Segregated Accounts Companies Act 2000

Summary

This Bermuda statute establishes the legal framework allowing companies (including limited liability companies) to register as segregated accounts companies (SACs) and to operate one or more segregated accounts whose assets and liabilities are legally ring fenced from each other and from the company's general account. It sets out registration requirements, management and record keeping duties, creditor and account owner protections, and receivership and winding up procedures specific to segregated accounts structures.

• Who can apply: A company engaged in insurance business, or any other company with the Minister's approval, may apply to the Registrar of Companies to register as a segregated accounts company.
• Registration process: Applicants must file a notice with prescribed particulars (name, registered office, segregated account representative details, nature of business, accounting arrangements) and, if the company already conducted business, a statutory declaration on assets, liabilities and solvency, plus creditor notice/consent procedures.
• Ongoing management duties: Registered SACs must disclose their SAC status to counterparties, appoint a segregated account representative, apportion and account for assets and liabilities separately per account, and maintain proper accounts and registers for each segregated account.
• Creditor and account owner protections: Creditor enforcement rights are limited to the assets of the relevant segregated (or general) account, and the Act specifies rights and obligations attaching to segregated accounts and internal transactions between accounts.
• Receivership and winding up: The Act provides for court-ordered receivership of individual segregated accounts and for winding up of segregated accounts companies, with rules on application of assets.
• Fees: Registered SACs pay prescribed fees on registration and annually; limited liability companies operating segregated accounts pay an additional annual fee of $295 per segregated account, capped at $1,180 in aggregate, due on or before 31 January each year.

The Act also addresses interaction with the Companies Act 1981, the Limited Liability Company Act 2016, the Economic Substance Act 2018 and the Registrar of Companies (Compliance Measures) Act 2017, and contains confidentiality provisions restricting disclosure of registration-related information by the Registrar.

Key obligations

• A company seeking registration as a segregated accounts company must file a notice with the Registrar containing prescribed particulars, including name, registered office, segregated account representative details, nature of business and a statement of accounting provisions for segregated accounts
• A company that conducted business before registration must file a statutory declaration by a director or LLC manager setting out assets and liabilities, expected material transactions, intended segregated accounts, and solvency declarations, and must obtain creditor consents or give creditor notice as required
• Where adequate notice is required, the company must notify known creditors with claims over $1,000 in writing and publish notice in an appointed newspaper, allowing creditors 28 days to object to registration
• A registered segregated accounts company must inform persons it deals with that it is a segregated accounts company
• A segregated accounts company must appoint and maintain a segregated account representative
• A segregated accounts company must apportion assets and liabilities to the correct segregated or general account and maintain proper accounts, records and registers for each segregated account
• A segregated accounts company must notify the Registrar of any material alteration to the particulars filed in its registration notice occurring before registration is completed
• A registered limited liability company operating segregated accounts must pay an annual fee of $295 per segregated account (capped at $1,180 aggregate) to the Registrar, due at filing of the registration notice and thereafter on or before 31 January each year
• A company to which the Companies Act 1981 applies must pay the fee under Part II of the Fifth Schedule to the Companies Act 1981 in respect of its registration as a segregated accounts company

Applies to

segregated accounts companies, companies engaged in insurance business, limited liability companies, account owners, creditors, segregated account representatives, mutual funds (where operating as segregated accounts companies)

Deadlines

• 28 days from the date of notice or publication: Period within which a known creditor may object to a company's registration as a segregated accounts company after notice is given
• on or before 31 January in each year: Annual deadline for payment of the prescribed segregated account fee to the Registrar by limited liability companies operating segregated accounts
• 1 November 2000: Operative date on which the Act came into force