An IBC is a company incorporated under the International Business Companies Act 1989 with limited liability for its shareholders and can be of unlimited or limited duration. It is a flexible vehicle designed to appeal to the non-Bahamian offshore user of The Bahamas.
WHAT CAN IT DO?
Unless otherwise restricted by its Memorandum of Association, an IBC has the capacity and power to undertake any lawful object or purpose including the power to dispose of or encumber its assets for the benefit of a third party without any corporate benefit accruing to it.
Some of the myriad activities that IBCs have been used for are:
- import and export activities;
- holding or investment vehicles;
- mutual fund vehicles;
- ownership of ships - whether registered on the Bahamian flag or not;
- operating foreign currency accounts in and outside The Bahamas.
STATUTORY RESTRICTIONS ON ACTIVITIES OF AN IBC:
An IBC may not:
- engage in business in The Bahamas or with residents of The Bahamas;
- own land in The Bahamas;
- undertake banking or trust business from The Bahamas;
- carry on business as an insurance or a reinsurance company; or
- carry on the business of providing the registered office of companies.
An IBC will not offend the proscribed activity of carrying on business with residents of The Bahamas by reason, for example, only that:-
- it has bank accounts in The Bahamas;
- it has contact with professional advisers, trust companies, management companies and the like;
- it prepares or maintains books and records within The Bahamas;
- it holds meetings of its directors or members within The Bahamas.
ADVANTAGES OF USING AN IBC
1. Minimum Of "Red Tape":
An IBC may be incorporated in The Bahamas within 24 hours of submitting the proper documents to the Registrar General.
The shares and assets of an IBC may be acquired, disposed of or encumbered without the requirement for any governmental approvals or approval from the Central Bank of The Bahamas.
As the Exchange Control Regulations of The Bahamas do not apply to IBCs, an IBC can also freely deal with foreign currencies.
2. Low Cost:
IBCs' pay registration fees upon incorporation and annual licence fees are payable on the 1st January of each year, beginning the year following incorporation. Filing fees and annual licence fees are based on the authorised capital of the company. Where the authorised capital is:
less than $5000 - $ 100.00 between $5000 and $50,000 - $ 350.00 over $50,000 - $1,000.00
Penalties are due for late payment and an IBC will be struck off the Register by the Registrar General if the annual fees remain unpaid for one calendar year.
3. Confidentiality:
An IBC affords a high degree of confidentiality since there are only limited filing requirements. The company's Memorandum and Articles of Association, and any amendments thereto, are required to be filed with the Registrar General. The name of the company, the address of its registered office and the name and address of its registered agent will be included in the Memorandum of Association.
There is no requirement for the names and/or addresses of the company's directors, officers and shareholders to be filed with the Registrar General and an IBC, therefore, provides the investor with a great degree of privacy.
Although it is unnecessary to inform any local authorities of the identity of the ultimate beneficial owners of the shares, most law firms and accountants require this information in light of recent legislation in The Bahamas, namely The Money Laundering (Proceeds of Crime) Act 1996. This information is kept in the strictest of confidence.
4. Corporate Flexibility:
There is no minimum authorised capital for IBC's. Its shares may be issued with or without par value, in registered form or to bearer and may be dealt with freely. An IBC also allows unrestricted redemption of shares and issue of fractional shares. A minimum of only 1 shareholder is required, although 2 subscribers are required to incorporate the IBC. The subscribers need not take up shares or be members of the IBC.
The business and affairs of an IBC may be managed by a board of directors either within or outside The Bahamas, consisting of at least 1 director. Directors need not be resident in The Bahamas. There is no requirement on the frequency of directors meetings and for annual general meetings of shareholders to be held. Directors meetings may be held by telephone, and directors may appoint alternates to attend and vote in their places. The books and records and minutes of meetings may be kept at the registered office of the Company or at such other place as may be determined by the directors (except for the statutory registers, which have to be kept at the registered office).
An IBC need not have any officers or any auditors. However, it must have a registered office and a registered agent in The Bahamas.
5. Tax Exemptions:
An IBC is exempted from the payment of taxes and stamp duties for a period of 20 years from the date of its incorporation.
EMPLOYEES:
An IBC can employ staff in The Bahamas in order to maintain the Company's books and records and for other limited purposes. Each non-Bahamian employee engaged in The Bahamas by the IBC will require a work permit from the Ministry of Labour, Immigration & Training. If the IBC seeks to employ more than two non-Bahamians, it should submit an application to the Bahamas Investment Authority for National Economic Clearance.
The contents of this article are intended to provide a general guide to the subject matter. Advice should be sought about specific circumstances.
