background image
1.1.2. Specific Uses of Available Legal Entities

Bahamas Domestic Limited Company

A domestic resident company limited by shares is usually formed for the purposes of carrying on local business

Bahamas Company Limited by Guarantee

The Company Limited by Guarantee has certain advantages, including that there is no list of members on the annual return, and that control over assets can be achieved without the use of shares; in some jurisdictions, profits realised from such companies are classified as capital gains rather than as income.

Bahamas Public Company

A public company formed under the Companies Act is similar to a private company limited by shares except that there is a compulsory annual audit, and there must be at least three directors. A list of all officers, directors and managers of the company must be kept at the registered office and sent to the Registrar-General along with the annual return.

Bahamas International Business Company

The International Business Company is the most widely used vehicle for offshore operations in the Bahamas; it normally takes the form of a private company limited by shares.

Bahamas IBCs are usually used as holding companies for investment or trading activity in other countries.

Many of the newer IBCs have been formed as asset protection vehicles, sometimes in association with trusts, either to hold shares or other types of asset. The Bahamas are one of the most popular jurisdictions for these markets, because of the flexible IBC legislation, confidentiality, good reputation, and high-quality professional services.

Bahamas Limited Duration Company

The International Business Company (Amendment) Act 1994 introduced the Limited Duration Company, which is essentially the same as the IBC but with a life limited to 30 years. This form is directed towards a certain class of US investors - when suitably structured the LDC has the characteristics of a partnership and is treated as such in the US, where it is known as a Limited Liability Company.

Foreign Company

A foreign company can operate a branch in the Bahamas with minimal formality and no registration requirements, but once the branch is recognised as an 'undertaking' under the Companies Act 1992, or as a 'trading' branch, it has to register with the Registrar-General.

Segregated Account Company

A SAC is a company which is registered under the Segregated Accounts Companies Act 2004. The SAC may create separate accounts with assets and liabilities which are segregated from the assets and liabilities attributable to every other account and also from the company’s general assets and liabilities.

Bahamas Foundation

While the most common use of foundations is for estate planning, they are useful in a number of other areas. They can be used to provide for subordinated debt; to perpetuate a particular corporate governance policy; to hold the benefit of warranties for a wider or changing class of investors; for philanthropic purposes; or for the separation of voting and economic benefits.

In addition, foundations allow for investment in family companies whose economic performance may be poor, for ownership of a private trust company, for provision of an employee share option scheme, or for packaging financial instruments into marketable securities.

Offshore Business

Insurance

The insurance sector in the Bahamas is regulated under the Insurance Act 1969 as amended and the External Insurance Act 1983. The Government is targeting insurance as a sector for expansion, and more modern legislation is in the pipeline.

The domestic insurance sector is very active, with more than 50 licensed insurers; but the international (captive) sector, although growing, is not yet very well developed compared with the leading offshore captive jurisdictions such as Bermuda.

Insurance companies cannot use the Bahamian International Business Company form, necessitating the formation of a Bahamian company under the Companies Act or the use of Foreign Company status, which has the same effect.

Ship Management and Maritime Operations

The Bahamas established themselves as a shipping registry with the Merchant Shipping Act 1976, and due to a combination of geographical, financial and operational factors have been very successful, building the third largest world fleet. More than 1,500 vessels are registered in the Bahamas, totaling over 25m gross tonnes.

The Bahamas operate a 'flag of convenience' registry, which does not impose minimum wage or nationality standards on its ships. However, the Bahamas registry belongs to the International Maritime Organization and adheres to its principal safety conventions. The Bahamas Maritime Organization, headquartered in London, administers the registry, supervises initial and subsequent ship surveys through a world-wide network of authorized inspectors, and ensures adequate training and skill levels among the crews of Bahamian vessels.