Key Takeaways
- Bermuda companies must keep proper records of account that explain their transactions and reflect the company's financial position.
- Foreign owners should confirm where records are held and how inspection rights apply, since storage location and retention periods carry specific obligations.
- Annual financial statements must be prepared and laid before members, though members may unanimously waive the audit and the appointment of an auditor.
- Sector-specific rules apply to insurers, funds, and segregated accounts companies, so businesses in those areas face requirements beyond the general regime.
Accounting and Bookkeeping Obligations for Bermuda Companies: An Overview
Every company incorporated in Bermuda must keep proper records of account that explain its transactions and show its financial position with reasonable accuracy. This duty is set by the Companies Act 1981 and applies to all companies, including the exempted companies most foreign owners use to hold assets, trade internationally, or run regulated insurance and fund businesses. The accounting and bookkeeping rules in Bermuda are supervised by the Registrar of Companies, with the Bermuda Monetary Authority taking on additional oversight for licensed sectors such as insurance, funds, and banking.
This article explains what records you must keep, which accounting standards you may apply, where the books must sit, how long to retain them, the audit position, and the heavier filing duties that attach to regulated entities. It is written for the non-resident owner or adviser responsible for keeping a Bermuda entity compliant from outside the territory.
The Legal Basis: Record-Keeping Duties Under the Companies Act 1981
The Companies Act 1981 governs company formation, governance, and the keeping of books of account. The record-keeping duty sits in Part V of the Act, under the heading "Keeping of Books of Account," and the obligation to lay financial statements before members follows close behind.
The Act gives "book and paper" a wide meaning. It covers minutes, financial statements, accounts, records of account, the beneficial ownership register, and assorted deeds and writings.
A company limited by shares must also use its bye-laws to provide for two things: how its accounts are kept and made available to members, and an annual audit by an independent representative of the shareholders. The form and content of financial statements and auditor's reports are set out in the Companies (Financial Statements and Auditor's Report) Rules 1995.
General corporate compliance is supervised by the Registrar of Companies, part of the Government of Bermuda. Sector regulators sit above this for licensed firms, with the Bermuda Monetary Authority drawing its powers from the Bermuda Monetary Authority Act 1969.
Recent amendments have refreshed parts of this regime. The Companies Amendment Act 2023 became operative on 24 May 2023, and the Miscellaneous Fees and Penalties Act 2023 took effect on 1 April 2023.
The Act does not publish a fixed dollar penalty for failing to keep records of account. Material non-compliance can lead to criminal offences and, at the extreme, a Registrar-initiated winding-up of the company.
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Which Records of Account Must Be Kept
Your books must do three things: explain the company's transactions, disclose its financial position with reasonable accuracy at any time, and support financial statements that give a true and fair view. Records that fall short of any of these tests do not satisfy the Act.
At a minimum, the entity should maintain:
- Books recording all receipts and payments
- Records of assets and liabilities
- A statement of stock and work-in-progress
- Statements of annual stock-takings
- Records of goods bought and sold, sufficient to identify the parties and the goods involved
Electronic records are recognised. A 2006 amendment inserted "electronic record" into the Act's definitions, so books held in digital form can meet the obligation provided they remain complete and accessible.
Accounting Standards and Generally Accepted Accounting Principles in Bermuda
Bermuda has not adopted a single national accounting framework. As an international financial centre, it lets companies report under IFRS Standards or a recognised national GAAP, and the GAAPs of Canada, the United States, and the United Kingdom are all in common use.
Many companies follow Canadian GAAP by practice, but a firm may elect another jurisdiction's standards so long as it makes full disclosure of its accounts. Smaller businesses may use the IFRS for SMEs Standard. None of this is mandatory; the choice is yours, subject to one condition.
That condition is consistency and disclosure. The framework you select must be applied consistently from year to year and stated in the financial statements, a point the IFRS jurisdiction profile records for the territory.
Commercial insurers face an extra layer. Each must prepare GAAP financial statements for its insurance business every financial year, and may report under US GAAP, Canadian GAAP, or IFRS. For insurers filing under IFRS 17, the Bermuda Monetary Authority amended Rule 14 of the Insurance Account Rules 2016, effective 26 February 2025, to accommodate the standard for 2024 year-end reporting and beyond.
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Where Records Must Be Kept and Inspection Rights
Records of account may be kept at the registered office or at another place the directors choose, and they must be open to the directors at any time. Where the books are held outside the territory, the company must still maintain enough records in Bermuda for the directors to work out its financial position with reasonable accuracy.
This Bermuda-accessible copy matters for foreign owners who run their bookkeeping abroad. The location must be convenient for inspection by the Registrar, who has the right to examine sufficient records held locally.
Inspection rights run to several parties. Directors have unrestricted access; the Registrar may inspect the local records; the Bermuda Monetary Authority has access to the books of licensed and regulated entities under sector legislation; and the Minister holds powers to inspect and investigate company affairs.
