The following information is not intended to provide a technical
legal analysis of the provisions of the Bahamas International Business
Companies Act, 2000, the Bahamas International Business Companies
(Amendment) Act, 2004 and the Bahamas International Business Companies
(Amendment to Fee Schedule) Order, 2004 (together the "Bahamas IBC Act").
Ihave focused only on the main provisions of the Bahamas IBC Act
and have intentionally omitted explanations of various sections of the
legislation which we believe are not of primary concern to the financial
services industry of The Bahamas.
All references to “$” are to Bahamian dollars. One Bahamian dollar
equals one US dollar.
The law is stated as at 1st March 2007.
OVERVIEW
The Bahamas International Business Companies Act, 2000, repealed the
Bahamas International Business Companies Act, 1989 as amended.
PERMISSIBLE ACTIVITIES FOR BAHAMAS INTERNATIONAL BUSINESS COMPANIES
Bahamas International business companies (“Bahamas company” ,
"Bahamian Company" or “Bahamas IBC”) are permitted to carry on any
activity anywhere that is not prohibited by the Bahamas IBC Act or any
other law in force in The Bahamas.
Bahamas IBCs have such powers as are permitted by law for the time
being in force in The Bahamas, irrespective of corporate benefit, to
perform all acts and engage in all activities necessary or conducive to
the conduct, promotion or attainment of the object of the Bahamas IBC.
The Directors of a Bahamas company may exercise all the powers of the
Bahamas IBC to borrow money and to mortgage or charge its undertaking
and property or any part thereof, to issue debentures, debenture stock
and other securities whenever money is borrowed or as security for any
debt, liability or obligation of the Company or of any third party.
Any mortgage or charge of the undertaking and property of the Bahamas
company shall be regarded as in the usual or regular course of the
business carried out by the Bahamas IBC.
In addition to carrying on business outside The Bahamas, Bahamian
IBCs may carry on business with persons deemed or designated “residents”
of The Bahamas pursuant to the Exchange Control Regulations, 1956, and
own or have a leasehold interest in real property situate in The
Bahamas; provided that, Bahamas IBCs wishing to carry on business with
persons deemed or designated “residents” of The Bahamas must obtain
prior exchange control approval of the Central Bank of The Bahamas.
APPLICATION FOR INCORPORATION OF A BAHAMAS IBC
An application must be submitted to the Registrar in order to
incorporate a Bahamas IBC. The application must be accompanied by the
following documents at the time of registration:
a. memorandum of association;
b. articles of association;
c. address of the Registered Office;
d. name and address of the Registered Agent; and
e. a written certification from either:
(i) a counsel and attorney engaged in the formation of the Bahamian company, or
(ii) the Registered Agent as named in the memorandum of
association of the Bahamian company, certifying that the registration
requirements have been met.
There is an incorporation fee of $330.00. An annual registration fee
is payable to the Registrar on 1 January of $350.00 for an IBC with an
authorised capital of $50,000.00 or less and $1,000.00 where the
authorised capital exceeds $50,000.00. Where the Bahamas company is of
unlimited liability or is limited by guarantee or includes no par value
shares, the fee is $350.00. The first annual registration fee is
payable in the year immediately succeeding the year of incorporation.
SHARE CAPITAL OF A BAHAMAS COMPANY
Shares in a Bahamas IBC may be issued for money, services rendered,
personal property (including other shares, debt obligations or other
securities in the company), an estate in real property, a promissory
note or other binding obligation to contribute money or property, or any
combination thereof.
Shares in a Bahamas company may be issued for such amount as may be
determined from time to time by the directors, and in the absence of
fraud, the decision of the directors as to the value of the
consideration received by the company in respect of the shares is
conclusive, unless a question of law is involved. Treasury shares and
unissued shares may be disposed of by a Bahamas company on such terms
and conditions as the directors may determine.
Subject to any limitations in its memorandum or articles of
association or any other law for the time being in force in The Bahamas,
a Bahamas IBC may issue:-
a. registered shares but not shares issued to bearer;
b. voting shares;
c. non-voting shares;
d. shares that may have more or less than one vote per share;
e. shares that may be voted only on certain matters or only upon the occurrence of certain events;
f. shares that may be voted only when held by persons who meet specified requirements;
g. no par value shares;
h. unnumbered shares;
i. common shares, preferred shares, or redeemable shares; and
j. shares that entitle participation only in certain assets.
