Companies wishing to incorporate in Bermuda will have to file applications with the Registrar of Companies electronically, under new legislation.

The Companies and Partnerships Electronic Registry Amendment Act 2020 was approved in the House of Assembly on Friday.

The Act also scraps existing legislation requiring exempt companies offering shares to the public to file a prospectus with the ROC.

The Act amends five pieces of legislation dating back to 1882, and will require all documents submitted to the ROC “to be filed by means of an electronic record”.

Curtis Dickinson, the Minister of Finance, told MPs that the new law will bring Bermuda in line with competitor jurisdictions such as the Cayman Islands.

He added that the new regulations, expected to be implemented in the new year, will make certain processes “less burdensome”.

“Upon the full implementation of the electronic registration system, all filings required by the various pieces of legislation will be submitted via the electronic platform, which will be hosted on the Registrar of Companies’ website,” Mr Dickinson said.

“The registrar's electronic system will be implemented in several phases, with some of the registration services beginning in February 2021.

“The remaining services will be made available over the ensuing months, with the expectation that by the summer of 2021 the Registrar of Companies will be operating its electronic registry system fully.”

Mr Dickinson said the system would make company information filed at the ROC available online to members of the public.

Tech company Foster Moore – “the world's expert in electronic registries” according to Mr Dickinson – designed and implemented the new system at a cost of $3.7 million.

The Act was supported by the opposition One Bermuda Alliance, with OBA leader Cole Simons describing it as “a step in the right direction”.

“We have no objection to moving to a paperless system – it’s the way of the world,” Mr Simons said.

But Mr Simons did raise concerns about the security of the new system, and questioned whether loosening regulatory red tape could harm Bermuda’s reputation as an upfront jurisdiction.

“Our concern is that all the checks and balances are in place,” he said.

“Generally, we have encrypted programmes so there's adequate security, and I think the security needs to be reviewed on a regular basis.

“We know that if there is an attempt for cyber criminals to get into our system, then we have to be ahead of them and be more expeditious in protecting the integrity of the data that we have in our systems.”

Mr Simons also expressed concerns that Bermudian shareholders of an exempt company could be vulnerable if that company no longer had to file a prospectus with the ROC.

He said: “The registrar's function is to protect the shareholders. We can have an exempt company that is incorporated in Bermuda, operating from Bermuda, and shareholders can be Bermudians.

“How can we provide the added protection by waiving the requirement for this prospectus even though we may have Bermudian share holders in that exempt company?”

Mr Dickinson replied by saying that the new regulations had been drafted following consultation with the industry.

“This government takes great pride in being collaborative and being mindful of the concerns expressed by our industry partners,” he said

“In as much that here was a concern raised by the bureaucratic nature of some of our filings, we took those concerns under consideration and sought to develop solutions to try to streamline the process.

“Part of the work was a review of what competitive jurisdictions have been doing. The team has advised me that there's not a whole lot of reputational risk with the non-filing of prospectuses.”

Mr Dickinson acknowledged that the role of the ROC had “transitioned from being a repository to one that takes on a much larger regulatory perspective”.

“There is a requirement for additional resourcing and we are supportive of providing the team with the resources to do their job properly,” he said.

“The consequences of them not being able to do their job properly can be significant.”