Retrenchment In IBC Numbers Seen As Short Term

A press release from the Office of the Attorney General has acknowledged that there has been a retrenchment in the numbers of International Business Companies, but indicated that this reflects short-term adjustments being made to the regulatory framework. In the long term, it is felt that many of the “sensitive” IBCs will be replaced by new business eager to find a niche in a Bahamas that is a clean, well-regulated and fully recognised international financial center.

The AG’s Office indicated that the long-term question remains as to whether IBCs, or prospective owners who are overly sensitive to the issue of disclosing their identities, will have any place to hide in the new global financial environment. According to the release, even the reputed “bastions of secrecy” are now requiring financial intermediaries to maintain records of the identity of beneficial owners, similar to the requirements of Bahamian Law. “For those who wish to conduct business with absolute anonymity, there is increasingly in the global market place nowhere to run, nowhere to hide”, continued the statement.

The Registrar General has commented that the drop off in the numbers of new incorporations of IBCs during the first four months of the year might be attributed to persons adopting a “wait and see” attitude with regard to the new Financial Services regulatory regime, or delays caused by the need for financial intermediaries to obtain more extensive background information on prospective clients. The number of existing IBCs that have renewed licences during this first quarter has fallen, but less so.

The International Business Companies Act 2000 repealed the International Business Companies Act 1989 and reenacted provisions for the incorporation, registration and operation of IBCs. Areas in which the new Act has modified the Bahamian IBC include the prohibition of bearer shares and a requirement that directors and officers be a matter of public record. There must be a minimum of 2 directors, and by virtue of the winding up provisions, there must also be a minimum of 2 shareholders. IBCs do not have a guaranteed fiscal exemption, and may have Bahamian resident shareholders and carry on business in The Bahamas with Bahamian residents, subject to Exchange Control approval.

Only banks and trust companies licenced under the Banks & Trust Companies Regulations Act, and financial and corporate service providers licenced under the Financial and Corporate Service Providers Act may provide registration, management, administration, registered agent, registered office, nominee shareholders and officers and directors for IBCs. Both referenced Acts require their respective licensees to obtain beneficial ownership information and to comply with the Financial Transactions Reporting Act. As a consequence, full application of the know-your-customer regime required by the Financial Transactions Report Act and Regulations applies in relation to IBCs.