Forming a New Corporation in the Bahamas: It's Easier Then You Think (If You
Have a Good Lawyer)
Editor's Note: This information is
valid as of 2002 and needs to be updated.
The New Companies Act became law on 1 August 1992, repealing the Companies
Act of 1866 and the Foreign Companies Act of 1891. Companies incorporated under
the new act may carry on in, or from within, the Bahamas the business of banking
or trust companies, and insurance and reinsurance. An enterprise can conduct
business in the Bahamas through incorporation or through branch operation.
The modified Companies Act provides investors with a number of advantages.
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The doctrine of 'ultra vires' has been abandoned and,
consequently, gives companies virtually the same range of powers enjoyed by
human persons without any further need to set out the extensive litany of
'objects' once required under previous company law.
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The minimum number of persons that may now incorporate a
company has been reduced from five persons to two persons.
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The paper requirements of company formation have been
reduced with the inclusion of a standard form of Articles of Association,
which can be adopted by mere reference.
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Company members' meetings may be held outside the Bahamas
and participation in meetings may be effected by telephone and other
electronic means.
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In an effort to better safeguard investments in public
companies made by members of the public, shareholders in public companies
are imposed with a substantially higher burden of accountability.
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If a company wishes to be restored after being "struck-off,"
it will no longer be required to apply to the Supreme Court of the Bahamas.
Company Formation
In order to incorporate a company in the Bahamas, a
Memorandum of Association must be filed with the Registrar General. Articles
of Association may be filed with the Memorandum of Association or within six
months thereafter, and must be signed and witnessed by one other person.
Other provisions include:
- The memorandum to be signed by at least two subscribers in
the presence of at least one witness.
- Each subscriber must subscribe for at least one share.
- A non-resident subscriber is required in order to obtain exchange control
permission.
- The capacity of persons incorporating is to be submitted with the
Memorandum in the form of a declaration signed by counsel and attorney.
- The extent to which the liability of the shareholders or members is
limited.
Company Mergers
A company merging or consolidating with another company or
companies must submit articles of merger or consolidation to the Registrar
General. The Companies Act does allow a company to merge with a subsidiary.
In this type of merger, the parent company is required to file articles of
merger with the Registrar General. Under this act, a company intending to
reorganize or reconstruct itself must submit articles of arrangement with
the Registrar General.
Private and Public Companies
All companies already registered as private companies in the
register of the Registrar General's Office continue to exist as private
companies, unless they wish to continue as public companies. A public
company is considered a company whose shares or any class of whose shares
are intended for distribution to the public. Following incorporation, the
public company may start business or seek to secure credit after:
- shares have been allotted to at least the minimum
subscription
- every director has paid the company for his share a proportion equal to
that payable on application and allotment of the shares offered for public
subscription or payable in cash
- the secretary or one of the directors has signed a statutory declaration
that the requirements with respect to the first allotment of shares have
been satisfied.
Foreign Companies
A foreign company is any incorporated or unincorporated body
formed under the laws of a country outside the Bahamas. In order to be
incorporated in the Bahamas, the foreign company must file a statement in
the approved form, setting out the following:
- the name of the company, the jurisdiction in which it was
incorporated, and the date of its incorporation;
- the manner in which it was incorporated, the particulars of its corporate
instruments and period, if any, fixed by those documents for the duration of
the company;
- the extent to which the liability of the shareholders or members is
limited;
- the undertaking the company will carry on in the Bahamas;
- the date the company intends to commence any of its undertakings in the
Bahamas;
- the authorized, subscribed, and paid up or stated capital of the company,
the shares that the company is authorized to issue, and the nominal par
value of those shares, if any;
- the full addresses of the principal offices of the company in and outside
the Bahamas;
- the full names, addresses, and occupations of the directors of the
company.
This statement must be accompanied by the following
documents:
- a statutory declaration by at least one director of the
company, verifying the particulars in the statement;
- a certified copy of the corporate instruments;
- a power of attorney.
Non-Profit Companies
A non-profit company is defined as one involved in
activities that are religious, charitable, educational, scientific,
historical, fraternal, literary, sporting, artistic and athletic. Non-profit
companies are required to file a memorandum stating the following:
- that the company has no authorized capital;
- that it is carried on without pecuniary gain to its members;
- that profits and other accretions to the company are used in furthering
its undertakings;
- the restrictions on the undertaking that the company is to carry on;
- the address of the clubhouse or other building maintained by the company;
- that each first director becomes a member of the company upon its
incorporation.
General Requirements for all Companies
All companies are required to file names of officers,
directors and managers; location of the registered officer; and an annual
return stating whether or not 60% of the shares are beneficially owned by
Bahamians. Banks must publish annual statements showing their true financial
position.
Every company having its capital divided by shares is required to file with
the Registrar General an annual return with the following information:
- a list of members, stating the names, addresses and
occupations of all members mentioned, the number of shares held by each, and
those who have ceased to be members;
- the amount of the company's capital and the number of shares into which it
is divided;
- the number of shares taken from the formation of the company up to the
date of the summary;
- the amount of calls made on each share, the total amount of calls
received, the total number of calls unpaid, and the total number of shares
fortified;
- the registered number of the company.
Company Management
Filing Fees:
Domestic Company:
- $1,000 if less than 60%
beneficially owned by Bahamians
- $350, if more than 60% beneficially owned by Bahamians
Foreign Company: $1,000
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A company must be managed by at least 2 directors and, in
the case of the public company, three directors. Persons consenting to be
directors may hold office until the first meeting of the members of the
company at which time election of directors takes place. Directors' meetings
may occur at any place and upon such notice as the directors determine,
unless otherwise provided for by the articles of association. Meetings may
be held by telephone or other communications which allow voice recognition
of each of the directors. The directors are required to submit financial
statements and the report of the auditor at the annual general meeting.
Directors hold office until they are disqualified, removed by resolution at
an extraordinary meeting or until their death or resignation.
Name Reservation
In order to reserve a name for the company, application may
be made on the approved form, which can be obtained from the Registrar
General's Office. The Registry provides a 24-hour company name reservation
service. Under Bahamas Company Law, the word "Limited" must be the last word
in the name of each company.
Business License & Fees
Every business must have a license to operate in the
Bahamas. Each licensed business is also required to pay an annual fee, based
on the gross profit as a percentage of turnover. Fees are based, in the case
of most businesses, on the annual gross receipts, less the "cost incurred in
producing that turnover." They range from nothing for a petty business to
$500,000 for "a very large business with a very high profit" per year. The
Business License Act defines business to include all types of manufacturing
and commercial undertakings and covers professions such as law, accounting,
and medicine.
The business license fee must be paid by April 30th each
year.
In addition, proof of payment of real property tax must be produced before a
license will be issued.
Deductions may be taken for each additional full-time employee hired in any
given year, up to a maximum of ten. For medium-sized businesses, 5% of the
fee may be deducted per employee. For large and very large businesses, 3%
per employee. The National Insurance Board will certify that additional
staff has been hired and issue a certificate upon application.
Companies designated "non-resident" under the Exchange Control Regulations
Act pay an annual fee of $100. The Business License Act also provides for
automatic annual renewal for Bahamian businesses (if other statutory
requirements have been met).
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