It’s a sign of the times that the House of Assembly, with near unanimity, agreed on Friday to ease the long-standing 60-40 rule for ownership of companies listed on the Bermuda Stock Exchange.That’s a far cry from the agonised debates that surrounded easing restrictions on Bermuda’s banks a decade ago.Only former Progressive Labour Party Cabinet Minister Terry Lister voiced any serious objections to the bill, although he received some sympathy from Opposition MP and former Cabinet Minister Dr Grant Gibbons. Nor did the changes generate very much public reaction — again, a far cry from earlier debates and perhaps a sign of how desperate things have become in the local economy.The 60-40 ownership rule has served Bermuda very well for decades. It prevented the homogenisation of the Island and enabled local businesses to grow and expand instead of being gobbled up by larger international rivals or driven out of business by predatory pricing.When tourism was king and Bermuda sold itself on the basis of being unique, that made a great deal of sense.But the rule has become less compelling since, and the drawbacks to have increased. Small Bermuda companies are unable to use the kinds of economies of scale that would enable them to keep prices down, and in the retail sector must pay a wholesale price for goods that is often higher than the retail prices a Wal-Mart or Amazon.com can offer.Protectionism in general also means that businesses can get away with selling poor products or substandard services because they have no competition.The 60-40 rule may also have made Bermuda more vulnerable to economic problems, and contributed to the real estate bubble which took place in the last decade. An editorial yesterday noted that much of the money from the sale of the Bank of Bermuda to HSBC went into real estate investment, thus driving prices in that sector up. Part of the reason for the that was that investments in property promised a better return than stocks on the illiquid Bermuda Stock Exchange. But if BSX companies were available to foreign investors, it is likely that liquidity and share prices would have been higher, and more money would have gone into these stocks instead of into land and buildings.Having said that, there is a real risk that undervalued companies like Belco, KeyTech and BF&M could be gobbled up by global corporations. While that might result in lower prices and improved services in the short term, the reality is that global companies are mainly interested in profit and the loss of local stewardship of these businesses could have dangerous long term consequences.HSBC has tried to address this by continuing to have a local board of directors, but it is clear that the final decisions will always be made in London.HSBC’s buy-out of the Bank of Bermuda is perhaps the best guide of what could happen. The bank is smaller than it was, but also more efficient. Bermudians have the opportunity to work and train overseas. So far, the local stewardship seems to be working and the bank is an exceptionally good corporate citizen. The fact it is part of a global corporation which successfully survived the 2009 financial crisis also enabled the Bermuda bank to avoid the kind of disaster that befell Butterfield Bank.However this might be a very different story if, for example, Royal Bank of Scotland had bought Bank of Bermuda. Then Bermuda might have been in real trouble. Some of that good fortune may have been a result of good judgment on the part of the Bank of Bermuda, but there was probably some luck involved as well.The new law requires that companies must apply for relief, and presumably Government can then set conditions for foreign ownership, which would include the fitness of the owners, requirements for local stewardship and so on. This would go some way to maintaining the best parts of the 60-40 protection while making Bermuda companies more competitive and financially stronger.