A Bahamian company may by a resolution of directors amend its
memorandum of association to increase or reduce its authorised capital
and in connection therewith the company may in respect of any unissued
shares increase or reduce the number of such shares, increase or reduce
the par value of any of its shares or effect any combination of the
foregoing.
A Bahamas IBC may amend the memorandum of association to:
a. divide the shares, including issued shares, of a class into a larger number of shares of the same class; or
b. combine the shares, including issued shares, of a class into a
smaller number of shares of the same class, provided, however, that
where shares are divided or combined under (a) or (b) above, the
aggregate par value of the new shares must be equal to the aggregate par
value of the original shares.
The capital of the Bahamas company may by a resolution of directors
be increased by transferring an amount of the surplus of the company to
capital.
The capital of the Bahamas company may by resolution of directors be reduced by:
a. returning to members any amount received by the company upon
the issuance of any of its shares, the amount being surplus to the
company;
b. cancelling any capital that is lost or not represented by assets having a realisable value; or
c. transferring capital to surplus for the purpose of purchasing,
redeeming or otherwise acquiring shares that the directors have resolved
to purchase, redeem or otherwise acquire.
However, no reduction of capital shall be effected that reduces the
capital of the Bahamas company to an amount that immediately after the
reduction is less than the sum of :-
(i) the aggregate par value of all outstanding shares with par value;
(ii) and all shares with par value held by the company as treasury shares;
(iii) and the aggregate of the amounts designated as capital of all outstanding shares without par value; and
(iv) all shares without par value held by the company as treasury
shares that are entitled to a preference, if any, in the assets of the
company upon liquidation of the company.
Also no reduction of capital shall be effected unless the directors
determine that immediately after the reduction the Bahamas company will
be able to satisfy its liabilities as they become due in the ordinary
course of its business and that the realisable assets of the company
will not be less than its total liabilities, other than deferred taxes,
as shown in the books of the company and its remaining issued and
outstanding share capital, and, in the absence of fraud, the decision of
the directors as to the realisable value of the assets of the company
is conclusive, unless a question of law is involved.
PROHIBITION OF THE ISSUANCE OF SHARES TO BEARER
Bahamas IBCs are not permitted to issue shares to bearer (“bearer shares”).
All bearer shares previously issued under the provisions of the
Bahamas International Business Companies Act of 1989 are considered null
and void and without effect for all purposes of law.
Filing of Amendments to Memoramdum and Articles of Association and Other Documents
Subject to any limitations in its memorandum and articles of
association, a Bahamas IBC may amend its memorandum and articles of
association by resolution of the members and where permitted by the
memorandum or articles of association or the Bahamas IBC Act by a
resolution of the directors.
Where a Bahamas IBC amends its memorandum
or articles of association (including the change of capital), it is
required to submit to the Registrar an authenticated copy of the
resolution of the members or the directors amending the Bahamas
company’s memorandum and articles of association within 28-days of such
amendment. The amendment to the memorandum or articles of association
is not effective until registered by the Registrar.
A Bahamas company is also required to file notices of any changes to
its register of officers and directors, the name and address of its
registered agent and the address of its registered office. See below.
Except as provided above, a Bahamian company is not subject to any annual filing requirements.
REGISTERED OFFICE/REGISTERED AGENT
An Bahamas company must at all times maintain a Registered Agent and
Registered Office in The Bahamas. The name and address of the
Registered Agent and the address of the Registered Office must be
submitted to the Registrar with the application for registration of the
Bahamas IBC.
The Registrar must be notified of any change in the address of the
Registered Office within 14-days after such change has been made and any
change in the name or address of the Registered Agent.
Under the Bahamas IBC Act, only Bahamian licensed banks and trust
companies and financial and corporate service providers licensed under
the Bahamas Financial and Corporate Service Providers Act are permitted
to act as Registered Agents of Bahamas IBCs.
