International Business Companies in The Bahamas

THE ACT 

The International Business Companies Act 2000 and its amendments thereto provide for the establishment of International Business Companies (IBC’s).

PRIMARY USES OF AN IBC

IBC’s established in The Bahamas are extremely popular because they serve many useful purposes. Some of the more important reasons for using IBCs are: 

1.	INVESTMENTS: These include certificates of deposit, savings and other bank accounts, currencies, stocks and bonds, various banking instruments, real property, and valuables.
2.	INTERNATIONAL TRADE: IBC’s facilitate the purchasing and sale of merchandise of all description across country borders. Agency, brokerage and representative agreements may also be established using IBC’s, and warehousing, shipping, transportation and bulk purchasing facilities arranged using IBC’s.
3.	REDUCED OR DEFERRED TAXATION: IBC’s can legally be utilised to reduce, defer or avoid the payment of taxes.
4.	INVESTMENT DIVERSIFICATION: IBC’s can help individuals diversify their assets and the jurisdictions in which they are held.
5.	LEGAL RIGHTS OF INHERITANCE: Sometimes the individual is not happy with the legal rights of inheritance in his country of residence and domicile and may prefer to hold assets in an IBC in The Bahamas.
6.	EMIGRATION: A wealthy individual may decide to emigrate and hold assets in an IBC.
7.	ABILITY TO CAPITALISE ON ENTREPRENEURIAL SKILLS: An inventor or author or successful investor may find it advantageous to assign his work to an IBC for worldwide application.
8.	OVERSEAS ENGAGEMENTS: An IBC may facilitate savings where an individual is employed abroad. Professionals and others with special skills and expertise may contract their services to IBCs to increase their disposable incomes.
9.	FINANCIAL PLANNING: An IBC may assist in protecting assets against frivolous lawsuits, civil disturbances, family disagreements and other situations.

Taxation

An IBC and its shareholders are not subject to any income tax, corporate tax, business license fees, or stamp duty on transactions. However, stamp duty is payable in relation to real property situate in The Bahamas which it owns, or is owned by any company in which it holds shares or for which it holds a lease.

Requirements of an IBC 

IBC’s may be incorporated or continued under the Act, and carry on any business which is not prohibited under the laws of The Bahamas. 

It’s activities may include acquiring land in The Bahamas or holding investments abroad , maintaining offices, opening a bank account, preparing and keeping books and records such as those of trading operations, and holding directors’ and shareholders meetings. It may be approved to conduct business with residents of The Bahamas.

Capital 

There is no minimum authorised capital for an IBC or a minimum capitalisation requirement. The usual authorised share capital is US$50,000.00, as this is the maximum authorised capital permitted for the minimum government license fee payment. The capital may be expressed in any currency. Shares of no par value are permitted.

An IBC may be wholly owned by one or more persons or entities. Residents of The Bahamas may be approved by The Central Bank of The Bahamas to act as shareholders. An IBC may purchase, redeem or otherwise acquire and hold its own registered shares but only out of surplus or in exchange for newly issued shares.

Pre-Incorporation Instructions

A person or entity that wishes to have an IBC should consult a Bahamian corporate services attorney. The Bahamian corporate attorney can properly advise as to the documentation required, formalities, procedure and costs.

Incorporation 

Three names must be provided by the prospective client in order of preference. Once the name is approved, the documents are submitted to The Registrar General’s Department for registration. Once the registration is completed, a Certificate of Incorporation and certified copies of the Memorandum and Articles of Association are provided.

Registered Agent

Each IBC must appoint a Registered Agent in The Bahamas. Typically, your Bahamian corporate attorney will be able to facilitate these as most firms have corporate service providing companies as well.  If you are interested in incorporating an IBC you can contact a Bahamian corporate attorney by clicking here.

Confidentiality and Registers 

The IBC affords a high degree of confidentiality since there are limited filing requirements. Only the name of the Company, a copy of the Register of Directors and Offices, its Registered Agent’s name and address, the company’s Memorandum and Articles of Association, including any amendments thereto, must be filed with the Registrar. The names and addresses of the company’s shareholders are not filed or registered in The Bahamas; however, the register of members must be kept and maintained at the Registered Office but is not available for inspection by the public.

Under the provisions of the Act and IBC can only issue registered shares. The names of the shareholders appear on the face of the share certificates. Bearer shares are not permitted.

Directors 

The business and affairs of an IBC may be managed by a board of directors consisting of at least one director. Directors are usually appointed by the shareholders. There is no requirement for frequency of directors’ meetings.

Corporate Books, Records The books, records and minutes of meetings must be kept at the Registered Office and copies at such other places as determined by the directors or the Articles.

Registration and Licence Fees

IBC’s are required to pay registration fees upon incorporation and an annual licence fee of $350 to the government. License fees are payable before the 31st of January each year, beginning the year following the incorporation of the company. Penalties are due for late payment and the Registrar can strike IBC’s off the register for non-payment. 

The Seal Each IBC must have a seal which must be kept at the Registered Office.

Amendments to Memorandum or Articles

IBC’s can amend their Memorandum and Articles of Association by shareholders’ resolution, or where permitted by the Memorandum and Articles, by a resolution of directors. Amendments may be made changing the name of an IBC, increasing and decreasing the authorized capital, dividing or combining shares and changing the maximum number of directors, among other things. Amendments must be submitted to the Registrar for public inspection and become effective on registration. The IBC must hold an annual general meeting in The Bahamas.

Exchange Control 

If an IBC does business with a person resident in The Bahamas, or where a person who is deemed to be resident of The Bahamas for exchange control purposes desires to purchase shares, debts or securities in the IBC’s, they would be required to obtain approval from The Central Bank of The Bahamas. Otherwise, the IBC is free of the Exchange Control Regulations.

Power of Attorney

The Power of Attorney authorizes the person named therein to do or execute all or any acts or things on behalf of the IBC. A Power of Attorney is usually given when the Bahamian corporate service provider provides officer and/or director services for the IBC.

Bank Account

A bank account can be opened at any of the major international and domestic commercial banks subject to their special rules and regulations being observed. 

Usually, if the client provides the officers and directors for the IBC, he or she will provide the signatories on the account. Where the Bahamian corporate services provider provides officers and directors the client may still be the sole signatory on the account, however, permission must be sought from the Central Bank for Bahamians to sign on the account. 

Continuation of Foreign Companies

A Foreign Company may continue as an IBC regardless of any provisions in the laws of jurisdiction of the foreign company. In case of emergency or other urgency in the jurisdiction of a foreign corporation, a temporary continuation may be arranged by the Registrar. Continuation as an IBC can be used to protect the assets outside the foreign company’s home jurisdiction.

SUMMARY 

IBC’s facilitate the conduct of international business from The Bahamas in foreign currency. They are free from Exchange Control Regulation for foreign investors. They are tax-free in The Bahamas.

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.