The register of members sits at the registered office, or at another address in the territory once an appropriate notice is filed, and must be available for inspection. Financial statements are a different matter.
A standard exempted company is not required to file its accounts with the Registrar, except in connection with a prospectus. The duty to produce financial statements runs to members, not to a public registry.
Insurance companies are the exception, filing an annual statutory financial return in the form prescribed under the Insurance Act 1978. The Registrar's portal, BERSY, is reached through www.roc.gov.bm, though there is no confirmed channel for general companies to upload bookkeeping or financial statements through it.
How Long Accounting Records Must Be Retained
The Companies Act 1981 does not state an explicit retention period in years for general books of account. Professional practice in the territory points to a minimum of five years from the end of the financial year to which records relate, in line with comparable common-law offshore centres.
A parallel five-year rule applies through anti-money-laundering law. The Proceeds of Crime Act 1997 and the Bermuda Monetary Authority's guidance require regulated financial institutions to retain customer due diligence and transaction records for at least five years from the end of the business relationship or transaction. This is a distinct obligation that overlaps with the corporate accounting duty rather than replacing it.
One point is firm. On a winding-up, directors must not destroy records without proper liquidator authorisation, since the Act governs how books are disposed of during liquidation.
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Preparing Annual Financial Statements and Laying Them Before Members
A Bermuda company must prepare annual financial statements, comprising a balance sheet and a profit and loss account (or an income and expenditure account), and lay them before the members in general meeting. Those statements must give a true and fair view of the company's position and results.
Where the company has dispensed with annual general meetings, the duty does not vanish. The audited financial statements must still be made available to members within 12 months of the financial year end, which is the outer limit for compliance.
For general, non-regulated, non-listed companies there is no obligation to file these statements with the Registrar. The reporting line is internal, owed to shareholders rather than to the public.
The form and content of the statements follow the Companies (Financial Statements and Auditor's Report) Rules 1995. No statutory deadline fixes the timing of the AGM relative to year-end for general companies; the bye-laws set that, with the 12-month availability window applying where AGMs are waived.
Audit Requirements and the Unanimous Waiver of Audit and Auditor Appointment
The default position is that a Bermuda company appoints an auditor and audits its accounts at least once each year. The Act sets out the appointment, disqualification, and role of auditors, and an auditor may not be a director of a company they audit.
That default can be set aside. The annual audit and the appointment of an auditor may be waived where every member and every director agrees, by written resolution or at a duly convened meeting. The consent must be unanimous, so a single dissenting member or director defeats the waiver entirely.
Auditors must be qualified to act. An eligible auditor is a person entitled to practise as a public accountant in the territory, or one qualified by examination of the Institutes of Chartered Accountants of England and Wales, Ireland, or Scotland, or the Canadian Institute of Chartered Accountants. Auditing follows Generally Accepted Auditing Standards as defined by Ministerial notice.
No statutory size threshold triggers a mandatory audit for general companies. There is no small-company audit exemption of the kind found in UK law; the position rests on the default audit rule and the unanimous waiver.
Sector-Specific Requirements: Insurers, Funds, and Segregated Accounts Companies
Licensed and regulated entities carry filing duties that sit on top of the basic Companies Act obligations, supervised by the Bermuda Monetary Authority. The detail and the deadlines vary by activity.
Insurers (Insurance Act 1978)
An insurer must prepare statutory financial statements for each financial year, audited by an approved auditor, unless the Authority grants an exemption. For Groups and Class 4, 3B, 3A, E, D, and C (re)insurers, audited general purpose financial statements form part of the annual filing and are subsequently published by the Authority. These classes must also file a Declaration of Compliance.
The principal filing deadlines run from the financial year end:
| Filing | Deadline after financial year end |
|---|---|
| Statutory financial return (designated insurer) | Within 5 months; extendable up to 8 months at the Authority's discretion |
| Capital and Solvency Return (CSR) | Within 4 months |
Reporting requirements are set by the Insurance Returns and Solvency Regulations 1980 and the Insurance Accounts Regulations 1980, with the Capital and Solvency Return submitted through the BSCR model. Supervision is risk-based, so a Class 4 insurer meets higher standards than a Class 1. Eligible insurers may use the amended IFRS 17 schedules for 2024 year-end reporting without prior approval, a change set out in a BMA insurance update.
Segregated Accounts Companies
SACs are governed by the Segregated Accounts Companies Act 2000. For an SAC-structure insurer, the approved auditor's annual audit must take in the schedule of Segregated Accounts and Separate Accounts, which forms part of the statutory financial statements, and the audit reaches cell level subject to a materiality threshold.
Investment Funds and Investment Business
Funds regulated under the Investment Funds Act 2006 must prepare annual audited financial statements, appoint an investment manager, an auditor, and a fund administrator, entrust property to a custodian, and comply with the fund and prospectus rules. Investment business licensees under the Investment Business Act 2003 must keep adequate systems of control and records, prepare annual accounts, and file audited financial information with the Authority by the prescribed deadline.
