Answer ... The Insurance Act 1978 (Insurance Act) sets out its own provisions regulating changes of control in relation to an insurer and the reporting thereof. In that context, ‘controller’ means, among other things, any of the following:
- a person that holds 10% or more of the voting shares in the registered person, or that is entitled to exercise or control the exercise of such voting rights;
- a person that can exercise a significant influence over the management of the registered person by virtue of holding shares in the registered person, or by being entitled to exercise or control the exercise of voting power over such shares; and
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a person in accordance with whose instructions any of the following persons are accustomed to act:
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- the directors of a registered person, or of another company of which the registered person is a subsidiary; or
- persons who are controllers of the registered person by virtue of the first and second points above.
A person whose position in relation to an insurer is of a kind described in the first and second points above is defined to be a ‘shareholder controller’.
Under the Insurance Act, the Bermuda Monetary Authority (BMA) must be served with a notice in writing where a person:
- intends to become a 10%, 20%, 33% or 50% shareholder controller of an insurer;
- becomes such a shareholder controller; or
- intends to reduce or dispose of his holding of shares below any of those thresholds in an insurer of specified classes.
The statute provides for the required timing of such notice and for the possibility of objection by the BMA, depending on further criteria. Those criteria include whether the insurer in question is one whose shares, or the shares of its parent company, if any, are traded on a stock exchange.
An insurer must serve notice in writing on the BMA when any person has become or ceased to be a ‘controller’ of the insurer, subject to some exceptions. There is no corresponding notification requirement imposed on a designated insurer in respect of a change of controller of an insurance group.
From the perspective of Bermuda company law, beneficial ownership information must be disclosed, among other things, in respect of any application to the Registrar of Companies for the registration of a company under the Companies Act 1981 (Companies Act). For this purpose, ‘beneficial owner’ is defined to include, among other things:
- an individual or individuals who directly or indirectly own or control more than 25% of the shares, voting rights or interests in the company; or
- if no such individuals exist or can be identified, an individual or individuals who control the company by other means.
Corresponding information must be filed with the BMA at the time of, or in some circumstances shortly after, the registration of a company.
Pursuant to the Companies Act, in general, a company must:
- take reasonable steps to identify its beneficial owners; and
- keep and maintain up to date a corresponding register.
These preceding provisions need not be complied with duplicatively where beneficial ownership information is filed pursuant to any other statutory provision.
An insurer which is a registered person under the Insurance Act is exempt from the Companies Act requirements concerning beneficial ownership. Notably, this exemption does not apply at the time of filing an application for incorporating a company which is intended to become an insurer because, at that point, the applicant is not yet a registered person in the meaning of the Insurance Act.