Domestic Companies in The Bahamas

INTRODUCTION

Trading as a private limited liability company enables a person to protect himself from the debts and liabilities of the company while being entitled to enjoying all the profits earned by the company.

The Companies Act 1992 ("the Act") consolidated and revised the law regarding the incorporation, management and control of domestic companies in The Bahamas.

Companies registered under the Act can carry on various types of business in The Bahamas including:

a.	Real Estate transactions in The Bahamas (including property and resort development)
b.	Commercial enterprises with residents of The Bahamas in Bahamian dollars
c.	Banking and Trust business
d.	Insurance business
e.	Manufacturing

The Act also provides for public companies, non-profit companies and foreign companies. Companies usually conduct business with Bahamian residents in Bahamian dollars, but in special cases they are permitted by the Exchange Control Department of The Central Bank of The Bahamas to maintain foreign currency accounts subject to certain reporting requirements, terms and conditions.

Notwithstanding the fact that such companies are subject to the Exchange Control Regulations, a system in place whereby they can readily obtain foreign exchange by converting Bahamian dollars for the purchase of goods and services abroad, the payment of pre-approved foreign loans, and the repatriation of profits and dividends. 

SIGNIFICANT PROVISIONS 

Among the more significant provisions of the Act are the following:

a.	Two or more persons may incorporate a company.
b.	A standard form of Articles of Association is included in the Act itself and can be adopted by mere reference, thereby further reducing the paperwork requirements of company formation.
c.	Meetings of members of a company may be held outside The Bahamas and participation in meetings is possible by telephone or other electronic means.

COMPANY INCORPORATION

The first step in the process of incorporating a company is the reservation of a name for the company. The Registry in the Registrar General’s Office provides a 24-hour company name reservation service and confirmation of a name is guaranteed immediately in most cases.

If a company is incorporated with a name which is similar to another company already on the record, the Registrar may give notice to the last registered company to change its name and if this is not done within sixty (60) days of the notice, then the Registrar may direct the company to change its name to such name as appropriate. The word “Limited” or the letters “Ltd.” must be the last word in the name of every company (unless the company is approved by the Registrar of Companies as a non-profit company, whereby the use of "limited" or "ltd." can be dispensed with).

A Memorandum of Association must be filed with the Registrar General. It must be signed by at least two subscribers (who must subscribe for at least one share each) in the presence of at least one witness. The witness must sign and swear to an affidavit stating that the subscriber signed the memorandum in his presence.

A subscriber, who is not a resident of The Bahamas, or his nominee, must get permission from The Central Bank. Such permission is usually not difficult to obtain. No person who is under the age of majority, of unsound mind, or an-discharged bankrupt may join in the incorporation of a company. 

MANAGEMENT OF THE COMPANY 

The Act provides that the Bahamian Company shall be managed by at least two directors. No person who is under the age of majority, of unsound mind or who an un-discharged bankrupt may be a director. Nominee officers and directors as well as shareholders can be utilised.

A notice of the names of persons consenting to be directors must be filed with the Registrar along with the Articles of Association. Such directors hold office until the first meeting of the members of the company at which time election of directors takes place. Directors hold office until they are disqualified, removed by resolution at an extraordinary general meeting or until their death or resignation.

Directors meeting may be held at any place within as well as outside The Bahamas and upon such notice as the directors determine unless otherwise provided for by the Articles of Association. 

The Act provides for participation in meetings by telephone or other communication, which allows recognition by the directors of each other’s voices. 

All acts of the company are affected by resolution. The Act distinguishes between “resolution of members” and “resolution of directors”.

The first annual general meeting of the shareholders must be held within three months of the date of incorporation of the company. At that meeting shareholders may elect the first officers, directors, etc.

All shares are registered shares with a par value. No bearer shares are permitted or shares without a par value. 

FILING REQUIREMENTS

1.	All companies must file with the Registrar the names of the officers, directors, managers, and a Bahamian registered office address.
2.	Every company which has a capital divided into shares must file an annual return at the Registry containing the following information: a. A list of members stating the names, addresses and occupations of all members mentioned and the number of shares held by each and the names of those who have ceased to be members. b. The amount of the company’s capital and number of shares into which it is divided. c. The number of shares taken from the formation of the company up to the date of the summary. d. The amount of calls made on each share, the total amount of calls received, the total number of calls unpaid, the total number of shares forfeited. e. The registered number of the company.
3.	All companies must also file an annual return declaring whether or not Bahamians beneficially own sixty (60) per cent of its shares.

This post is for your information only and nothing contained in this post is intended to constitute a legal opinion.  If you require any detailed advice you can contact a Bahamian corporate attorney by clicking here.