Banks
A bank licensed under the Banks and Deposit Companies Act 1999 must have its annual financial statements audited by a BMA-approved auditor and filed with the Authority each year. Its systems must support audited annual statements prepared under generally accepted accounting principles, along with interim statements where appropriate.
Bookkeeping in Practice and Common Compliance Pitfalls
Most accounting problems for foreign-owned Bermuda companies come from misreading what the absence of public filing actually means. The internal duty to members is real even where nothing reaches the Registrar.
- Treating "no public filing" as "no accounts": a standard exempted company files nothing with the Registrar absent a prospectus, but it must still prepare statements and make them available to members.
- Keeping books abroad with no local copy: where records sit outside the territory, sufficient records must remain in Bermuda for the directors to ascertain the financial position; keeping none locally is a direct breach.
- An invalid audit waiver: the unanimous waiver fails if a single member or director has not consented, a frequent error where share transfers occur and the register is not updated before the resolution is signed.
- Missing the 12-month window: dormant and shell structures often let the deadline for making audited statements available to members slip past 12 months from year-end.
- Silent standard switching: electing one framework and quietly moving to another in a later year, without disclosure, breaks the consistency requirement.
- Regulated entities relying only on the Companies Act: insurers, funds, and investment business licensees face separate BMA deadlines, and missing them can bring regulatory sanctions up to licence suspension.
Beneficial ownership reporting is a related but separate duty: certain owner information must be filed with the Bermuda Monetary Authority, with changes notified within 14 days of the company becoming aware. That register is covered in its own article; the point here is simply to keep it current alongside your accounting records.
Penalties under the Act escalate with the gravity of the failure, from criminal fines up to strike-off or compulsory winding-up on the Registrar's application.
Conclusion
The accounting burden on a standard Bermuda company is lighter than newcomers expect on filing and heavier than they expect on substance: nothing goes to a public registry, yet proper books, a Bermuda-accessible record, annual financial statements, and either an audit or a properly executed unanimous waiver are all genuine, enforceable duties. Regulated insurers, funds, and banks carry a separate and far more demanding set of BMA deadlines that no amount of Companies Act compliance will satisfy on its own.
Before the next financial year closes, confirm which category your entity falls into and fix the two items that trip up most foreign owners: a complete local record where books are kept abroad, and a valid audit decision recorded with every member and director on side.
How Expanship Can Help Your Business in Bermuda
Expanship maintains the day-to-day books for foreign-owned Bermuda companies, prepares annual financial statements to your elected framework, and manages the audit-or-waiver decision so it holds up under inspection. The same team handles the wider compliance load that comes with running an entity from outside the territory.
- Company incorporation and structuring of exempted entities
- Registered office and registered agent services
- Ongoing compliance and filing management
- Accounting, bookkeeping, and preparation of annual financial statements
- Economic-substance and beneficial-ownership support
- Banking introductions for newly formed companies
To discuss your accounting and bookkeeping requirements, contact Expanship Bermuda for a tailored assessment.
Frequently Asked Questions
No. A standard exempted company is not required to file accounts with the Registrar of Companies, except where needed in connection with a prospectus. The obligation to prepare financial statements is internal, owed to the members, while insurers do file statutory returns with the Bermuda Monetary Authority.
Yes, the directors may keep the books wherever they think fit, including abroad. Where the records sit outside the country, the company must still maintain sufficient records in Bermuda for the directors to ascertain its financial position with reasonable accuracy, and keeping no local records is a breach.
There is no single mandated national framework. A company may report under IFRS, US GAAP, Canadian GAAP, or UK GAAP, and smaller firms may use the IFRS for SMEs Standard, provided the elected framework is disclosed and applied consistently. Commercial insurers additionally prepare GAAP financial statements for their insurance business.
An annual audit is the default under the Companies Act 1981, with no small-company exemption. It can be waived only if every member and every director consents, by written resolution or at a meeting, so a single dissenter defeats the waiver.
The Act sets no explicit period in years for general books of account, but professional practice points to a minimum of five years from the end of the relevant financial year. Regulated financial institutions face a parallel five-year rule for due diligence and transaction records under anti-money-laundering law.
A designated insurer must file its statutory financial return within five months of the financial year end, extendable up to eight months at the Authority's discretion, and the Capital and Solvency Return within four months. These Bermuda Monetary Authority deadlines sit on top of the basic Companies Act duties, and missing them can lead to regulatory sanctions including licence suspension.
Legal Disclaimer
The information provided in this article is for general informational purposes only and does not constitute legal, tax, or professional advice. While we strive to ensure the accuracy and timeliness of the content, laws and regulations are subject to change, and the application of laws can vary widely based on specific facts and circumstances.
Readers should not act upon this information without seeking professional counsel tailored to their individual situation. Expanship and its authors disclaim any liability for actions taken or not taken based on the content of this article.
For specific advice regarding your business setup, compliance requirements, or any legal matters, please consult with qualified legal and tax professionals in the relevant jurisdiction.
