The purpose of this Memo is to generally set out the requirements of Bermuda's ICO legislation as at the date hereof and does not speak to any future date. It has been drafted to cover the requirements applicable to companies in Bermuda, although there are similar provisions for limited liability companies (LLCs).

Relevant Legislation

Bermuda launched the world's most progressive ICO legislation in 2018 in the form of the Companies and Limited Liability Company (Initial Coin Offering) Amendment Act 2018 which revised the Companies Act 1981 and the Limited Liability Company Act, respectively, and came into effect on 9 July, 2018; as well as the Companies (Initial Coin Offering) Regulations 2018 and Limited Liability Company (Initial Coin Offering) Regulations 2018 which came into effect on 10 July, 2018 (together the 'ICO Legislation').

The ICO Legislation applies to companies issuing ICOs (as defined in the ICO Legislation) and imposes certain legal requirements which a company must comply with, including publishing an offer document or 'white paper' with certain disclosures.

The ICO Legislation aims to not only provide certainty for those wishing to issue an ICO but it also aims to provide protection for those looking to purchase tokens or coins via an ICO.

The ICO Legislation makes the issuance an ICO a restricted business activity, meaning that any company wishing to launch an ICO will require the consent of the Minister of Finance under the ICO Legislation. Whilst a company will not be prevented from being incorporated pursuant to the typical processes provided by the Companies Act 1981 (as amended), ministerial consent is required prior to the launch of the ICO.

Any person who contravenes the ICO Legislation restriction on issuing an ICO, or makes (or authorises the making of) an untrue statement1 in an ICO offer document commits an offence under the ICO Legislation2 .

Under the ICO Legislation, an ICO is defined as an offer by a company to the public to purchase or otherwise acquire digital assets. The reference to offering digital assets 'to the public' includes offering them to any section of the public. 'Digital assets' include anything that exists in binary format and comes with the right to use it and includes a digital representation of value that:

  1. s used as a medium of exchange, unit of account, or store of value and is not legal tender, whether or not denominated in legal tender;
  2. is intended to represent assets such as debt or equity in the issuing company;
  3. s otherwise intended to represent any assets or rights associated with such assets; or
  4. is intended to provide access to an application or service or product by means of blockchain.

It is worth noting that any affinity or rewards program which does not permit value to be taken from or exchanged for legal tender, bank credit or any digital asset, falls outside the scope of the ICO Legislation. Similarly, any digital representation of value issued by or on behalf of a publisher and used within an online game, game platform, or family of games sold by the same publisher or offered on the same game platform are excluded.

ICO Offer Document

The ICO Legislation provides that no company shall offer digital assets to the public unless it publishes in electronic form an ICO offer document prior to such offer. The company must file a copy of the offer document signed by or on behalf of all of the directors of the company prior to (or as soon as reasonably practicable after) publication of such ICO offer document.

Notwithstanding the above, an ICO offer document does not need to be filed with the Registrar, at any time or in any circumstances, where—

  1. the digital assets are listed on an appointed stock exchange or appointed digital asset exchange, or an application has been made for the digital assets to be so listed, and the rules of the appointed stock exchange or appointed digital asset exchange do not require the company to publish and file an ICO offer document at such time or in such circumstances;
  2. the company is subject to the rules or regulations of a competent regulatory authority and such rules or regulations do not require the company to publish and file an ICO offer document at such time or in such circumstances, except where exemption from publication and filing of an ICO offer document is given by reason of the offer being made only to persons who are resident outside the jurisdiction of the authority; or
  3. an appointed stock exchange, appointed digital asset exchange or any competent regulatory authority has received or otherwise accepted an ICO offer document or other document in connection with the Initial Coin Offering to the public.

It is important to note that the offer document must remain accurate and must be updated if any of the minimum required information changes. Pursuant to the ICO Legislation, a statement included in an ICO offer document shall be deemed to be untrue if it is misleading in the form and context in which it is included; and, a statement shall be deemed to be included in an ICO offer document if it is contained in the document or in any report or memorandum appearing on the face thereof or incorporated in the document by reference or issued along with it.

Where an ICO offer document invites persons to purchase digital assets of a company, the following persons will be liable3 to pay compensation to all persons who prove that they purchased any digital assets in reliance to his detriment on the ICO offer document for the loss or damage they may have sustained by reason of any untrue statement included therein which is relevant to the ICO that is to say—

  1. every person who is an officer of the company at the time of the issue of the ICO offer document;
  2. every person who has consented to be named and is named in the ICO offer document as an officer or as having agreed to become an officer either immediately or after an interval of time;
  3. a promoter4 of the ICO; and
  4. every person who has authorised the issue to the public of the ICO offer document.


1. Unless he proves either that the statement was immaterial or that at the time he made the statement he had reasonable grounds to believe it was true

2. A person convicted of an offence as set out in this paragraph, shall be liable: on summary conviction, to a fine not exceeding $50,000 or to imprisonment for a period of one year or to both such fine and imprisonment; on conviction on indictment, to a fine not exceeding $250,000 or imprisonment for a period of five years or to or to both such fine and imprisonment.

3. Unless a statutory defense applies.

4. The ICO Regulations provide that a person is not a promoter solely by virtue of his provision of professional services to the company in relation to the ICO.

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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.