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12 April 2001
The International Business Companies Act 2000 has repealed the International Business Companies Act 1989. The commencement date of the act was December 29 2000. There is a 180-day transition period for all existing Bahamian international business companies (IBCs) to comply with the act.
IBCs are no longer restricted from carrying on business with persons resident in The Bahamas, or from owning or having a leasehold interest in real property located in The Bahamas. This is provided that IBCs wishing to carry on business with persons resident in The Bahamas first obtain exchange control approval pursuant to the Exchange Control Regulations 1956.
IBCs continue to be permitted to carry on any activity that is not prohibited by the act or any other law in force in The Bahamas.
IBCs are now prohibited from dealing or trading in securities as an agent, or providing securities investment advice. This restriction does not prohibit an IBC from dealing or trading in securities as a principal (ie, for its own benefit).
The act continues to restrict IBCs from:
An IBC incorporated under the act for the purposes of facilitating any criminal activity (or for any object or purpose that is prohibited by the act or by any other law in force in The Bahamas) may be struck off the register of companies immediately upon the expiration of a minimum of seven days after the publication of notice to this effect in the Official Gazette. During this seven-day period, the registrar must give the IBC an opportunity to be heard.
Only Bahamian-licensed banks and trust companies, or persons and organizations licensed and approved under the Financial and Corporate Service Providers Act 2000, may incorporate IBCs. An application must be submitted to the registrar in order to incorporate an IBC. The application must be accompanied by the following documents:
The registration fees under the repealed act remain in force until December
31 2001. At present, they are B$250 for an IBC of which the authorized capital
does not exceed B$50,000 and B$1,000 where the authorized capital exceeds
B$50,000. The fee is B$350 where the IBC is of unlimited liability, or is limited by guarantee
or includes no par-value shares. From January 2002 there will
be a single registration fee of B$330 only.
IBCs are no longer permitted to issue bearer shares. IBCs that have issued bearer shares under the repealed act are required to recall them within six months of the date of the commencement of the act (ie, by June 29 2001), cancel them and issue registered shares in their stead. Any bearer share not recalled and cancelled within this period will thereafter be considered null and void, and without effect for all legal purposes.
An IBC is required to submit an authenticated copy of the resolution of the members or directors amending the company's memorandum and articles of association to the registrar within 14 days of such amendment.
Registered office and agent
The address of an IBC's registered office must be submitted with the application for registration. The registrar must be notified of any change in the address of the office within seven days of such change being made. An IBC is required to keep copies of its memorandum and articles of association (and all amendments thereto), and a register of its directors and officers, at its registered office. It is not required to maintain its books, records or minutes at the registered office.
Under the act only Bahamian-licensed banks and trust companies, and financial and corporate service providers licensed under the Financial and Corporate Service Providers Act, are permitted to act as registered agents of IBCs. Any person who acted as a registered agent under the repealed act and who wishes to continue to do so must obtain a licence under the Financial and Corporate Service Providers Act within 90 days of the commencement date of the act (ie, by March 29 2001).
The registrar general is required to maintain a register of licensed agents, which must be published during the month of February each year in the Official Gazette. It must reflect the list of agents on record on January 31 of that year.
Maintenance of share register
While the act requires an IBC to maintain a share register, a copy no longer needs to be held at the registered office.
Officers and directors
An IBC must have at least two directors. The act requires an IBC to keep a register of officers and directors at its registered office, and provides for the specific information to be stated therein. In addition, an IBC is required to file a copy of the register with the registrar, which will be open to inspection by the public. The registrar must be notified of any person appointed as an alternate director.
Directors, officers and liquidators may no longer be indemnified by an IBC against expenses arising from any criminal conduct in which an IBC may be engaged.
An IBC is now required to have an annual general meeting of the members each year. This meeting does not have to be held in The Bahamas.
The act provides that the circumstances under which an IBC may be wound up include when the number of members is reduced to fewer than two. This section was adopted directly from the Companies Act 1992. However, it is uncertain whether Parliament intended this result, as under the act an IBC requires only one shareholder to avail itself of the limited liability provisions of the act. Nevertheless, only a party having a right of appearance before the court may submit a petition to have an IBC wound up on the grounds that it has fewer than two members. The circumstances in which such a petition may be presented are therefore limited.
The period of time in which an IBC is required to comply with a registrar's notice that it no longer satisfies the requirements of the act before it is struck off the register has been shortened to 30 days. The act requires only that a 30-day notice be served on an IBC before publishing the 90-day notice in the Official Gazette, following which the IBC is subject to being struck from the register.
An IBC will be struck off the register if it fails to pay any outstanding annual fees within 30 days of the date of the notice from the registrar requiring payment. The notice may be issued at any time following the expiration of 30 days after the due date of January 1 in each year.
The fees listed in Part 10 of the repealed act will remain in effect until December 31 2001. The registration fees and the annual fee set forth in the Schedule to the new act shall apply from January 1 2002. All fees are due on January 1 of each year. IBCs will be permitted a grace period of only 30 days from this date to settle such fees.
Failure to maintain the register of members in accordance with the act is an offence and the offender is liable for a fine of B$5,000. The act also imposes a severe penalty on persons who make or assist in making any report, return, notice or other document to the registrar containing any untrue statement of a material fact or omitting to state a material fact. Such persons shall be liable to a fine of B$10,000 or to imprisonment of two years.
The act provides that a person who contravenes any section of the act without reasonable cause and for which no penalty is provided is guilty of an offence and shall be liable to a B$10,000 fine or to imprisonment of two years.
Liability is also imputed to any director or officer of an IBC who knowingly authorized, permitted or acquiesced in the commission of an offence. In such a case, the director or officer will also be guilty of the offence and subject to the same criminal penalty for that offence.
An IBC is exempt from the exchange control regulations only if its operations are intended to be exclusively overseas. An IBC wishing to carry on business with persons resident in The Bahamas must first obtain exchange control approval from the Central Bank of The Bahamas with respect to its planned operations. Persons deemed resident for exchange control purposes and who wish to acquire shares or an interest in an IBC must first obtain exchange control approval.
Stamp duty is payable by an IBC in respect of an acquisition or disposition of (i) a leasehold interest in real property located in The Bahamas, or (ii) shares in any company that owns a freehold interest in real property located in The Bahamas. The act fails to clarify whether stamp duty is payable where an IBC acquires or disposes of a freehold interest in real property directly, or owns shares in a company that acquires or disposes of a leasehold interest in real property. However, the provisions of the Stamp Act 1925 may apply.
The act provides that every IBC in existence immediately prior to the commencement date of the act shall continue in existence and be required to satisfy the requirements of the act within 180 days of the commencement date of the act. However, the act also specifically preserves all benefits accruing to such IBCs under the repealed act.
For further information on this topic please contact Michael L Paton or Kenred MA Dorsett at Lennox Paton by telephone (+1 242 502 5000) or by fax (+1 242 328 0566) or by e-mail (firstname.lastname@example.org or email@example.com).
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