Bermuda Shareholder Schemes Of Arrangement: A Practical Guide

Court-sanctioned schemes of arrangement remain one of the most effective mechanisms available under Bermuda law for effecting privatisations and corporate restructurings. In recent years, schemes of arrangement have been used in several Bermuda company transactions, reflecting their flexibility, strong deal certainty and the Bermuda court’s approach in this area.

This article provides an overview of the legal framework governing schemes of arrangement in Bermuda, with practical guidance for those considering this option.

What is a Scheme of Arrangement?

A scheme of arrangement is a statutory procedure under Bermuda law that enables a company to enter into a binding compromise or arrangement with some or all of its shareholders (or creditors). In essence, it is an agreement for some form of ‘give and take’ approved by the requisite majority of shareholders and sanctioned by the Bermuda court, which is then binding on all shareholders, including those who voted