The type of company used for international trade and investment is called an International Business Company (IBC).
The principal Company legislation is the International Business Companies (IBC) Act 2000 (as amended). New companies can be quickly and easily incorporated for the purpose of transacting offshore business. An IBC has all the powers of a natural person. The language of legislation and corporate documents is English.
IBCs are subject to the following restrictions on trading and business activities:
- An IBC cannot trade within the Bahamas or own real estate there;
- The businesses of banking, insurance, assurance, reinsurance, fund management, collective investment schemes, trust management, trusteeship, the rendering of investment advice or any other activity that would suggest an association with the banking or insurance industries are not permitted;
- A Company cannot sell its own shares or solicit funds from the public.
Incorporation procedure is as follows: a Registered Agent prepares the Memorandum of Association signed by two subscribers and submitted to the Registry. The Articles of Association can either be filed at the same time as the Memorandum of Association or within 30 days of the date of incorporation. A Company must maintain a registered office address within the Bahamas and appoint a Bahamian resident as registered agent. There is a Common Law duty on professionals to keep the affairs of their clients confidential. In the Bahamas off-the-shelf companies are available.
IBC names are subject to the following requirements and restrictions:
- A Company name can be in any language that uses the Latin alphabet. The Registrar may require an English translation.
- A Company is not permitted to use a name that has already been incorporated, or a name that could cause confusion.
- The words “Royal” or “Imperial” are not acceptable.
- Any name that suggests the patronage of the Bahamian Government is not permitted.
- Consent or a licence is required if a Company name contains any of the following words in English or any other language: Bank, Building Society, Savings, Loans, Insurance, Assurance, Reinsurance, Fund Management, Investment Fund, Trust, Trustees, Chamber of Commerce, University, Municipal, or any name that may suggest association with the banking or insurance industries.
- Limited, Corporation, Incorporated, Societe Anonyme, Sociedad Anonima, Gesellschaft mit beschrankter Haftung, or abbreviations thereof are the required suffixes denoting limited liability.
IBCs must have a minimum of one director; corporate directors are permitted. Directors may be of any nationality and there is no requirement for them to be resident in the Bahamas. There is no specific requirement to appoint a company secretary, but there normally is one. A minimum of one shareholder is required. No details of the directors or shareholders appear on the public files, but a register of shareholders must be kept at the registered office address of the company in the Bahamas.
The normal authorised share capital is US$ 5,000, divided into 5,000 shares of US$ 1. This is the maximum capital to qualify for the minimum duty payable at the time of incorporation and the maximum authorised share capital for the minimum annual licence fee. The minimum issued share capital is either two shares without par value or two shares with par value. The share capital may be expressed in any currency. The following types of shares are permitted: registered shares; shares without par value; preference shares; redeemable shares; shares with or without voting rights.
Annual Taxation and Fees
There is no direct taxation in the form of income tax, capital gains tax, tax on gifts or inheritance tax. The Bahamas are not a party to any double tax treaties. The Bahamas do though have agreements with a number of countries covering mutual assistance in cases of drug trafficking.
The licence fees depend on a company’s share capital:
- Companies with an authorised share capital with a nominal value of up to US$ 50,000 pay the sum of US$ 350 per year.
- Companies with a share capital of more than US$ 50,001 must pay a fee of US$ 1,000 per year.
- A penalty of up to 50% of the annual licence fee is incurred if the licence fee is not paid when due.
There is no requirement to file financial statements and an annual return or audited accounts with the authorities, but a company must keep financial records reflecting its financial state.
Economy and Infrastructure
The economy is based on the tourist industry (60 per cent of State income), financial and trade activity. The main industries are oil, salt, aragonite extraction and processing. Agriculture is not highly developed.
The Bahamas possess excellent telecommunication services. There is direct dialling to the most of the world. A new telex system has been installed, and underground cable transmission extends to West Palm Beach, Florida. There are also excellent postal and courier services.
The Bahamas boast convenient flight links to major international air routes. Besides Nassau’s International Airport on New Providence, there is an airport with a runway that can take jet planes in Freeport, the country’s second city, and there are 41 other commercial airports and landing strips.
There is an excellent range of international banks on the Islands, with 396 banks currently holding licences under the Banks and Trust Companies Regulations Act 1965. Confidentiality is also excellent, protected by the English Common Law Duty of Confidentiality.
The currency is the Bahamian Dollar which is on a par with the US Dollar. Residents are subject to Exchange Control, while International Business Companies (IBCs) are exempted.