Resignation of Registered Agent
Where a Registered Agent wishes to resign and is unable to reach an
agreement with the Bahamas company regarding the Registered Agent’s
replacement the Registered Agent may resign provided the Registered
Agent takes the following steps:-
a. the Registered Agent shall give not less than 90 days written
notice to any director or officer of the Bahamas company of which he is
Registered Agent at the director’s or officer’s last known address, or
if the Registered Agent is not aware of the identity of any director or
officer then the person from whom the Registered Agent last
received instructions concerning the Bahamas IBC, specifying the wish of
the Registered Agent to resign as Registered Agent;
b. the Registered Agent shall, in writing, inform the Registrar that he has served the notice referred to in paragraph (a);
c. if, at the time of the expiry of the notice, the Bahamas company
has not notified the Registrar or the Registered Agent of any change in
the name or address of its Registered Agent, the Registered Agent shall
inform the Registrar in writing that the Bahamas company has not
changed its Registered Agent and the Registrar shall publish a notice in
the Gazette that the name of the Bahamas IBC will be struck off the
Register of Companies (“Register”), unless the Bahamian company, within
30-days from the date of the publication of the notice in the Gazette,
notifies the Registrar of the change in the name or address of its
Registered Agent; and
d. if a Bahamas company fails within 30-days from the date of the
publication of the notice referred to in paragraph (c) to notify the
Registrar of the change in the name or the address of its Registered
Agent, the Registrar shall strike the name of the Bahamas IBC off the
Register and shall publish in the Gazette a notice that the name of the
Bahamian company has been struck off the Register.
If the Registrar has reasonable cause to suspect that a Registered
Agent has died or has otherwise ceased to act or to qualify to act as a
Registered Agent and the Bahamas company has not notified the Registrar
of any change in the name or address of its registered agent, the
Registrar shall serve on the company at its registered office a notice
directing the Bahamian company to replace the registered agent.
If a Bahamas company fails within 30-days from the date of the notice
to notify the Registrar of any change in the name or address of its
Registered Agent, the Registrar shall strike the name of the Bahamas IBC
off the Register and shall publish in the Gazette a notice that the
name of the Bahamas company has been struck off the Register.
Maintenance of Share Register or Register of Members/Shareholders, Register of Directors and Officers
A Bahamas company is required to keep at its Registered Office:-
a. one or more registers known as Share Registers containing the
names and addresses of the persons who hold registered shares of the
Bahamas company; the number of each class and series of registered
shares held by each person; the date on which the name of each person
was entered in the Share Register and the date on which any person
ceased to be a member. The Share Register is not publicly filed
with any government authority.
b. a Register of Directors and Officers containing the names and
addresses of the persons who are directors and officers of the Bahamian
company; the date on which each person was appointed as a director or
officer of the Bahamas company; and the date on which each person as a
director or officer ceased to be a director or officer of the Bahamas
IBC. A current copy of the Register of Directors and Officers must be
filed with the Registrar. Any changes must be filed within one year of
such changes.
c. copies of its memorandum and articles of association.
d. an imprint of its common seal.
Officers and Directors of Bahamas COMPANIES
Subject to any limitations in its memorandum or articles of
association or in any unanimous shareholder agreement, the business and
affairs of a Bahamas company shall be managed by at least one director
who may be an individual or a company. There are no Bahamian residency
or share qualification requirements to be a director of an Bahamas IBC.
There is no requirement to appoint any officers of an Bahamas IBC.
The Register of Officers and Directors must be filed with the Registrar
within 12-months of their appointment and the Registrar must be notified
of any change in the directors or officers of the Bahamas company
within 12-months after the change occurs.
Indemnification of Directors, Officers and Liquidators
Subject to any limitations in a Bahamas IBC’s memorandum and articles
of association or in any unanimous shareholder agreement, a Bahamas IBC
may only indemnify a director or officer against all expenses,
including legal fees, and against all judgments, fines, amounts paid in
settlement and reasonably incurred in connection with legal and
administrative proceedings where such director or officer acted honestly
and in good faith with a view to the best interests of the Bahamian
company.
Notwithstanding the foregoing, a Bahamas IBC may purchase and
maintain insurance in relation to any person who is or was a director or
an officer against any liability asserted against the person and
incurred by the person in that capacity, whether or not the Bahamas
company has or would have had the power to indemnify the person against
any of the liability.
Meeting of Members/Shareholders
A Bahamas IBC is not required to have an annual general meeting of the members.
Meeting of Directors
Subject to any limitations in the Bahamas IBC’s memorandum or
articles of association or in any unanimous shareholder agreement the
directors may meet in the following manner:-
The directors may meet together inside or outside The Bahamas for the
dispatch of business. A director shall be deemed to be present at a
meeting of directors if he participates by telephone or other electronic
means and all directors participating in the meeting are able to hear
each other and recognise each other’s voice.
It is necessary to give a minimum of 2-days notice of a meeting of
the directors to every director but such notice may be waived by any
director.
