*File photo
*File photo

Statement by Minister Grant Gibbons

On Friday, March 7th I introduced a Bill in the House of Assembly entitled the Companies Amendment Act 2014. This Bill proposes a number of important changes to the ability of both local and exempt companies to acquire and hold land in Bermuda under the Companies Act 1981.

The Bill also refers to a new written Policy that will guide decision making for corporate landholding. Earlier today, I tabled this Policy in the House.

I anticipate that the Bill and the associated Policy will be debated this coming Friday, March 21st.

There are a number of reasons for introducing these changes and they include:

To provide, for the first time, a clear and transparent written policy on corporate landholding in an otherwise cloudy area of law and practice.

 To stimulate turnover in the real estate market and create jobs in the construction sector, and

To make Bermuda a more attractive and competitive jurisdiction and to further strengthen the bond that exempt companies and their senior executives have with Bermuda.

Over a number of years, the policy, process and procedures used by the Minister to provide consent for companies to hold land has been chopped and changed as a result of changes to the Act. These policy changes were apparently not written down, nor was there adequate consultation or consistency in application. This has led to years of confusion and problems in practice.

It has also led to some companies being unable to pass on clean ownership title to their property when they wished to sell. The Ministry is aware of at least 10 such cases that have been brought to its attention over the last couple of years. There may be many more, as some companies will not realize there is a problem until they attempt to sell their property.

The Bill addresses this “title” issue. If adopted, the Minister will be able to provide rectification to situations where, if a company can prove that they should have had proper ministerial consent, they will be able to receive it. This consent will then put them in a position to pass on clean title to prospective buyers.

Another feature that has been missing up until now, is a clearly articulated, written policy to guide decision-making on ministerial consent for companies to hold land. The Bill and Policy combined will finally provide written clarity on the law and the process for companies to acquire land in Bermuda.

However, I wish to make it very clear that our approach toward corporate landholding is one of caution. Our land is a scarce resource. It is precious. We are very careful to balance this fact with the need to stimulate our economy. With this in mind we have crafted the Policy to ensure that restrictions remain on the capacity of companies to acquire and hold land. The Policy is appropriate and robust.

The main change between the previous situation and the new Policy is that now local and exempt companies will be allowed to purchase residential property.

Let me be clear here. The residential properties they will be allowed to purchase are very specific and are the properties that are already available to “restricted persons”. This restricted person category is a designation that the Department of Immigration uses for foreign nationals or persons who do not possess Bermudian status. Residential properties with an Annual Rental Value, or ARV, of $177,000 and above are the properties available to restricted persons. There are about 250 high end residential properties in this category, as well as a number of condos that are similarly designated.

The Policy will prevent companies from renting these properties in the market.

The proposed policy changes will also allow, within certain criteria and restrictions, exempt companies to hold commercial property if it is used for the specific purposes of their business. Similar provisions will apply to local businesses.

Without getting too deeply into the legislative complexities (we will do this on Friday in the House) I will simply advise that the previous situation was unnecessarily complex and contradictory. That’s why we are seeking to clarify it by modifying the law, and producing a clear policy. Consultation with the Bermuda Bar Association and the Chamber of Commerce on the proposed amendments has taken place over the past year.

It is important to note that these proposed revisions to the Companies Act do not impact on the Bermuda Immigration and Protection Act. The decision making of the Minister of Home Affairs with regard to Immigration consent still applies on landholding.

We believe that with passage of this Bill, several properties that are currently on the market will be acquired. This will produce revenue for the government via stamp duty. And, most importantly, this will produce jobs in the construction sector. Many of the properties, once acquired, will undergo renovation and redevelopment.

Let me close by saying this is a forward-thinking Bill and Policy and one which we believe will move the real estate, construction and conveyancing sectors in a positive direction.

Thank You.

Corporate Landholding Policy