majority of companies formed in the Bahamas for
offshore purposes are incorporated under the International
Business Companies Act 1989 (see below). However
this law did not supersede the existing companies
law, most recently re-stated in the Companies Act
1992 (as amended), which is based on English law
and is used to form various types of company used
by businesses trading in the Bahamas, and also for
certain other special purposes.
formed under the Companies Act 1992 can be private
companies limited by shares or by guarantee, or
can be public companies. For all these types of
company, Memorandum and Articles of Association
must be filed at the Companies Registry, there need
to be a minimum of two members, and there must be
a registered office in the Bahamas. If a company
is going to trade locally, it will need an appropriate
Bahamas Domestic Limited Company
resident company limited by shares is usually formed
for the purposes of carrying on local business.
must be at least two directors. The company's annual
return includes a list of the members, and is kept
on the public register. An annual audit can be dispensed
with, if all shareholders agree. There is no requirement
to file financial statements.
need not have a par value, and when paid up, need
not have distinguishing numbers. Bearer shares can
be issued with exchange control permission.
Company Limited by Guarantee
the Companies Act, a company limited by guarantee
must have a minimum of two members; the Memorandum
of Association contains a statement of the amount
up to which the members guarantee the company's
debts. The Articles can provide for the members
to have differing 'shares' of the assets and liabilities.
Limited by Guarantee has certain advantages, including
that there is no list of members on the annual return,
and that control over assets can be achieved without
the use of shares; in some jurisdictions, profits
realised from such companies are classified as capital
gains rather than as income. Specialist advice is
required by anyone considering the use of a company
limited by guarantee.
Bahamas Public Company
company formed under the Companies Act is similar
to a private company limited by shares except that
there is a compulsory annual audit, and there must
be at least three directors. A list of all officers,
directors and managers of the company must be kept
at the registered office and sent to the Registrar-General
along with the annual return.
International Business Company
International Business Company is the most widely
used vehicle for offshore operations in the Bahamas;
it normally takes the form of a private company
limited by shares. The governing legislation is
the International Business Companies Act 1989, updated
by the International Business Companies (Amendment)
Act 1994, the International Business Companies Act
2001, and the International Business Companies (Amendment)
2001, there was no need to register details of beneficial
owners, directors or officers, but under the International
Businesses Companies Act 2001 which came into force
at the start of 2001 IBCs are required to submit
their identities, addresses and names of directors
and owners to the Registrar General's Department.
Otherwise, statutory requirements are minimal, and
- Only one director,
who may be corporate, and one shareholder are
directors and officers need not be resident
in the Bahamas and there is no stipulation as
to their nationality;
- There is no minimum
capital requirement; shares must be registered
and may be issued in any currency; bearer shares
however are no longer permitted;
- Accounts need
not be kept; however, if they are kept there
is no requirement for an audit.
- A share register
needs to be kept; it is unclear whether nominee
shareholders are still permitted;
- Shareholders and
directors meetings need not be held in the Bahamas
and can be held by telephone;
- The Memorandum
and Articles of Association are the only documents
to be held on the public record;
- The legislation
contains asset protection clauses against actions
emanating from without the Bahamas; it also
contains provisions for the protection of minority
- An IBC is exempt
from Bahamian Exchange Control, from stamp duty
and from other taxes and estate duties for 20
years from the date of incorporation;
- an IBC can be
managed, controlled and operated from the Bahamas.
incorporated or (if foreign) registered under the
Companies Act 1992 can switch to IBC status if it
qualifies under the legislation.
is granted subject to certain conditions:
- No business may
be transacted with residents in the Bahamas;
- No ownership interest
in real property in the Bahamas is permitted;
property may be leased for office use only;
- Banking, insurance
or re-insurance business is not permitted;
- Engaging in the
business of company management or providing
registered facilities for Bahamian incorporated
companies is not permitted.
permitted to own shares in other Bahamian companies,
maintain bank accounts in the jurisdiction and employ
the services of local professionals.
obligatory to use a registered agent in the Bahamas
to incorporate an IBC. Fees for incorporation of
an IBC are based on the company's authorised share
capital. Normally, the incorporation process takes
no more than one day.
incorporation and annual registration fees are as
to the International Business Company legislation
in 2004 permit the continuation of an IBC as a Bahamian
company under the Companies Act, and enable an IBC
to be licensed as an external insurance company.