A director may by a written instrument appoint an alternate director
who need not be a director and the name of such alternate shall be
disclosed and notified to the Registrar. An alternate for a director
shall be entitled to attend meetings in the absence of the director who
appointed him and to vote or consent in place of the director.
The quorum for a meeting of directors is that fixed by the memorandum or articles of association.
The continuing directors may act notwithstanding any vacancies, but
if and so long as the number of directors is reduced below the minimum
number of directors the continuing directors or director may act for the
purpose of filling up such vacancies or of summoning general meetings
of the Bahamas company, but not for any other purpose. If there be no
directors or director able or willing to act, then any member may summon
a general meeting for the purpose of appointing directors.
A resolution in writing signed by all the directors is effective as a
resolution passed at a meeting of the directors duly convened and held,
and may consist of several documents in the like form, each signed by
one or more of the directors.
Appointment and Removal of Directors
The first directors of the Bahamas Company must be appointed by the
subscribers to the memorandum of association; thereafter, the directors
are elected by the members for such term as the members determine and
where permitted by the memorandum or articles of association by the
current directors.
Each director holds office for the term, if any, fixed by resolution
of members or until his earlier death, resignation or removal.
A director may resign his office by giving written notice of his
resignation to the Bahamian company and the resignation shall have
effect from the date the notice is received by the Bahamas company or
from such later date as may be specified in the notice.
A vacancy in the directors may be filled by a resolution of members or by a resolution of a majority of the remaining directors.
Dissolution and Striking-off
Where the Registrar has reasonable cause to believe that a Bahamas
company no longer satisfies the requirements prescribed for a Bahamas
IBC the Registrar shall serve on the company an Order for Compliance.
If the Registrar does not receive a reply within 90-days immediately
following the date of the service of the Order the Registrar shall
strike the name of the Bahamas company off the Register, unless the
Bahamian company or any other person satisfies the Registrar that the
Bahamas company should not be struck off, and the Registrar shall
publish notice of the striking off in the Gazette.
Where a Bahamas company has otherwise complied with the requirements
of the Bahamas IBC Act the Registrar shall upon request by the company
issue a Declaration of Compliance.
fees and penalties
If a Bahamas company fails to pay the prescribed registration fee to
the Registrar by the 1st day of April in each year the fee increases by
10% of that amount.
If a Bahamas company fails to pay the amount due by 31st October then
the registration fee increases by 50% of the prescribed fee.
If a Bahamas company fails to pay the registration fee by 31st
December, the name of the Bahamas IBC will be struck off the Register
from 1st January of the following year.
segragated account companies
A Bahamas IBC:-
a. engaged in the business of investment funds, with the written
consent of the Securities Commission or an investment fund
administrator with an unrestricted investment fund administrator’s
license, where applicable;
b. engaged in the business of issuing securities, with the written consent of the Securities Commission;
c. engaged in insurance business, with the written consent of the Registrar of Insurance;
d. if it is a subsidiary of a Bank or Trust Company and not
licensed by the Central Bank of The Bahamas, with the written consent of
the Central Bank of The Bahamas; or
e. engaged in any other business, with the written consent of its
primary regulator who may be prescribed by the Minister may be
registered as a segregated accounts company.
A Bahamas company registered as a segregated accounts company will be
able to set up accounts containing assets and liabilities that are
legally segregated from the assets and liabilities of the Bahamas IBC’s
ordinary account thus allowing the assets of one account to be protected
from the liabilities of another account. This ability to segregate
accounts removes the need to use separate companies for each investment
strategy whilst affording each segregated account the same limited
liability that would be obtained if separate accounts companies were
used.
Creation of Mortgages and Charges of Shares
A mortgage of shares or a charge of shares of a Bahamas company
incorporated under the Bahamas IBC Act must be in writing signed by, or
with the authority of, the registered holder of the share to which the
mortgage or charge relates.
A mortgage of shares or a charge of shares of a Bahamas IBC may be governed by foreign law.
While a mortgage of shares or a charge of shares of a Bahamas IBC is
not required to be in any specific form, it must clearly indicate:-
a. the intention to create a mortgage or charge; and
b. the amount secured by the mortgage or charge or how that amount is to be calculated.
