The Bahamas offers several possible company structures for prospective business owners to choose from. Each business structure has slightly different strengths, depending on the industry and its needs; as well as practical limitations on the protection of business objectives’ liability. However, we would like to introduce you to LTDs, Partnerships, and the Substance Requirements for commercial entities.

Before getting into the details, it must be highlighted that the country's developed financial services sector, established infrastructure, progressive government, tax-neutral environment, and luxurious lifestyle have all been meticulously promoted to become a major international business center. Some advantages offered by the Bahamas are:

-There are no capitalization restrictions 

-No tax implications for investors

-The Bahamas offers individuals and organizations the opportunity to create personalized business structures tailored to the specific needs of international business and wealth management. 

-Maximum confidentiality and anonymity

-There are no annual reporting requirements.

Business Structures in the Bahamas

You can use a variety of options when choosing a structure to run your business in the Bahamas. Certain types of investments may require the use of certain vehicles, such as in the case of banking or insurance activities. 

For instance, startups working primarily overseas should consider setting up an international trading company. 

If your business has multiple investors or employee directors, consider forming a corporation rather than a partnership. Working with too many partners can be overwhelming and difficult to manage. In a business, a small group of directors or managers are usually responsible for the day-to-day operations of the business, but investors are usually excluded. 

If you anticipate needing to protect a particular asset, we recommend using a different account company or trust structure to give you peace of mind. 

The Bahamian options of business structure include individual business owner limited liability companies, companies under the Companies Law 1992, and companies under the International Companies Law. Among them we have: unlimited liability companies, limited liability companies, individual account companies, joint ventures, partnerships, sole proprietorships, etc. 

You must know that the government does not require any ownership or participation in the business by the investor. Also, the investor's potential liability to third parties or other investors is determined by agreement between the parties. As we have mentioned before, there are no limits to capitalization and no tax implications for investors. 

Legal Framework

The government's aggressive economic growth and development policies are guided by the Bahamas Investment Authority (BIA), which was established to mitigate bureaucratic delays in domestic and foreign investors. 

The BIA, which operates from the Prime Minister's Office, is called a "one-stop shop" aimed at simplifying investment in the Bahamas. The BIA acts as an administrative division of the National Economic Council (NEC) and the Investment Commission. 

If you do business in the Bahamas with local residents, please consider setting up a company under the Companies Act 1992. Although many national companies only operate in the Bahamas, Bahamian law does not require Bahamian citizens to act as administrators or participate in national companies. 

The enactment of the International Business Companies Act of 1990 easing the process and cost of incorporation and governance, helped to establish the country as a popular destination for foreign investment.

Process

Foreign investors wishing to start a business in the Bahamas must:

1.Submit a project proposal to the BIA along with supporting documents. In this first step, the company name must be approved by the company registry. 

-The process includes submitting the required form for a required fee of $50.00 and obtaining the certificate at the registrar's office. The name will be approved within 24 hours. 

2.The final proposal will be considered by NEC, an institution led by the Prime Minister responsible for managing the implementation of national investment policies. This is logical since NEC is the decision-making body for virtually all business projects undertaken by foreign direct investors. 

3.After the NEC approves the investment project and establishes the necessary structure to conduct the proposed business, the investor must obtain a business license from the Ministry of Finance [the business licensing body].

General Requirements to Establish a Company in the Bahamas

According to the government’s official website, some general requirements apply to almost all companies and structures in the Bahamas. These are:

-Certificate of incorporation

-Exclusive name of the company, already reserved. The name of the company should be spelled consistently (for example, correct spelling, capital letters, and symbols).

-Memorandum and articles of association. 

-The statutory declaration is notarized by a notary public, sworn in by a Justice of the Peace or a lawyer. 

-Signatures of all registrants (2 or more) 

-In addition to it, you should have:

-At least one shareholder. 

-At least one director. There is no residency requirement. 

-Legally registered office address. 

-Standard authorized capital: $50,000. 

-Notarized copy of passport. 

