put in 60 per cent of the capital, and Bermuda needs capital, I should be able to say who represents me on the board.
“Sixty per cent of Bermudians will control the 60 per cent capital of the investor. It’s giving something on one hand and taking it back with the other.”
Sir John added: “We say ‘Bermuda is open for business’. We want people to come here and invest their money. But we are saying ‘give us your money, we will let you have four directors’. But the other six directors will decide the policy of the company.”
Companies that do business in Bermuda, with some exceptions are at present subject to the 60:40 rule, which requires that at least 60 per cent of a company’s shares are owned by Bermudians.
Sir John was speaking after Mr Dickinson told the House of Assembly: “In this Budget session, we will introduce a Bill that will reduce the required ownership of a local company from 60 per cent Bermudian to 40 per cent Bermudian, while maintaining the requirement for the board of directors to be at least 60 per cent Bermudian.”
Sir John said it appeared that the Government was trying to appease two groups with opposing viewpoints. He added: “I have a mindset problem with it. We have got to stop talking out of both sides of our mouth.
Sir John asked: “Where else in the world does this exist?
“I don’t know of anywhere in the world that it does. It’s an anachronism.”
He warned: “The financial position we are in makes it harder to get capital and this won’t change it very much.”
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