In the case of default by the mortgagor or chargor on the terms of
the mortgage, the mortgagee or chargee is entitled to the following
remedies:-
a. subject to any limitations or provisions to the contrary in
the instrument creating the mortgage or charge, the right to sell the
shares; and
b. the right to appoint a receiver who, subject to any limitations
or provisions to the contrary in the instrument creating the mortgage or
charge, may (i) vote the shares; (ii) receive dividends and other
payments in respect of the shares, and (iii) exercise other rights and
powers of the mortgagor or charger in respect of the shares, until such
time as the mortgage or charge is discharged.
In the case of a mortgage of shares or a charge of shares, the Bahamas company may enter in the share register of the company:-
a. a statement that the shares are mortgaged or charged;
b. the name of the mortgagee or chargee; and
c. the date on which the statement and name are entered in the share register.
Registration of Mortgages and Charges of A BAHAMAS Company
A Bahamas company may elect to maintain a register of mortgages or
charges and a Bahamas IBC may also elect to submit for registration by
the Registrar its register of mortgages or charges.
Once a Bahamas company elects to submit a register of mortgages or
charges to the Registrar the list of mortgages or charges must be a
complete list and include ALL mortgages or charges of the Bahamian
company.
A Bahamas company that has elected to submit for registration a copy
of its register of mortgages and charges shall, until it otherwise
notifies the Registrar, submit for registration any changes in the
register of mortgages or charges by substituting for registration a copy
of the register containing the changes.
A Bahamas company that submits for registration a copy of its
register of mortgages or charges with the Registrar may elect to cease
the registration of changes in the register by informing the Registrar
in writing.
If a Bahamian company elects to submit for registration its register,
until such time as the company informs the Registrar that it elects to
cease to register changes in its register, the Bahamas IBC is bound by
the contents of the copy of its register submitted to the Registrar.
Registration of documents creating a mortgage or charge
An IBC may submit to the Registrar for registration:-
a. any document or copy of a document creating a mortgage, charge or other encumbrance over some or all of its assets;
b. any document or copy of a document amending any document referred to in paragraph (a); and
c. any document releasing or discharging a mortgage, charge or other encumbrance over any or all its assets.
The Registrar must retain and register the document or a copy thereof.
Fiscal Exemptions
A Bahamas IBC or any member or shareholder is not subject to:-
a. any business licence fee, income tax, corporation tax,
capital gains tax or any other tax or income or distributions accruing
to or derived from such company or in connection with any transaction to
which that Bahamas company or shareholder, as the case may be, is a
party;
b. any estate, inheritance, succession or gift tax, rate, duty,
levy or other charge payable in The Bahamas with respect to any shares,
debt obligations or other securities of that company or shareholder;
c. the payment of stamp duty on any transactions in respect of
shares, debt obligations or the securities of a Bahamas company and any
other transactions relating to the business of the Bahamas IBC; provided
however, stamp duty is payable in relation to real property situated in
The Bahamas which is owned by the Bahamas IBC, or which is owned by any
company in which it holds shares or for which it holds a lease.
These exemptions do not apply to :-
(i) a person who is a “resident” of The Bahamas within the meaning of the Bahamas Exchange Control Regulations Act; or
(ii) to a company incorporated or continued under the Bahamas IBC Act
if a “resident” of The Bahamas within the meaning of the Bahamas
Exchange Control Regulations Act and the regulations made thereunder is
the beneficial or legal owner of any of the common or preferred shares
issued or to be issued by such Bahamas company or acquires a legal or
beneficial interest in any debt or other securities issued or to be
issued by such Bahamas IBC or is otherwise directly or indirectly
entitled to receive any dividends or distributions from such a Bahamas
company.
A Bahamas IBC is exempted from the Bahamas Exchange Control
Regulations only if its operations are intended to be exclusively
overseas. A Bahamas IBC wishing to carry on business with persons
resident in The Bahamas must first obtain exchange control approval from
the Central Bank of The Bahamas with respect to its planned
operations.
Persons deemed “resident” for exchange control purposes and who wish
to acquire shares or an interest in a Bahamas IBC must obtain prior
exchange control approval. Maintaining business relations with
advisers, bankers and the maintenance of an office in The Bahamas is not
considered doing business in The Bahamas although certain activities
carried on from within The Bahamas may require the Bahamas IBC to be
licensed under Bahamian law in respect of such activity.
The foregoing exemptions are granted for a period of 20-years from
the date of incorporation of a Bahamas company or from the date of its
continuation under the Bahamas IBC Act.
If you require specific advice regarding Bahamian IBCs you should contact a Bahamian corporate lawyer or a Bahamian corporate services provider. You can contact a Bahamian corporate lawyer by clicking here.
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