Businesses have welcomed news that Finance Minister Eugene Cox has predicted Bermuda's strict 60/40 company ownership rule will have to be relaxed.

The Bermuda International Business Association (BIBA) and major employer The Bank of Bermuda Ltd. both threw their support behind relaxing the rule on the grounds that it would allow companies to operate more freely in a global marketplace. Mr. Cox said it looked like the rule would have to be "liberalised'' when he spoke to The Royal Gazette last week after attending a seminar on the global economy at a Paris conference hosted by the Organisation for Economic Cooperation and Development (OECD).

BIBA marketing manager Ross Webber said a relaxing of the "somewhat anachronistic'' rule would allow companies in Bermuda to take part in mergers and acquisitions, which "are being used to extend business operations, create new opportunities and enhance competitive advantage''.

Mr. Webber added: "The benefits of liberalisation include: an enhanced ability to seek capital from wider sources outside the Bermuda market as well as an ability to operate in larger, more liquid, financial markets.

He explained it would also allow companies "to establish strategic partnerships that build expertise and exposure and therefore enhance competitive advantage''.

Mr. Webber said that changing the rule would have "different levels of resonance for various types of local companies, and change may be more appropriate for some than others''.

He applauded the "case-by-case'' approach to making adjustments as "sensible''.

60/40 rule He added: "Provided the amendments are well structured, closely monitored and applied with appropriate discretions, this can be a positive step for Bermuda and has BIBA's support.'' The Bank of Bermuda has applied for exemption from the 60/40 rule because it wants to become a global player and raise the share price, which President and CEO Henry Smith believes is undervalued.

Mr. Smith told The Royal Gazette he was "very pleased'' to hear Mr. Cox's comments in support of relaxation.

"Our request for exemption from 60/40 is an excellent example of how greater flexibility could serve the best interests of Bermuda,'' he said.

"Our ability to serve on an overseas exchange would enable us to continue to provide Bermudians with the opportunities and financial rewards of having a successful global operation right on our doorstep.'' Mr. Smith added: "We also believe Bank of Bermuda's listing on Nasdaq would serve as a wonderful showcase for Bermuda as a world-class international business centre.'' Shadow Finance Minister Grant Gibbons said the 60/40 rule had been seen by the OECD as having a "ring fencing'' effect on local companies.

He stressed that it was not known whether it was that rule that they requested to have adjusted or section 129 of the Companies Act which deals with international businesses or both.

Dr. Gibbons explained: "Changes in either of those would mean more foreign capital could play a larger role in Bermudian business. I suspect this would be okay for the larger businesses but the smaller ones would be more exposed to the competition.'' But he added: "We won't be able to have a real sense of what impact this might have on Bermuda until we've got a clear sense of whether the rule is to be amended or eliminated completely.

"It is really the responsibility of the minister to tell us exactly what these changes will be,'' Dr. Gibbons said.