why go offshore?  why bermuda?
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E-Commerce: Why Offshore…
Why Bermuda?
Bermuda:The Future of Offshore, Today
London, January 22, 2001
London, January 22, 2001
E-Commerce: Why Offshore…Why Bermuda?
Moderator: The Hon. MD Renee Webb, JP, MPMinister of Telecommunications and e-Commerce
Tim Marshall
Leigh Estabrook
Greg Wojciechowski
Dr. Robert Edwards
Timothy Z. MarshallSenior Partner
Marshall Aicardi
The Bermuda Advantage
Availability of secure and reasonably priced bandwidth from multiple sources Cable & Wireless 360 Networks
Bermuda is a strategic telecommunications hub
The Bermuda Advantage cont...
Respected international reputation and political stability Oldest democracy in Western Hemisphere Westminster Style of Government Both political parties committed to promoting and expanding
international business Laws and policies designed to let in only those businesses
that enhance Bermuda’s reputation
The Bermuda Advantage cont...
Familiar legal system, Legislation and policies Bermuda Courts and procedures are modelled after United
Kingdom with ultimate appeal to the Privy Council Bermuda’s laws are based on British legal traditions Companies Act, 1981 Electronic Transaction Act 1998 Corporate vehicle flexibility
The Bermuda Advantage cont...
Favourable and reputable tax environment Bermuda’s tax structure does not include income tax, profit
tax, capital gains tax or withholding tax Opportunities for legitimate tax planning OECD approved
The Bermuda Advantage cont...
Sensible immigration policies Designed to assist international businesses and promote
opportunities for Bermudians Bermuda is strategically located
Close proximity to the US/Canada Direct flights to and from the U.K. Businesses are conveniently able to operate in multiple time
zones
The Bermuda Advantage cont...
Sophisticated Infrastructure Established banking institutions with worldwide offices and
affiliates Multiple currency credit card processing facilities A choice of knowledgeable law and accountancy firms Skilled E-commerce service providers and work force
Examples of Bermuda’sE-Commerce Service Providers
Service Providers
360 Networks/ TeleBermuda Int’l World-class E-Commerce
Secure hardened facility with up to 1.28 terabit bandwidth capacity
climate controlled with back-up power facilities.
Cable & Wireless Comprehensive E-business
solutions centre inclusive of web-hosting
online payment processing solutions and high-speed internet access
Owned by Cable &Wireless PLC
Global Connectivity
Service Providers cont.
BTC Dynamic realm of Data
Services including high-speed LAN
WAN connectivity Ranges of data services
from DS-0(64kbs) through T3(45mbs)
Owned by Keytech, a Bermuda publicly traded company
North Rock Communicationscompetitively priced e-commerce plans
encompassing: credit card processing credit card merchant accounts fully customizable shopping carts Bermudian-owned
Service Providers cont.
Logic Communications One-stop shop for on-line
business Provides a range of services
from design strategies to secure hosting for e-commerce
Owned by Keytech, a Bermuda publicly traded company
E-Venture Centre Provides promising start-ups
with all the tools necessary to build successful e-businesses that traverse the globe
Joint venture between Centre Financial Services and Paragon Bermuda Ltd.
Legislative Environment
Electronic Transactions Act 1999 One of the first in the world Partnership between Government and private industry
Characteristics of Electronic Transactions Act 1999
Legal recognition of electronic records and signatory Recognition of the validity of electronic contracts The requirement for writing may be met in the form of
an electronic record Electronic records shall be admissible as evidence
Standard for Electronic Transactions
Established to protect Bermuda’s business integrity Set up as a standard for the service providers and
intermediaries carrying on business in or from Bermuda
Protection of personal data Creation of Safe Harbour Guidelines
Know Your Customer -Guidelines
Bermuda’s internal regulations to protect the Island’s business and integrity
Three facets important to know your customer Internal regulations OECD guidelines Anti-Money Laundering Legislation
Prohibited Activities
No gaming, lotteries or adult sites permitted to operate from Bermuda
Incorporation Process
Initial vetting by local service provider (normally a law firm)
Completion of disclosure documents for Government (disclosure not for public review)
Choice of capital structure (minimum US $12,000 share capital)
Incorporation Process cont.
Choice of name and upon receipt of materials, submission to Bermuda Monetary Authority for review
Government approval
Incorporation Process cont.
