Finding a rental space in Hamilton that fits one's business is tough enough but at least one local lawyer told The Royal Gazette that there is further headache for international companies that no longer need the space they rented.

Appleby, Spurling and Kempe property lawyer Michelle Stone said that clients who no longer need a rental space - because their business on the Island has either downsized or expanded into larger premises - and are unable to break the lease, may consider sub-letting the space. But in order to do that the Ministry of Finance - and Mrs. Stone said this had only become an issue in recent years - was asking exempt companies to seek a business licence under section 129A of the Companies Act.

Section 129 A states that no exempted company shall carry on business in Bermuda unless the Finance Minister, on application made by the company, grants a licence to the company empowering it to carry on in Bermuda a business or an activity. Further on in the legislation it states that an exempted company shall not have the power to acquire and hold land in Bermuda except: land required for its business held by way of lease or tenancy agreement for a term not exceeding 50 years; or with the consent of the Minister granted in his discretion land and by way of lease or tenancy agreement for a term not exceeding 21 years in order to provide accommodation or recreational facilities for its officers and employees.

The Ministry conceded that the Act did not expressly state that sub-leasing would require a licence. A statement issued to The Royal Gazette said: "There is no express statutory provision in the Act for the Minister to grant a licence to an exempted company to cover subleasing arrangements. The Ministry has taken the view that holding land by way of sublease is a licensable activity. Therefore, it has been the Ministry's practice to permit exempted companies to enter into subleasing arrangements provided that such companies give an undertaking not to profit from the arrangement."

In contrast to the Ministry's position, Mrs. Stone argued that sub-letting should not be considered as doing business when a company sub-lets a space for the same rent as is paid to the landlord.

Mrs. Stone said: "The Ministry believes that sub-letting (for no profit) is carrying on business. But they have never publicised the reasons behind this stance." She added that there is no Bermuda case law to back up the policy but she said based on UK Housing Law a single sub-lease would not be considered as doing business.

The licence, which must be renewed annually, costs $1,000 and whatever legal fees are incurred in the process. In addition, Mrs. Stone pointed out that the turn around time on the license may take up to two months or longer. At the end of the day companies are left with several thousand dollars in direct costs and thousands more from the cost of paying rent on an empty space while waiting for the license to sub-let.

Mrs. Stone, who could not speak of specific companies because of client privilege, said some high-profile businesses are fed up with the red tape surrounding the process.

She added that although she has been asking the Ministry of Finance for written clarification of their position over the last two years, she is still in the dark as to why the Ministry has taken this stance. Mrs. Stone said however that the Ministry had indicated to her that they were canvassing for the opinion of the business community on the matter through the Bermuda International Business Association (BIBA). But a call to BIBA CEO Richard Calderon found that they were not aware of the issue and had not been approached by the Ministry of Finance on the matter.

On that matter, Government said: "The Ministry had been asked to review this issue and met with representatives from two law firms sometime last year. Once that review has been completed, the Ministry will consult with all the relevant stakeholders, which is its normal practice."

Pamela Jones, Legislative Assistant for the Finance Ministry, told The Royal Gazette that records indicated that the first sub-letting licence had been issued in 1971. But she added that very few licences had been granted to exempted companies. She said: "Some have taken the view that they don't need a licence". Ms Jones added: "This is a very uncomplicated process and usually takes less than two weeks to complete," although Ms Stone indicated her clients had waited up to two months for the licence to be issued.