Bermuda remains one of the oldest colonies of the United Kingdom. It is strategically located in the North Atlantic, closer to the United States than the Caribbean. Bermuda is protected under a United States defense umbrella. The legal system is based on English Common Law but has been modified and supplemented by acts passed under the Bermuda Constitution Order which took place in 1968. The government is headed by a governor, who is appointed by the Crown of England. The success of Bermuda as an international financial center is due to its social and political stability, excellent communications, sound regulatory regime, progressive legislation, and high caliber of professionals.

Bermuda has established itself as one of world's leading jurisdictions for international business. Bermuda has made great progress developing a competitive environment for international financial services with the development of the Bermuda Stock Exchange (BSX). The international business community includes subsidiary operations of more than three-quarters of the Fortune 500. The history of Bermuda's international business developed out of the early successes of its insurance industry. Bermuda has attracted substantial insurance business and boasts the third largest premium flow of any insurance center in the world.

There are variety of entities, which can be incorporated in Bermuda. The most common type of entity utilized is the exempted company. The exempt company is popular to the people of Hong Kong as this entity was approved by the Hong Kong Stock Exchange for listing purposes. An exempt company may carry on business from within Bermuda only in connection with transactions and activities external to Bermuda. The most common business activity of exempted companies is investment holding. The features of the exempt company are as follows:

Taxation
The Bermuda exempted Company will receive an undertaking from the Mister of Finance that the company will not be subject to any tax or duty on profits or income, capital gains, or appreciation, and that no inheritance tax or estate duty will be payable on shares debentures or other obligations of the company. The exemption extends until 2016 but may be further extended at a later date.

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