Sen. Lynda Milligan-Whyte , Parliamentary Secretary for the Minister of Finance, said the new laws would make Bermuda a more attractive place to do business, for international and local companies alike.

Aside from a couple of concerns, the new laws had the full support of the Opposition Progressive Labour Party.

The Senate passed: The Mutual Companies (Non-Application of Companies Act) Regulations 1995; the Overseas Partnerships Act 1995; The Exempted Partnerships Amendment Act 1995; and The Companies Amendment Act 1995.

Sen. Milligan-Whyte said The Mutual Companies (Non-Application of Companies Act) Regulations 1995 were very straightforward.

They allowed for the closure of the register of members of mutual insurance companies, putting them on the same footing as mutual fund companies. They passed without objection.

The Overseas Partnerships Act 1995 contained "significant amendments to enhance the jurisdiction as an international offshore jurisdiction, enabling overseas partnerships to establish a place of business in Bermuda''.

She noted the Companies Act permitted overseas companies, called permit companies, to establish a place of business in Bermuda. There were a significant number of them on the register and they had a significant impact on the economy, by paying an annual fee and employing accountants, other workers and resident representatives.

This was now being expanded to include exempted partnerships that were set up in other jurisdictions.

Provisions in the new law were similar to those in the Companies Act, with the Finance Minister having complete discretion to accept or reject an application for a permit from an overseas partnership, without having to state a reason.

In making a decision, the Minister was to be guided by criteria like the economic situation in Bermuda, and the likelihood that the new entity would have an adverse impact on the economy.

In approving a permit, the Minister could also set conditions, Sen.

Milligan-Whyte said. For example, he could allow the partnership to carry on business in connection with one aspect of financial services, but not another.

The Registrar of Companies would maintain a register about the overseas partnership that would be open for public inspection. They would also keep a registered office in Bermuda, and have a resident representative.

And the overseas partnership would be included in the definition of an exempted undertaking, being free from income tax until 2016 and free from exchange controls. With few exceptions, they would also be prohibited from carrying on business locally.

If necessary, the Finance Minister would have the power to appoint an inspector to look into the affairs of an overseas partnership. And a significant change in the overseas partnership would require the prior written consent of the Minister.

"It does add to Bermuda's international business sector in a very significant way and will probably mean that a whole new line of business will be set up in Bermuda,'' she said.

Sen. Terry Lister (PLP) praised the legislation and said he was "very pleased'' with the $2,000 annual fee. In fact, Government might want to consider raising that fee next year, he said.

But he had some concerns. What, if any, financial records, would the partnership have to produce when applying for a permit? The act did not specify.

Sen. Milligan-Whyte replied the act clearly said the nature and previous conduct of the company had to be among the factors the Minister took into consideration.

But Sen. Lister said he did not interpret that to mean financial records had to be produced.

Moving to another concern, Sen. Lister said he was pleased the Minister had the power to appoint an inspector, but he felt the Act should spell out under what circumstances an inspector could be appointed.

"I'm not saying this to imply that I believe the minister, permanent secretary, or Registrar of Companies will act frivolously,'' he said. But, "we're dealing with the law here, and the law is very unclear, if not silent on this matter''. That was "inappropriate''.

Sen. Lister said he was also concerned that a general partner could surrender the Bermuda permit without showing the consent of limited partners.

Sen. Norma Astwood (Ind) called for changes in the wording of the law to make it gender neutral. She also questioned a reference to such a company taking out a mortgage, when she did not believe it could hold land in Bermuda.

Sen. Milligan-Whyte bristled at the suggestion the fee spelled out in the act should soon be raised. "Bermuda has to be very, very careful,'' she said.

"We have other jurisdictions highly competitive with Bermuda and in fact Bermuda's fees have been traditionally much higher than our competitors to the south.'' To suggest such fees should be raised on a regular basis could send a "very, very damaging'' message.

Sen. Milligan-Whyte said that when applying for a permit, information about the partnership, including financial statements for the previous two years, would have to be provided to the Bermuda Monetary Authority.

When it came to appointing inspectors, the act was intentionally drafted so as not to limit the power of the Finance Minister, she said.

And surrender of a permit was a management decision that a limited partner should not be involved in without risking the loss of limited liability, she said. Also, many limited partnerships were listed on stock exchanges, meaning there could be as many as 1,000 limited partnerships.

Sen. Milligan-Whyte felt Sen. Astwood was "absolutely correct'' about the need for gender-neutral wording.

But from a legal perspective, the matter was dealt with under the Interpretation Act, she said.

There were rare circumstances in which such companies were able to take out a mortgage, she said.

Sen. Milligan-Whyte then moved on to The Exempted Partnerships Amendment Act 1995, which she said removed the requirement for the Finance Minister's consent prior to any change in limited partners.

The only role of a limited partner was to provide capital. Limited partnership units needed to be freely traded, on the Bermuda Stock Exchange, and elsewhere, and the requirement for Ministerial consent was time-consuming and onerous.

"This (change) came out of the industry itself and will encourage partnerships to list on the Bermuda Stock Exchange and freely trade their units,'' she said.

Sen. Lister described the change as "totally appropriate''.

The Companies Amendment Act 1995 contained two types of changes -- those affecting financial statements, and those affecting the duties and obligations of companies' officers and directors, she said.

One change would require an auditor's consent seven days before filing a prospectus. Under the existing legislation, a company could issue a prospectus naming the company's auditor without necessarily obtaining consent, she said.

There was also a new requirement that financial statements be included in the prospectus.

The Finance Minister was empowered to consult with the Institute of Chartered Accountants to draft regulations on what information should be included, and what generally accepted accounting principles should be used in preparing financial statements.

Sen. Milligan-Whyte said another change gave directors the authority to inspect minutes of shareholders' meetings. This was needed because the requirement that directors hold qualifying shares had been removed.

Yet another section dealt with indemnity of company officers. It would allow directors to be indemnified for acts or omissions other than wilful negligence, wilful default, fraud, or dishonesty.

Another amendment removed the requirement to obtain a register of members for mutual funds. "We have a number of mutual funds registered in Bermuda that have thousands of members,'' and they have been open for public inspection.

New business laws From Page 6 It could be argued that removal of the register of members requirement would encourage more mutual funds to register in Bermuda.

Another "very significant'' section set rules on when a company could dispose of its records after a winding-up, setting limits of two to 20 years, depending on the type of liquidation. The Minister was empowered to make rules to prevent the premature destruction of company records.

Sen. Lister described the changes as "good, healthy stuff'' which would make business in Bermuda "a lot cleaner'' while removing a cost layer.

Under the current legislation, an audit was required when issuing a prospectus, but it was really not needed, he said. As an accountant, "we should only be paid for things we do that are useful,'' he said. "I'm very much in favour of this, though my pocketbook will be lighter.'' The Senate also passed the following private bills yesterday: The Eco-Tech Ltd. Act 1995; The MassMutual International (Bermuda) Ltd. Act 1995; The Bermuda Broadcasting Company (Amendment and Validation) Act 1995; The Bermuda Drug Company (Amendment and Validation) Act 1995; The BF&M Life Insurance Company Ltd. Act 1995; The G.E. Superabrasives Ireland Act 1995; The Signal Mutual Insurance Association Act 1995, The Fortress Insurance Company Ltd.

(Separate Accounts) Act 1995; The Palladium Insurance Ltd. Act 1995; and The New Providence Mutual Ltd. Act 1995.