A US article that criticises last July's amendments to the Companies Act has been called "a scurrilous piece'' by a leading local lawyer.

The article, headlined "Bermuda makes it tougher on creditors'', appeared in a new Miami-based publication "Offshore Alert'' by David Marchant, an English journalist who previously worked in Bermuda.

It claimed that as a result of the amendment, "it has become more difficult, if not impossible, for creditors of failed Bermuda-registered companies to sue those who are largely responsible for the failures''.

But Government and the private sector said the author was wrong and in fact the legislation sought merely to reduce exposure to frivolous lawsuits.

The article claimed: "Concerns have been raised in Bermuda about the dangers to the Island's reputation caused by the amendments which appear to have been designed primarily to give officers, directors and auditors of companies legal immunity from acts of gross negligence and everything else short of outright dishonesty.'' The article further claimed that as a result of the amendment "company officers now appear to have a free rein to write legally-binding by-laws protecting themselves and their auditors from gross negligence and all manner of other incompetent actions, short of blatant dishonesty and criminality''.

When the amendments were passed by Parliament last July, Finance Minister Grant Gibbons said the changes would end the practice of making company officers and auditors joint and severally liable to pay all damages. Instead, they will be held proportionately liable -- except where dishonesty or fruad was concerned.

Last week, senior partner at Appleby, Spurling & Kempe, John Campbell, said: "The whole article is so far wide of the mark, that it would be a pointless exercise to dignify it with a response.

"It shows a remarkable lack of understanding of the intentions underlying the legislation and a total lack of appreciation of the actual effect of the legislation. The article is a scurrilous piece.'' Tom Conyers, chairman of the Legislative Change Committee of the Bermuda International Business Association (BIBA), said: "I think the author of the article has missed the point. The issue is that lawsuits are more frequent and they are in many cases being used as a tactical weapon. You see a lot more of that in the US.'' The BIBA committee, which includes government representation, was involved in proposing the changes specific to the bill.

Dr. Gibbons said on Friday: "We tried to strike a balance that would help deflect nuisance lawsuits, but that would still give people the lawful right to sue for negligence.

"We removed the word `wilful' from the legislation because we had a number of legal opinions that said the word was difficult to determine and in fact only created opportunity for spurious lawsuits.

"A lot of our business is done with the US, a very litigious business jurisdiction. We were finding a number of lawsuits which were occurring, sometimes with no real merit at all, but which led to settlements by companies that did not wish to fight the nuisance suits.

"But people can still be sued for negligence and fraud. None of that has changed. We only removed the word `wilful' because independent legal opinions said it was hard to define.

"It was inviting nuisance lawsuits and that's why it was removed.'' Mr. Conyers said: "In Bermuda, even if you are completely comfortable that there is no legal merit to the case, the mere fact that it is filed puts you in a position sometimes to make a business decision that it is cheaper to settle than to fight.

"That's inappropriate because it puts a burden on honest service providers who may have substantive assets, and who may be the only ones left to target.

More balance was required to ensure that egregious behaviour would not be permitted, but that it would not lead to unnecessary litigation.'' BUSINESS BUC