Organisation - either: two Bermuda directors; or one Bermuda director and one Bermuda secretary; or one Bermuda secretary and one resident representative
Annual Fees Normal Process time - one to two weeks
Bermuda’s Legislative Approach is Responsiveto Innovative Businesses and a World Economy
Transparency of laws and regulations guarantee recognition of Bermuda companies by foreign jurisdictions
OECD and EU endorsed regulations An E-Commerce Ministry and Government’s close
partnership with Bermuda’s business community means legislation and regulations can be fast tracked to take advantage or respond to world conditions, business needs and opportunities
Leigh EstabrookExecutive Vice PresidentFirst Atlantic Commerce
Fundamentals…
Internet merchants are the first generation of "mobile" merchants who can now choose where they wish to domicile their e-business
To be successful in the B2C world, e-businesses need to be able to accept credit and debit cards in currencies suitable for their target consumer markets
Mid-size B2B entities are now shifting from traditional payment methodologies to credit card payment solutions
Fundamentals… VISA and MasterCard mandate that a corporate presence and
back office support is required in the same country as the settlement bank
Currency of the Internet (for the time being) is USD shifting towards multi-currency capabilities
Bermuda falls into the Latin America Caribbean Region which is a USD denominated processing interchange
Two processors in the LACR are able to provide multicurrency payment solutions to banks and Internet merchants
Why Bermuda?Business simplification - Obvious advantages
Legal system based on English Common Law Political and economic stability Tax neutrality ie corporate income tax and sales tax Well regulated e-commerce environment – ETA, The Standard,
Proceeds of Crime, etc. Access to reputable legal, accounting, banking, technology services Bandwidth galore – one "wired" island!
Why Bermuda?Business simplification - Not-so-obvious advantages
Ability to establish an e-business for USD or multi-currency processing, including the Euro and pound sterling without the requirement of a US incorporation
Free access to foreign currency – no foreign currency exchange controls
Banks will review/accept virtual e-business start-ups Multi-currency pricing and settlement services available
Why Bermuda?Business simplification - Not-so-obvious advantages
Separate region for Card Association compliance regulations from Europe and North America
Banks can provide VISA, MasterCard, AMEX through a single merchant account – no duality issues in the region
Ability to establish a "VirtualCorp" under the First Atlantic Commerce E-commerce Act 1999
What is a VirtualCorp? Enables businesses to establish a corporate presence in
Bermuda without the requirement of a "full" incorporation A VirtualCorp is based on the Segregated Cell concept
adopted from the captive reinsurance market Each client’s assets and liabilities are “firewalled” from
other clients, thus segregating one account from another Deemed approved legal structure by Visa and MasterCard
for the purposes of their regulatory compliance requirements
What is the value of a “VirtualCorp”?
Enables e-businesses to establish their incorporation in their choice of jurisdiction for the purposes of meeting their business requirements
AND
Fully access all the obvious and not-so-obvious business advantages that Bermuda has to offer to maximize their e-business growth
Online rental payments Travel portals and vacation rentals Online investment sites Entertainment sites
CDs videos concert simulcasts graphic arts
Business information portals Domain name registration services Insurance companies (consumer)
Primarily digital content e-businesses such as:
Who's setting up offshore?
Software E-Media
online magazines distance learning university registration services
Conferences with online registration
Legal firms for incorporation and registry services
Telephony services – subscription based billing
First Atlantic Commerce Ltd
Bermuda-based; established in April 1998 Provide turn-key e-commerce solutions for e-businesses
and financial institutions FAC solves complex business issues through the use of
unique Internet payment solutions (split jurisdictional, multi-jurisdictional, etc.)
Advanced industry expertise with e-commerce payment solutions, fraud management, web site security and international Card Association compliance regulations
First Atlantic Commerce Ltd First Data Corporation qualified Internet Payment
Gateway – providing multi-currency payment solutions to banks on their North American and Caribbean platform
Qualified Internet payment gateway with First E-commerce Data Services (FEDS) in Bermuda, offering full end-to-end multi-currency payment solutions
Strategic partners include VISA International, First Data Corporation, Bank of Bermuda, Cable & Wireless, and others located in other jurisdictions
The advances of the Internet have created an explosive opportunity in offshore e-business that is only starting to be realized
ACCESS AN OCEAN OF INNOVATION.
