Bermuda's reputation as a first class offshore jurisdiction, along with the timely enactment of its Electronic Transactions Act 1999 on 4 October last year, have served to catapult it to the forefront of the e-commerce world.

The Island, which has traditionally relied on tourism and international business for its revenue, is now seeking to include e-commerce as another of its areas of expertise.

Bermuda's location, approximately 650 miles off the East Coast of the United States, will surely play a key role in its successful entry into the e-commerce arena.

When one considers the self-governing Island's status as an Overseas Territory of Britain, its common law-based legal system and its history as a premier offshore jurisdiction (it is the third largest reinsurance market in the world behind London and New York), clearly the opportunities it presents can only be described as boundless.

Bermuda also enjoys political stability and a high standard of living which, along with its beauty and temperate climate, make it an idyllic place to live and work.

At the heart of establishing and maintaining a successful e-commerce venture is the availability of expertise and reliable service providers in the relevant jurisdiction.

Despite its size of 21 square miles, Bermuda has an abundance of talented professionals including lawyers, accountants and IT specialists who call its shores home.

There are two local Internet Service Providers and four telecommunications companies on the island who can provide an e-business with its vital link to the Internet as well as with a host of other services.

Cable & Wireless, which has had a presence on the island since 1890, recently announced that it would be offering a business solution that will allow Bermuda to become a world base for the Internet through the introduction of its Bermuda hosting facility at South Side, St. David's.

Secure server co-location facilities, dedicated lines and digital certification for electronic signatures are just a few of the options available in Bermuda to e-commerce entrepreneurs.

An e-business owner can also rest secure in the knowledge that the Bermuda Government has thrown its support behind establishing the island as a top offshore e-commerce centre.

Bermuda was one of the first countries to pass e-commerce legislation and the first country in the world to include e-commerce in a Cabinet Minister's portfolio.

The Minister of Telecommunications and E-Commerce, Renee Webb, has publicly stated that the Bermuda Government has measures in place to enable the island to compete against other countries looking to secure rare, highly skilled IT workers.

Ms Webb has given assurances that, in the event that the required expertise is not available on the Island, all such work permit applications will be processed as expeditiously as possible.

Limited liability companies are normally the legal form required for doing e-business. Bermuda's version is an exempted company. As its name implies, it is exempt from all taxes, rates and assessments in Bermuda.

An annual fee is, however, payable to the Bermuda Government, based on assessable share capital. The minimum share capital with which an exempted company may be incorporated is $12,000, for which the current annual fee of $1,780 is payable to the Government.

A limited liability Bermuda exempted company with e-commerce objects can be incorporated usually within two to three days of submitting all of the required information to the local authorities.

The Bermuda Monetary Authority, which works in conjunction with the Registrar of Companies, reviews applications thoroughly to ensure that Bermuda's image and reputation as a premier offshore jurisdiction are protected and upheld.

Several Bermuda companies have been established in the last year which make available legally segregated accounts, sometimes referred to as cybercompanies or e-suites, specifically for e-commerce related uses.

If an e-business venture is not initially large enough to warrant the establishment of its own exempted company, it has the option of existing in limited liability form more economically through the use of an e-suite.

The e-suite concept is based upon Bermuda's protected cell insurance legislation and, through the provisions of a Private Act of the Bermuda Parliament, is designed to economically provide clients with the limited liability structure they desire while ensuring that one e-suite's assets and liabilities remain separate from those of the other e-suites existing under the same corporate structure.

The option of obtaining an e-suite may, therefore, initially prove to be a quicker and more cost-efficient and alternative for an e-entrepreneur than incorporating his or her own limited liability exempted company.

Whether one decides to establish their own limited liability company or opt for an e-suite, the cost of establishing and operating an e-business from Bermuda is reasonable in the circumstances.

Although currently communications costs may be slightly higher than those in the US, the advantage of the offshore domicile of the e-business should outweigh this higher cost.

Also, with competition heating up in the local communications market the outlook for reduced communications costs in the near future looks bright.

Continue on Page 19 Continued from page 12 Tonya Marshall If an e-business, whether it is engaging in business-to-business, business-to-consumer or business-to-government transactions, requires secure payment processing services offshore, the local banks are well equipped to assist.

The Bank of Bermuda, together with its partner First Ecom.com, recently established a joint venture company known as First Ecommerce Data Services Limited, or FEDS.

Through its relationship with FEDS, the Bank of Bermuda is able to offer e-businesses a unique payment processing application with the option of multi-currency settlement from an offshore bank.

The availability of multi-currency settlement payment processing is particularly attractive to Internet merchants, as most consumers are more comfortable buying goods online in their own currencies.

Allowing consumers the option of purchasing goods in a variety of currencies can boost earnings potential, provide merchants who offer this facility with a competitive edge and substantially reduce the costs and risks associated with foreign exchange transactions for the e-business.

Finally, for those e-commerce companies wishing to go public, Bermuda has its own internationally recognised stock exchange, the Bermuda Stock Exchange, or BSX. All things considered, Bermuda is a full service jurisdiction that is well placed to provide everything required for the launch and ongoing operation of an e-business.

With the commitment of its Government, the Island is quietly undergoing a digital revolution that could change the whole complexion of business as we know it today.

N.B.

This is the exact same Law Matters supplement that ran in The Royal Gazette on 20th September, 2000. However do the printing problems that affected the quality of the print, it was pulled from the circulation and did not appear again until the 9th October, 2000.