**Backbone of The Bahamas Financial Sector**
The provision of Corporate Services in The Bahamas is a key component of our overall Financial Services industry. Corporate Services go hand in hand with the various Financial Services industries such as the Securities industry and the Banking and Trust industries. Indeed, Corporate Services are the backbone of any financial services industry with few international transactions undertaken today that do not involve the use of one or more corporate entities. To highlight a few:
**International Business Companies**
Corporate Services in the Bahamas principally involves the incorporation and management of International Business Companies (IBCs) pursuant to the International Business Companies Act, 2000 (IBC Act).
IBCs are versatile and adaptable and have many uses. Currently, their most frequent use involves estate planning, private portfolio holding and trading, property holding and as investment funds.
Some of the more attractive features of the IBC include:
* A Minimum of one Director and one Shareholder
* No Requirement to file annual returns or financials statements
* The exemption of the company and its shareholders from all Bahamian taxes and duties.
Incorporation under the IBC Act is straightforward and can generally be completed in 3-4 business days. Incorporation is deemed to have taken place on the date the documents are filed with the Registry.
Limited Liability Companies and Companies Limited by Guarantee which traditionally have been used where special planning requirements are present also can be incorporated under the Act.
*Flexibility of Administration*
IBC owners have a number of local options available to them in terms of company administration. They can choose to simply utilise the services of an agent to act only in the capacity of statutory Registered Office and Registered Agent. However, there are additional services the Registered Agent can provide to assist the company’s owners in the structuring of the administration of the company. For example, Registered Agent can provide directors for the company, either in person or using corporate director. As Director information is required to be filed on the public records of the company at the Bahamas Registry, many company owners choose this option.
Another option available to company owners is the utilisation of Nominee Shareholder services. This generally takes two forms. A simple Nominee Agreement can be used whereby the shares of the company are held on behalf of the client in nominee form. An alternative is for the shares to be held subject to a bare trust in terms of which shares are held in trust on behalf of the shareholders as the Primary Beneficiaries and upon their death, for the Secondary Beneficiaries in proportions outlined in the bare trust.
*Ongoing Administration Requirements*
After an IBC has been incorporated there are a number of items that may be needed from time to time and are readily available from The Bahamas Registry. These items include, but are not limited to, Certificates of Good Standing, Certificates of Tax Exemption and Registry certified copies of constitutive documents such as Certificates of Incorporation and Memorandum & Articles of Association. Additionally, changes to the constitutive documents of the company can be effected by making filings with the Registry. Changes that can be easily effected are change in the company’s name, change in share capital or changes to the company’s Memorandum & Articles of Association.
*Emigration and Immigration of Companies*
The IBC Act also allows for the continuation into The Bahamas of companies from other jurisdictions as well as the continuation out from The Bahamas to other jurisdictions, provided of course that the continuation is legal in the jurisdiction in question.
At the end of the useful life of the IBC, the owners can choose to formally dissolve the company by having the Registered Agent file the necessary documents and fees, or allow the company to lapse for non-payment of annual fees. If the shareholders choose to allow the company to lapse they should be aware that for five years thereafter, the company will remain a viable entity which can sue or be sued and have claims brought against it by creditors. After five consecutive years following strike off, an IBC is deemed to be dissolved by the Registry and cannot be restored without making an application to court.
There also are a number of exciting new products the Bahamas Government have put in place over the last few years to enhance the Financial Services Industry.
The enactment of The Foundations Act 2004 made The Bahamas the premier Common Law jurisdiction with respect to the domicile of Foundations. Foundations were used in Europe for many centuries for ecclesiastical purposes and in the last century in the individual and commercial contexts. The best-known civil law foundations jurisdictions to date have been Liechtenstein, Panama and the Netherlands Antilles.
The Bahamian Foundations Legislation builds upon the legislation in place in other jurisdictions while taking into account the specific requirements of civilian clients and their need to exercise a certain level of control over the vehicle which is unavailable with trusts.
Some of the common uses for Foundations are as follows:
* Tax and Estate planning
* Asset protection
* Maintenance of Corporate Control
* Assistance to charities
* Separation of voting and economic benefits in investment holding companies
* Ownership of private trust companies
* Ownership of employee share option schemes
* Holding assets off-balance sheet in connection with the securitization of mortgages
The use of Foundations is steadily growing as clients become more aware of and comfortable with this structure. Foundations are clearly an exciting product which includes some of the attributes of both the IBC and the Trust introducing the best of both worlds to one entity. The Bahamian Foundations legislation also includes features that are unique and which sets it apart from foundations in other jurisdictions.
**Segregated Accounts Companies**
When Segregated Accounts companies were introduced by way of the passing of the Segregated Accounts Companies Act 2004, it ushered in another useful product to add to The Bahamas’ portfolio of products. Segregated Accounts Companies (SACs), also called Protected Cell Companies in some other jurisdictions, are generally used by the investment funds industry and insurance industries. The main benefit of a SAC is that the assets and liabilities of each segregated account in the company are exclusive to that respective account and do not affect the other accounts. As such, each account is insulated and protected from the occurrences in the other accounts.
Once an IBC has been incorporated, it can be registered as a SAC. This Registration does not change the company’s designation as an IBC; it is simply an IBC registered under the SAC Act. As such, in addition to paying the annul fees for the IBC itself, annual fees also need to be paid for the SAC and its respective accounts.
The utilisation of SACs has been steadily increasing and we anticipate further growth in its use, in particular by the investment funds industry.
Overall, the future of the Corporate Services Industry in The Bahamas is bright. Government has given its commitment to improving the services it provides through the Companies Registry and to look at ways to add new products that would be of benefit to our clients. With that approach there is little that stands in the way of The Bahamas maintaining and improving its status as the one of the premier Financial Services jurisdictions in the world.
*(Extracted from BFSR Article produced by Yolanda Coakley, Manager, Trident Corporate Services (Bahamas) Limited – a member of the Trident Trust Group.*