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Due diligence requirements

What due diligence is necessary for buyers?

Due diligence is key for any M&A deal. A due diligence request list will typically be compiled by the buyer and include all items that it requires the seller to disclose relating to the target (and group) in order to carry out its due diligence before the acquisition, which will vary depending on the particular transaction. There may be negotiations involved between the buyer and seller over this due diligence list. However, the following will typically be considered as part of standard due diligence:

  • corporate structure and minute book(s);
  • financials;
  • litigation;
  • employment;
  • taxes (if applicable);
  • material agreements;
  • intellectual property (if applicable); and
  • environmental impact (if applicable).

Searches will also typically be carried out in relation to the company, including a search at the Registrar of Companies and the Supreme Court registry.

Specific asset due diligence will be carried out as applicable. 


What information is available to buyers?

As discussed above, a due diligence request will typically be made and publicly available searches will be carried out to verify information and representations.

  • The following company information is publicly available in Bermuda:
    • The Registrar of Companies keeps the following documentation in relation to Bermuda incorporated companies:
    • the certificate of incorporation and memorandum of association;
    • the address of the registered office;
    • any prospectus or offer document that must be filed pursuant to the Companies Act 1981;
    • any registered charges against the company; and
    • any other filings required pursuant to the Companies Act 1981.
  • Recent changes to Bermuda company law will also require companies from the end of 2016 and thereafter to file directors’ information with the Registrar of Companies.
  • The Registry of the Supreme Court maintains records of legal proceedings and judgments.
  • The Bermuda Stock Exchange (BSX) will have published accounts and auditors reports and any other relevant filings and announcements in respect of listed companies.
  • The registered office of the company will contain the following information:
    • the register of directors and officers, setting out names and addresses; and
    • the register of members, setting out the names and addresses of members, details of the number of shares held, the amount paid up on the shares and the date on which the person was entered in the register of members. 

What information can and cannot be disclosed when dealing with a public company?

A public company should not disclose material non-public information unless it acts within the BSX Listing Regulations and is protected by a non-disclosure agreement.


How is stakebuilding regulated?

The BSX Listing Regulations govern stakebuilding and notice must be made to the BSX in respect of any shareholder of a listed entity who:

  • acquires 5% or more of the beneficial interest, control or direction; or
  • has a beneficial interest or exercises control of 5% or more and acquires, in aggregate, an additional 3% or more. 

Insider dealing and market manipulation are offences under Bermuda’s Criminal Code and may potentially be committed by a bidder if it possesses price sensitive information and seeks to build a stake in the target.

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