Bahamas Limited Duration
Business Company (Amendment) Act 1994 introduced
the Limited Duration Company, which is essentially
the same as the IBC but with a life limited to 30
years. This form is directed towards a certain class
of US investors - when suitably structured the LDC
has the characteristics of a partnership and is
treated as such in the US, where it is known as
a Limited Liability Company.
Bahamas Foreign Company
company can operate a branch in the Bahamas with
minimal formality and no registration requirements,
but once the branch is recognised as an 'undertaking'
under the Companies Act 1992, or as a 'trading'
branch, it has to register with the Registrar-General.
The following amount to having 'undertaking' status:
- the keeping of
a place of business;
- the holding of
a licence (or the requirement to hold one) for
- the holding of
a licence (or the requirement to hold one) for
selling securities; or
- having a local
involves filing a notarised and legalised copy of
the company's Memorandum and Articles of Association
(or its Statutes) and details of the directors and
officers. A Certificate of Registration is issued,
and the company (the branch) then has the same position
as a Bahamian incorporated company, ie it must maintain
a local registered office, etc etc as above.
foreign company (branch) intends to trade within
the Bahamas or to employ more than two Bahamians,
it needs to apply to the Bahamas Investment Authority
for clearance from the National Economic Council,
and it needs to obtain the relevant business licence
as does a Bahamian company.
open to a qualifying foreign company, once registered,
to become an International Business Company (see
Bahamas Limited Partnership
law relating to partnerships is essentially similar
to English law. General or limited partnerships
In a limited
partnership there must be at least one general partner
with unlimited liability, and the limited partners
may not take part in management of the partnership.
There must be a written partnership agreement which
must be registered, and one of the general partners
must file a notarised declaration of the sum contributed
by the limited partners.
which trade in the Bahamas need the appropriate
business license, as for limited companies.
Bahamas Exempted Limited Partnership
Limited Partnership Act (1995) created a partnership
form (ELP) equivalent to the International Business
Company, and has the same limitations on local activity
as the IBC (see above). The structure is the same
as for a limited partnership (see above); a general
partner can also be a limited partner, and one of
the general partners must be either a Bahamian resident
or a company incorporated under the Companies Act
1992 or the International Business Companies Act
must be registered, and the names and addresses
of all general partners must be filed. On issue
of the registration certificate, the ELP becomes
exempt for 50 years from exchange controls, from
all forms of taxation, from stamp duty, and from
business license fees. (However, if one of the general
partners is a Bahamian resident, then there may
be some exchange control implications).
registration fee for an ELP is $850, and the continuing
annual fee is $475. An annual declaration must be
filed confirming adherence to the local trading
law of the Bahamas is based on English trust law,
and was codified in the Trustee Act 1893, but there
have been a number of recent statutes which update
and extend Bahamas trust law, particularly the Trustee
Act 1998 which repeals the Trustee Act 1983 and
the Variation of Trusts Act Cap 166. The Trust (Choice
of Governing Law) Act 1989 protects against forced
heirship provisions; the Fraudulent Dispositions
Act 1991 strengthened the position of asset protection
trusts. In early 2004 legislation dealing with purpose
trusts was introduced to the legislature. See
Law of Offshore for a fuller description
of the legal regime for Trusts in the Bahamas.
trusts (other than those holding Bahamian property)
do not have to be registered, and the 1998 Act disapplies
Exchange Control Regulations to non-resident settlors,
donors, beneficiaries and trustees - therefore it
is no longer necessary for trusts to be registered
with the Central Bank as non-resident. This applies
to existing trusts as well as to new ones.
