The Companies Act 1982 legislates companies in Barbados. It was modelled on the Canadian Business Corporation Act. Company forms available under the Act are limited liability companies, companies without share capital (for non-profit purposes) and mutual insurance companies. Most offshore operations in Barbados make use of the limited liability company form, and then take offshore status under one of the enabling pieces of legislation, including the International Business Companies Act 1991, the Foreign Sales Corporations Act 1984, and the various specialised financial company forms.

Companies are formed under the Companies Act by submitting Articles of Incorporation, Notices of Directors and Registered Address and Request for Name to the Registrar of Companies. The Registrar issues a Certificate of Incorporation, and the company exists as from the date of the Certificate. Incorporation usually takes two or three days; shelf companies are not available. The Companies Regulations 1984 establish registration fees for companies formed under the Companies Act. A fee of BDS750 is payable to the Government on incoporation and an annual fee of BDS250 thereafter.

Barbadian companies need to have a registered office, and must keep various documents there, including minutes of directors' and shareholders' meetings, registers of shareholders and debenture holders, and accounting records. There needs to be a company secretary. Annual returns are not required; neither are audits unless total assets exceed BDS1m, and they do not have to be filed.

Under pressure from the OECD, Barbados is effectively merging its offshore and onshore sectors, and the Companies Act is in the process of being modified.

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Barbados Limited Liability Company

There needs to be only one shareholder and one director, who may be corporate; public companies must have at least three directors. Any company which is not a public company is a private company. The Companies Act does not set any minimum level of capital. Different classes of share are possible; bearer shares are not provided for in the Act; shares of no par value are allowed.

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Barbados Company Without Share Capital

A company without share capital (non-profit company) must limit its activities to purposes that are religious, philanthropic, educational etc etc. There must be at least three directors.

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Barbados Mutual Insurance Company

A mutual insurance company must be owned directly or indirectly by its members, and must provide insurance or reinsurance for the benefit of its members.

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Barbados External Company

External companies are defined by the Companies Act as incorporated or un-incorporated bodies formed under the laws of a country other than Barbados. An external company must register in order to do business in Barbados. Registration involves submission of basic corporate information to the Registrar and payment of a fee of BDS3,000. After registration, an annual return must be submitted to the Registrar. Registration validates prior acts of the company under Barbadian law.

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Barbados International Business Company

The International Business Company is the most widely used vehicle for offshore operations in Barbados.

IBC status is given to companies that are carrying on the business of international manufacturing or international trade or commerce. Broadly speaking, these activities have to be carried out in Barbados, with exports or the provision of services being to countries outside the Caricom area or to other IBCs, exempt insurance companies or Foreign Sales Corporations (ie other offshore entities).

The Act limits the issue of an IBC license to companies that fulfill the following criteria:

Offshore banks (see Offshore Business Sectors), exempt insurance companies (likewise) and foreign sales corporations (see below) are not eligible for IBC status.

IBC Licenses are issued by the Minister of Finance and are valid for one year, renewable annually for a fee of BDS250. The Minister will issue an assurance to an applicant that the benefits of the Act will be available for 15 years.

An IBC pays tax at a low rate and is entitled to various other benefits (see Offshore Legal and Tax Regimes).

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Barbados Foreign Sales Corporation

The US Tax Reform Act of 1984 enabled US companies to open 'Foreign Sales Corporations' (FSC) in a number of offshore centres, giving tax benefits to the US holding companies; Barbados is one of those countries.

A Foreign Sales Corporation normally takes the form of a limited liability company (see above). The governing legislation is the Foreign Sales Corporation Act 1984. FSCs are only permitted to operate with customers outside the Caricom area, and such sales are termed 'foreign trade transactions'. FSCs are licensed by the Ministry of Trade and Commerce; an FSC must:

The definition of 'foreign trade transactions' was loosened to permit some trading with Caricom by the Foreign Sales Corporation (Amendment) Act 1994. Barbados also introduced the 'shared' FSC under which a number of smaller US companies can club together to operate through an FSC, thus reducing costs.