-Certificate of Residence (3 months or more) 

-First meeting’s minutes. 

-Register of Shareholders and Directors.

The request will be processed within 1-7 days from the date of submission of all documents. This service has no expiration date. Related costs of $ 330.00 apply to all regular businesses. However, if you want to have a better and 100% successful experience, let us guide you in this process with the help of our local experts.

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Limited Liability Company (LTD) in the Bahamas

In the Bahamas, many business owners are choosing to form a limited liability company over other types of business. Limited liability companies have many advantages in making this type of corporation very popular. This service allows Registered Agents and investors to form national organizations or legal associations in the Companies Section of the Registrar General’s Department. 

First, as the name suggests, limited liability companies offer a lot of liability protection to their members. The structure of a limited liability company separates the personal assets and liabilities of its members from the assets of the company. 

Members, officers, and directors of a limited liability company are not liable for the debts of the company unless they are in good faith or are liable for misconduct before the law. 

An important exception to this rule is that members may be liable for the total amount of their investment in a limited liability company or any other outstanding amount that has been reached. 

In the Bahamas, a member's liability may be limited in two ways: by act or by endorsement. When a company is not limited by shares or limited by warranties, it is said to be a limited liability company. (Find more details in Articles 4-8 of the Companies Act; Articles 7-9 of the Law on International Business Companies).

In a public limited liability company, a member's liability is limited to the number of shares the member has not paid for. In a guaranteed limited liability company, the member's liability is limited to the scope of the contract of the company's memorandum of understanding to each partner for the liquidation of the company. 

A Bahamian limited liability company is required to keep the minutes of association meetings when the company is newly formed. Please also note the following details:

-The memorandum of association must specify whether the company is limited by either a stock limited liability company or a guaranteed limited liability company. 

-All dates have to match.

-Likewise, a limited liability company must clearly state the authorized capital of the company, including the par amount to be issued by the company and the share capital represented by non-nominal shares. 

-To settle the debts and liabilities of the company, each member contributes the expected amount to the company and the costs associated with dissolution must be specified. 

Partnerships

The Bahamas has several types of partnerships, including limited liability General Partnership, Limited Liability Partnership, and Undisclosed Partnerships. Partnerships are ideal for a group of small business partners working together in a joint venture. 

Bahamian law relating to partnerships is essentially similar to British law. A limited partnership requires one or more general partners with unlimited liability. Regular partners cannot participate in partnership management. 

As a general requirement, Bahamian law establishes that a written partnership agreement must be registered and one of the general partners must submit a notarized declaration of the amount the member has contributed his or her capital. 

Business partnerships in the Bahamas, such as limited liability companies, require an appropriate business license. If you want to get to know the details about obtaining this or any other license, do not hesitate to contact us. 

Substance

The Commercial Entities (Substance Requirements) Act 2018 (the “Substance Act”) which came into effect on December 31, 2018, is consolidated, registered, or extended under the Bahamian Company Law.

The main purpose of the law is to prevent and impede the formation of "cover" companies in the Bahamas for tax evasion/evasion in the host country of the parties. Because of the effects of Substance law, for-profit entities engaging in "related activities" must demonstrate substantial economic existence and actual economic activity in the Bahamas. 

In this regard, business organizations include companies established under the International Business Companies Act and the Companies Act. 

The relevant activities are defined by the law in question and are directed to: 

-Insurance activities 

-Banking activities

-Fund management activities

-Financial transactions and leasing

-Distribution and service center 

-Shipping industry. 

-Use of intellectual property for commercial purposes. 

It also includes subsidiaries that participate as a parent company or in one of the activities described before.

We understand that these processes may be difficult at first. Fortunately, Mundo is associated with experts that can provide different types of advice services, including setting companies and business structures in the Bahamas and abroad. We do so through an outstanding team of corporate lawyers, tax advisors, auditors, and accountants. Believe in our specialists and our secure organization, complying with all the administrative demands and professional skills you are looking for. Are you ready to succeed?

Contact us to get a consultation with one of our experts!