A piece of legislation which makes it easier for non-insurance companies such as mutual funds set up a segregated account company in Bermuda will take the Island ahead its competitors in other jurisdictions.

This is according to the lawyers at Appleby Spurling Kempe who produced "The Brief" on the Segregated Accounts Amendment Act 2002, which was put forward with a view to enhancing Bermuda's competitive position, according to the publication.

The Bermuda law firm has published the detailed guide to the Segregated Accounts Companies Amendment Act 2002s and hopes to break down the complicated piece of legislation which was tabled for a first reading in the House of Assembly on December 14, 2001.

"The Brief", which is published by AS&K explaining legal issues to clients and its own staff, said that it took more than a year of comprehensive and specialist review to get the bill tabled.

"Much interest has been expressed by potential users in relation to the legislation and it is anticipated that many companies presently operating under private acts or without the benefit of segregate accounts legislation will become registered under the Segregated Accounts Companies Amendment Act 2002," The Brief said in its conclusion.

And it added that it was the most comprehensive and coherent legislation on the subject of any jurisdiction in the world and will take Bermuda ahead of the pack.

"With the introduction of the Amendment Act, it is hoped and expected that Bermuda will continue to excel as the jurisdiction of choice in relation to the formation and operation of segregated accounts companies.

The article states that the Amendment Act represents a major overhaul of the Segregated Accounts Companies Act 2000.

"The review of the SAC Act was spearheaded by Appleby Spurling & Kempe and took place under the auspices of the Legislative Change Committee of the Bermuda International Business Association with a view to enhancing Bermuda's competitive position by, among other things, facilitating the application of the legislation to non-insurance uses including mutual funds.

"The revisions to the SAC Act are numerous and technical but the effect of them will be to make the legislation more attractive to users and to enable them to achieve specific business solutions they have requested."

The act will simplify registration procedure, will no longer have to have "segregated account company" in the registration name, allows greater flexibility, internal transactions and a simplification of accounting procedures and the way different types of segregated companies are listed.

There are now also changes to insolvency, liquidation and receivership have been proposed as well as ways to avoid unfair transactions before becoming insolvent.

What it a segregated account company?

A segregated account company is a way of creating separate cells or accounts where assets and liabilities in each account are completely ring-fenced. For example, for a split rights deal in a record company, one cell had theatrical receipts and other sound recording and merchandising etc.