Bank of Bermuda Ltd. shareholders on Friday approved increasing authorised share capital by 100 million shares, the final erection in its defences against a hostile takeover.

At the special general meeting shareholders also granted approval for an executive share plan and a new employee share purchase plan.

The additional authorised 100 million shares will be reserved solely for use in case the bank's board determines a hostile takeover bid is in process. The board will then determine whether the bid is unfair to shareholders and could then decide to issue a rights offering of a number of the authorised shares.

The rights offering will make the "hostile'' bidders have to pay additional money for the extra shares so as to maintain a controlling percentage ownership. The bank currently has an authorised share capital of 40 million, of which 20.2 million are in the hands of shareholders and the rest are unissued.

If the board took drastic action and determined it had to issue a full rights offering for 100 million shares, the bank's earnings per share will be diluted by about 490 percent.

At last year's annual general meeting in June shareholders approved "poison pill'' amendments to the bank's bylaws aimed at making it more difficult for someone to buy a controlling amount of shares. The change gave the board the ability to grant rights to acquire shares not exceeding 20 percent of the issued and outstanding shares in the bank.

Another change made at last year's annual general meeting requires a two-thirds "Super Majority Vote'' by shareholders to remove a director or to sell or transfer the bank's assets elsewhere.

The change also requires two-third's approval in the event someone wants to move the bank outside Bermuda, or in the event of winding-up, liquidation or reorganisation.

The hostile takeover measures were put in place in anticipation of the bank's plan to list its shares on the Nasdaq stock exchange. That plan hit a roadblock this year when a private bill to exempt the bank from a regulation limiting foreign ownership to 40 percent was turned down in Parliament.

Executives have stated they still intend to pursue the secondary listing and are considering other options.

Another proposal shareholders approved on Friday is a two-part executive share plan. Under the plan, executives will be required to use 20 percent of their annual cash bonuses to purchase bank shares at a 25 percent discount. The share purchase part of the plan is meant to increase executive ownership in the bank and align their interests with shareholders. Under the performance accelerated restricted share element part of the plan executives and key employees will be granted shares depending on performance.

Shareholders also voted to increase the number of shares employees are allowed to purchase under an existing plan. The current plan allows employees to use up to five percent of their yearly salary to purchase bank shares at a 25 percent discount to the market price.

Under the new plan employees will be allowed to use up to ten percent of their salary, to a maximum of $25,000 a year in buying the bank's shares at a 25 percent discount.

Currently bank employees collectively own about two percent of the bank. About 45 percent participate in the current employee share purchase plan.

Shareholders also voted for a bye-law amendment to remove a provision which required the bank to have two deputy chairmen, which the board of directors said was no longer relevant.