Bermuda is an ideal place through which to arrange film financing, due largely to the high levels of expertise and flexibility available.

Deborah Poole, of Appleby, Spurling & Kempe, explained how the Island could be utilised in film finance to an audience of film makers and associates at a workshop on Saturday. The workshop, at the Bermuda Underwater Exploration Institute, was organised by the Bermuda International Film Festival.

The series of workshops examined various aspects of funding and marketing independent films. Large studio productions do not face the same problems that smaller, independent filmmakers face and a selected number of experts led the workshops dealing with the options and possibilities.

Ms Poole was there to tell the audience about options in Bermuda and she said that due to historical associations the Island has a lot of knowledge about doing business in both the Americas and in Europe.

She explained that if the main financing vehicle is based in Bermuda, a neutral tax jurisdiction, access to and from other jurisdictions is uncomplicated and tax efficient.

"Bermuda is tax neutral which is ideal for film financing where the investors (those putting up the money to make the film) may be situated anywhere in the world. For a financing vehicle tax neutral means there is no need to get involved with matters such as double taxation and tax treaties. It is also possible to roll up the profits here without taxation at source,'' she said.

There is flexibility in the type of vehicle that can be used which may be a corporate vehicle, a partnership or a unit trust. And there is also flexibility in the types of financing such as secured lending, debt offerings, equity and hybrid structures which can be a mix and match, she explained.

Ms Poole also highlighted the types of expertise available in the island. She said all the large accounting firms are represented here and there is a good representation of lawyers. There are also a number of very experienced asset managers who manage money for high net worth clients who are seeking alternative investment strategies.

She feels that in the future it would be advantageous to use the Island's segregated accounts companies, legislated for last year. "In these you can create separate cells or accounts where assets and liabilities in each account are completely ring fenced. For example this would work for a split rights deal where one cell could handle theatrical receipts and another sound recordings and merchandising rights, etc.'' In an earlier session Mark Litwak, a veteran entertainment lawyer, described investing in independent film making as "a little more risky than going to Las Vegas''. He said that typically profits from a production are shared 50/50 between the producers and the investors, but the producers' share has then to be split among actors, writers, etc.

"Limited liability companies are the most commonly used vehicles for investors now, no longer is it limited partnerships. A limited liability company combines aspects of the corporate and partnership forms of business, while avoiding some of their drawbacks.

"Like shareholders of a corporation, members of an LLC are not personally liable for the debts and obligations of the LLC. And, like a partnership, an LLC may not be subject to income tax. Profits and losses can be passsed through to members,'' he said.

Mr. Litwak provided a checklist for protecting investors which includes: Due diligence -- thoroughly investigate the reputation and track record of any producer or distributor with whom you contemplate doing business.

Full disclosure -- even if registration is not required, the anti-fraud provisions of security laws require that the offeror make full disclosure of all facts that a reasonably prudent investor would need to know in deciding whether to invest.

Track record -- do not back a filmmaker or production team that does not possess the proven skill needed to make a professional-looking movie.

Identify the potential market for the film -- there is a very limited market, and modest potential revenue, to be earned from short films, documentaries, black and white films and foreign language pictures.

Congruence of interests -- it is best to invest in an endeavor where evryone shares the same risks and rewards.

Obtain all promises in writing -- don't ever accept oral assurances from a producer or distributor.

Take an active role -- by being actively involved in the production, an investor will be better able to monitor the performance of the film maker and discover problems while there is time to remedy them.

Obtain an experienced advisor -- retain an entertainment attorney or experienced producer's rep to advise you and review all documents.

Don't invest more than you can afford to lose -- the complete loss of your investment should not appreciably affect your standard of living.