The number of foreign companies which incorporated in Bermuda declined for the second quarter in a row, according to figures from the Registrar of Companies released this week on company registrations between April and June.

Save a spurt of new companies during the fourth quarter of last year, the number of incorporations has fallen steadily since mid-2000, when the Registrar approved 545 new companies.

During the second quarter of this year, just 271 exempted companies, exempted partnerships, overseas companies, overseas partnerships and non-resident insurance companies were added to the Bermuda's list.

The figure is the lowest since the first quarter of 1999, when 254 companies were added.

The number of local company incorporations has not followed any trend, varying between 45 and 52 per quarter since the middle of last year.

The number of overseas company incorporations caught the attention of Opposition Leader Grant Gibbons, who said the slowing growth of new incorporations is "not healthy" because incorporations provide fee revenue for the banks which manage their accounts and the legal firms which set them up.

"Anything that suggests we are getting fewer companies here indicates a negative impact on economy," Dr. Gibbons said in an interview this week.

Weaker financial markets, concern about offshore markets and the negative exposure Bermuda has received in the United States are all possible reasons for the declining number of incorporations, Dr. Gibbons said.

"It could simply be a change in business activity," he added.

Although new companies join Bermuda's register every quarter, between April and June more companies were removed, resulting in a net loss of 319 companies compared with the previous quarter.

The number of companies removed from the list during the quarter is seasonally high because of result of an annual clean-up, whereby the Registrar of Companies removes companies who have not paid their annual dues from the active portion of the register.

Some will pay their dues to stay on the register and will be reinstated in the following quarter.

The rest of the decline can be attributed to companies which are wound up as a part of bankruptcy proceedings, reorganisation of the parent company or once the company has achieved its purpose.

A spokesman for Conyers Dill & Pearman said the law firm had not noticed an increase in the number of liquidations it deals with.

A Ministry of Finance spokesman agreed with Dr. Gibbons that the shaky global economy had probably curbed the number of new incorporations, while increasing liquidations.

But he added that Government is more interested in the quality of companies which incorporate in Bermuda than the number of them and was not concerned by the current trend.

He added that Bermuda's company business is not contracting to the advantage of other offshore jurisdictions, citing statistics for the Isle of Man, which has also seen its much-larger company register contract.

At the end of 1998, there were 42,555 companies registered in the Isle of Man. At the end of September last year, incorporated companies numbered 37,764. Many of the companies were abandoned, according to the island's Financial Supervision Commission, although new incorporations have also slowed over the past three years.