BERMUDA
Greg WojciechowskiChief Operating Officer
Bermuda Stock Exchange
Bermuda Stock Exchange
The world’s leading fully electronic offshore stock exchange
GOING PUBLIC
“It’s a Question of WHEN not IF”
Why Go Public?
Benefits of Going Public
Raise Public Capital Increase Market Recognition Greater Marketability Improved Valuations Improved Opportunities for Future Financing
Benefits of Listing on a Stock Exchange
Trading venue = Liquidity Listed Shares are a form of Currency Regulatory Oversight/Investor Protection Information dissemination
BSX Shorts
Founded 1971 SEC Recognition, DIE pending FIBV Full Member OECD Member Nation Over 320 Listings; 210 Funds Daily Trading and rolling T+3 Settlement Trading volume 2000 $230 Billion Market Cap: > in excess $148 Billion
Timing is Everything
Is the Company Ready? Are Market Conditions Favourable? Has the Market been Prepared for the Company? Is the Company Large Enough to Get Noticed? You Only Have One Chance to Make a Good Impression! Plan Carefully
Disadvantages of GoingPublic Too Early Enormous Pressure on Management’s Time
Poor Valuation in the Secondary Market
Investor Relations Nightmare
Onshore Stock ExchangeListing Requirements
Initial Listing Requirements
Minimum Market Cap (size) Minimum Profitability Minimum Track Record (ongoing operations) Minimum Shareholder Spread Minimum Share Price
Key Stock ExchangeListing Requirements
Ongoing Listing Requirements
Regular Reporting (qtrly, semi-annual and annual) Compliance with accounting standards Disclosure of major/material events Disclosure of substantial shareholders Disclosure of directors and officers remuneration
Early Listing OptionsNorth America
NASDAQ – National Market, largest and most actively traded stocks. More than 4,400 securities. Small Cap market created for emerging growth companies, some 1,800 securities listed. www.nasdaq.com
The Canadian Venture Exchange (“CDNX”), newly established market (following the Canadian capital market re-structuring in 1999) for small to medium sized companies (min mkt cap . Over 2,400 securities listed. www.cdnx.ca
Early Listing OptionsEurope
EASDAQ, modelled on NASDAQ, for the listing and trading of shares in high-growth companies. Currently lists 56 companies and dual lists 17. www.easdaq.com
Euro.NM, the pan-European network of regulated stock markets. Its sector focus is high growth, small and medium sized companies within the European time zone. Currently over 400 companies are listed. www.euronm.com
Neuer Market, established by the Deutsche Borse in March of 1997 for high-growth potential start up companies. Neuer Market listing contribute up to nearly 50% of the stocks listed on the Euro.NM. The Neuer Market has over 200 listed securities. www.neuer-markt.de.
The BSX’s Mezzanine Market
“And Now For Something Completely Different”
www.mezzmarket.com
Going Public Without Doing an IPOThe BSX Mezzanine Market
“Listed Private Equity” Institutional Marketplace – Qualified Investors only Sits Between the “Family, Friends and Fools” Round
and the Ultimate IPO on an International Exchange – Hence “Mezzanine”
QI’s = The Wealth, Wise and Well Advised Focused on E-commerce and Hi-Tech Companies
Advantages of theMezzanine Market Extremely Simple Listing Requirements Preparatory phase for future IPO, thus providing insulation from
market gyrations that may impact share/company valuation Enhances Public Image and Prestige of Company Exposes management to regulatory oversight and reporting
requirements while not being overbearing Secondary trading facility via a fully electronic central limit order
book trading platform Gives Angels & VC’s comfort that a liquidity event (IPO) pending
BSX/Mezzanine Market Success Stories
FirstEcom.com Inc. 360 Networks – (formerly TBI and GlobeNet
Communications) Earthport.com Conexys Corporation Imumed International
Admission Procedure
Appoint Sponsoring Broker Application letter Supporting documentation A Prospectus = Private Placement Memorandum
On Going Responsibilities
Material News Annual Financial Results Authorized Representation in Bermuda
BSX-Mezzanine Market When is Now!
The answer to your timing problem Prepare the market for your IPO from a recognized
offshore stock exchange in a highly regarded jurisdiction. Get management accustomed to regulatory compliance. Enhanced distribution to a sophisticated investor base.
Dr. Robert EdwardsChairman and Founder
Drawn and Quartered.com Ltd.London