After payment of an application fee of BDS200, the license application itself is accompanied by the Certificate of Incorporation, certain other documents, and a license fee of BDS1,000 (companies with turnover below BDS10m) or BDS2,000 (companies with turnover above BDS10m). Similar fees are payable annually on renewal of the license. There are substantial local tax advantages for FSCs, as well as the beneficial US treatment itself (see Offshore Legal and Tax Regimes).

In 1999, the WTO ruled against the US FSC legislation, in response to a complaint from the EU. After a long series of appeals and counter-appeals, the US finally accepted defeat in 2002, and the FSC legislation was repealed in 2004, along with a temporary replacement regime called the Extra-Territorial Inclusion Act, which had also been ruled illegitimate.

The future for Barbados-based US exporting subsidiaries is unclear.

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Barbados General Partnership

Partnerships fall under the Partnerships Act Cap 313 as amended, which is basically similar to the English Partnership Act 1890. No registration of partnerships is necessary, and there does not have to be a written partnership agreement. Partners are liable for the whole debts of the partnership. Partnerships are fiscally transparent, and the partnership tax assessment will fall on the partners individually. Apart from the need to file a tax return, there are no filing requirements for partnerships.

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Barbados Limited Partnership

Barbados Limited Partnerships are governed by the Limited Partnerships Act Cap 312 as amended. The maximum number of partners is 20 (but only 10 if the business of the partnership is banking).

There are one or more general partners, with unlimited liability, and a number of limited partners. A Limited Partnership must be registered with the Registration Office; otherwise it will be deemed to be a general partnership.

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Barbados Exempted Limited Partnership

Barbados has announced new legislation for Exempted Limited Partnerships. They will be equivalent to International Business Companies in many respects, including the restrictions on local trading and their tax treatment (see Offshore Legal and Tax Regimes).

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Barbados Societies with Restricted Liability

The Society with Restricted Liability (SRL) is similar to the Limited Liability Company in a number of other jurisdictions - it is designed to allow US taxpayers to claim individual tax treatment on their participation in an entity which is treated as a corporation in its own jurisdiction.

SRLs are formed under the Societies with Restricted Liability Act 1995, and have the following characteristics:

SRLs do not need to have any physical presence in Barbados, but must maintain a local registered agent and registered office; they are classed as exempt or non-exempt.

Exempt SRLs are subject to the same limitations on ownership and trading as International Business Companies (see above) and receive the same tax treatment (see Offshore Legal and Tax Regimes). A legislative amendment in 2004 permitted Exempt SRLs to trade within Caricom.

Non-exempt SRLs can trade within Caricom and Barbados, and are not subject to the ownership limitations that apply to IBCs. They can take advantage of tax treaties (not open to IBCs or exempt SRLs.)

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Barbados Trusts

Trusts in Barbados are governed by English common law and by the Trustees Act Cap 250 as amended, which deals with the powers of trustees. Appeal is to the Privy Council. There is no registration requirement or stamp duty; trustees can be non-resident as long as one is resident. A resident corporation acting as trustee must be licensed under the Offshore Banking Act (see Offshore Legal and Tax Regimes). Exchange controls apply to local trusts.

The Hague Convention has not been implemented; the maximum perpetuity period is 100 years.

Local (domestic) trusts are taxed as separate entities (see Domestic Corporate Taxation).

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Barbados International Trusts

The International Trusts Act 1995 introduced purpose trusts and asset protection trusts, as well as strengthened protection against forced heirship provisions, non-recognition of foreign judgements, and protection against creditors. The rule against perpetuities does not apply, and accumulation of income is permitted for up to 100 years.

International trusts have considerable tax advantages (see Offshore Legal and Tax Regimes) and are exempt from exchange control; the following conditions must be fulfilled:

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