(other than those holding Bahamian real estate)
with non-resident beneficiaries are exempt from
all taxes, including stamp duty on transfers into
the 1998 Act, new trusts need to be stamped with
a $50 Bahamas revenue stamp, which can be bought
for cash and does not involve any disclosures. See
Legal and Tax Regimes for further details
of the tax position of Bahamian trusts.
Act provides for the appointment of a 'protector
of trust', effectively a supervisor of the trustee(s),
and also managing and custodian trustees.
offering trust services must obtain a licence under
the Banks and Trust Companies Act 1965 and conform
to various conditions.
new Private Trust Companies legislation passed both
houses of parliament in the Bahamas in December
2006. Under the legislation, a Bahamian PTC, like
other structures such as foundations, does not require
regulatory approval. The PTC need only arrange its
affairs with a regulated Bahamian service provider
or Registered Representative.
legislation which allows for the formation of Private
Trust Companies (PTCs) is the Banks and Trust Companies
Regulation (Amendment) Act, 2006, and the Banks
and Trust Companies (Private Trust Companies) Regulations,
the legislation this class of trust is defined by
reference to the Designated Person(s). The Designated
Person(s) is an individual(s) who is identified
at the establishment of the PTC and with whom all
other settlors of trusts, for whom the PTC acts
as trustee, must be related. With the requirement
that the Designated Persons must be related, and
that all other settlors of trusts, for whom the
PTC acts as trustee, must be related, the PTC can
act as Trustee for an unlimited number of trusts
and can benefit anyone (subject to due diligence
requirements) from the assets of the trusts.
were introduced by the Foundations Act 2004 and
accompanying regulations. Such structures are already
well-known in Europe, Latin America and Asia, and
the Bahamian foundation is an important tool for
the jurisdiction’s expanding wealth management
are no perpetuity period rules applicable to Bahamian
foundations, which immediately provides for continual
unending succession if it is desired by the founder.
A Bahamian foundation is not subject to forced heirship
laws of a foreign jurisdiction.
Bahamian foundation is a distinct legal entity which
is convenient for ‘proper law’ questions.
Assets placed within the foundation are owned solely
by it, and a change in a Bahamian foundation’s
governing body does not change the legal ownership
of the foundation’s assets. There is no statutory
requirement for an external audit unless the foundation’s
charter so provides.
foundation established in another country may redomicile
in the Bahamas; and a Bahamian foundation may redomicile
into another country, provided such a move is permitted
in that country.
the most common use of foundations is for estate
planning, they are useful in a number of other areas.
They can be used to provide for subordinated debt;
to perpetuate a particular corporate governance
policy; to hold the benefit of warranties for a
wider or changing class of investors; for philanthropic
purposes; or for the separation of voting and economic
addition, foundations allow for investment in family
companies whose economic performance may be poor,
for ownership of a private trust company, for provision
of an employee share option scheme, or for packaging
financial instruments into marketable securities.
registration process for a Bahamian foundation is
comparable to that of a company registration, making
it a legal entity that must be filed with the Registrar
General of the Bahamas. Like that of a company,
the name of the Bahamian foundation must be reserved
at the Registrar General’s office prior to
submission of the necessary documentation. The registrar
will confirm that the foundation name is valid for
use and that the name has been reserved for a period
of 90 days.
registration is available. The fees for the registration
of a Bahamas foundation are: $500 if registered
in the first quarter; $375 if registered in the
second quarter; $250 if registered in the third
quarter; and $125 if registered in the fourth quarter.
The foundation’s charter must contain a statement
that the value of the assets of the foundation may
not be less than B$10,000, or the equivalent in
any other currency.
of the foundation must keep proper records and accounts,
which can be inspected by any officer, foundation
council member, founder, auditor or any other supervisory
person at any time. However, confidentiality provisions
restrict any person acquiring information from disclosing
such information relating to the foundation, without
the expressed consent from the founder and the beneficiaries,
or as required by law, or a Bahamian court.
SAC is a company which is registered under the Segregated
Accounts Companies Act 2004. The SAC may create
separate accounts with assets and liabilities which
are segregated from the assets and liabilities attributable
to every other account and also from the company’s
general assets and liabilities.
highlights of a SAC: