Funds and Trusts in the Bahamas

The Bahamas trust adopts cutting-edge regulatory standards that encourage some of the world's largest and most successful financial service providers to start a business. Likewise, international advisors or managers recommend creating investment funds in the country. There are currently more than 800 licensed and regulated investment funds, the number of which is steadily increasing year by year.

When setting up a trust or funds in the Bahamas, smart investors do not need to factor in local taxes as there is no income, capital, or property tax in their jurisdiction. 

Bahamas Funds and Trusts are versatile and represent a long-standing use of asset management. Their trusts protect assets from bankruptcy, government claims, spouse or extramarital support claims, inheritance rights, death obligations, and most types of claims.

Setting a trust or investment fund in the Bahamas brings you the following benefits: 

-The Bahamas is an active member of established international regulatory and policy-making bodies and devotes considerable resources to its participation in these bodies and adherence to international best practices.

-100% foreign ownership, 

-100% tax-free,

-Privacy, 

-Fast formation, 

-A Bahamas trust or investment fund can be formed within 24 and 72 hours

-The ability to respond to the market in a well-regulated environment is a philosophy that continues in The Bahamas and will continue to drive the development and growth of the Bahamas Funds and Trusts sectors.

Unique Asset Protection Advantages

Authorized trust companies are subject to strict privacy and confidentiality laws in the Bahamas, and unauthorized disclosure of trust information is a crime that can lead to serious reporting and detention/ imprisonment. Bahamian residents or aliens do not require a license to become a trustee. Likewise, the Bahamas trust can be established even if all assets are in different countries and the settlers and beneficiaries are in different countries. 

Additionally, according to the Rule Against Perpetuities Abolition Act of 2011, trusts created after December 30, 2011, can last indefinitely. This law applies to asset protection trusts and purposeful trusts.

Another important advantage is that if the assets are first transferred to the Bahamas parent company and the shares of the company are transferred to the trustee, additional asset protection can be provided. This provides additional asset protection if the creditor cannot object to the transfer of shares from the parent company to the trustee under Bahamian law. 

Why Setting a Trust in the Bahamas?

Bahamian Trusts are tremendously useful, and this accounts for their long-standing use in wealth management. Since we have mentioned some unique asset protection advantages provided by this jurisdiction, we also wanted to show you a broader perspective of the benefits. In that sense, these can be summarized as follows: 

-Flexibility in customer asset allocation after death; 

-You can save wealth for the next generation. 

-Income benefits’ separation from capital; 

-Preservation of properties for those who cannot own it at the moment, such as minors; 

-Ensure fair people's services for wealth management and prevent disputes between heirs and beneficiaries. 

-Transfer legal ownership to the trustee to protect property and assets from legal and political actions that can be taken against the solver and beneficiary.

The Bahamian Trust Types

There is a wide array of trusts in the Bahamas. However, two types of trusts that are common with foreigners are the Asset Protection Trust and the Purpose Trust. Below is a brief explanation of both trusts.

Asset Protection Trusts: The Bahamas Property Protection Trust (APT) was strengthened in 1991 by the Fraudulent Disposition Act. In essence, this law protects all assets that are settled in trusts, as foreign civil and criminal proceedings are initiated more than two years after the setting of that trust. The decisions of these foreign courts are not recognized in the Bahamas. 

In the Bahamas, it is illegal to undervalue an asset and dispose of it with fraudulent intent, but creditors who object to the disposition will be required to prove the fraudulent intent of the grantor. 

The Trusts Act (1989) enables the installation of a "protector of trusts" who supervise and control trustees. This figure acts as a link between the trustee and the settlor. If the settlor decides to include the conditions specified by the protector in the trust instrument, the law grants the protector the following rights (unless the trust instrument excludes certain powers): 

-Withdraw or appoint the beneficiary. 

-Delete and appoint the trustee. 

-Obtain information about the trust and its activities.

-Instruct the trustee about the investment and expenditure of the trust fund. 

Protectors are advised not to live in the same jurisdiction as the settlor, as that person (or company) may be subject to the same jurisdiction of the authority which may not recognize the trust. 

Purpose Trusts: The Purpose Trust Act of 2004 applies to all trusts in the Bahamas. It is a perfect platform for business as it allows investors to build trust for income-generating investments without specifying a beneficiary name. The objective of trust must be clearly established and must not violate public order or engage in illegal activities. 

A "discretionary trust" permits the settlor to state the criteria this person wants before the trustee is receiving the trust's income and assets.

Besides this, “Fixed” trusts provide a fixed amount and length of time for which the beneficiary can receive income and assets. The types of assets a trust can hold are virtually endless: bank accounts, company stocks, commodities, stocks, cars, antiques, and jewelry. The only exceptions are land and real estate. 

If you are considering this option for you and your future, rest assured, since our partners in the Bahamas have an extensive track record providing investment management, banking and trust services and everything you may need to start this journey. Do not hesitate to contact us.

Regulatory Framework

The regulatory and supervisory framework of banks and trust companies are regulated by the Bahamas Central Bank. This includes corporate governance, internal control, and accounting standards, risk management standards, large-scale financial risk management. The Bahamian legal framework surrounding trusts contains guidelines for solving conflicting interests that arise and KYC policies are required as well. 

The Trustee (Amendment) Act of 2011 is a modern normative that puts the Bahamas at the forefront of international jurisdiction over world-class trust law. This law is special since it: 

-Allows the settlor to retain some discretion without affecting the validity of the trust. More importantly, it includes the power to: revoke the trust or the power granted by the trust instrument; add or remove trustees, and even withdraw assets from the trust. Consequently, the settlor can ensure that the trust is properly managed. 

-Establishes that the trustee retains all investment rights and investment modifications as if they belonged to the individual beneficiaries only. Trustees may designate agents, such as investment advisors, who can properly invest in the trust and provide investment advice on behalf of the trust agreement. 

-Formally recognizes the role of protectors. 

-Allows for a process in which a trustee can seek advice and guidance from a court judge without taking legal action. This makes it easier to quickly resolve issues related to the administration or management of trust assets, involving only stakeholders. 

If you want to know more details about the process to set asset protection or purpose trust in the Bahamas, please do not hesitate to contact us and get the best guidance possible in the process. Our local partners and a team of experts are the best in their area. 

Ask for Information

Investment Funds in the Bahamas

The Bahamas can be considered an innovative jurisdiction when it comes to investment funds. This is proven year by year when looking at the interests of fund managers and investors worldwide. With their options and legal framework, Bahamian regulators added a new dimension to the wealth management sector. According to the Bahamas Financial Services Board, over the past five years, investment fund registrations have grown by more than 60% in the country, driven by factors such as growing awareness and popularity of hedge fund vehicles known as SMART funds. Let us introduce you to the main features of the Bahamian investment funds sector.

Regulatory Framework of the Bahamian Investment Funds

The Investment Funds Act, 2019, has cemented the Bahamas’ leadership position as an outstanding legal environment for establishing investment funds. The Act updated the general legislative and supervisory environment and provided more details of an additional style of collective investment vehicle–The Bahamas SMART Fund–officially known as the Specific Mandate Alternative Regulatory Test Fund, established in the country back in 2003. The Bahamas Securities Commission (SCB) recognized the need for flexibility in developing a regulatory framework for investment funds to fully meet the changing needs of the global market.

The Law Allows Four Types of Funds:

1. The Standard Fund. It is a modern, highly regulated investment vehicle designed to serve the public and function as a traditional alternative to collective investment.

2. The Professional Fund. This option was designed for advanced investors and may be licensed by an authorized manager or administrator (other than the Securities and Exchange Commission). This will shorten the launch time.

3. The SMART Fund. Some funds require alternative regulations that apply to the innovative structuring of investment funds. As with other licensed fund structures, SMART funds can be more efficient in terms of economies of scale and investment structures. SMART funds also provide the ability to achieve a cost-based structure by adjusting the complexity of the fund structure to meet the needs of promoters and investors. 

For an investment fund defined in the Investment Funds Act to be approved as a SMART fund, the fund must meet the specifications and requirements of a specific set of rules established by the Securities Commission. There are 7 SMART Fund models (SFM) with different characteristics. If you want to get to know about them in detail, please do not hesitate to contact us.

A specific mandate alternative regulatory test fund suitable for innovative structuring of investment funds. Similar to other licensed fund structures, SMART funds can generate economies of scale and other efficiencies for investment structures. Furthermore, SMART funds offer the ability to achieve cost-based structuring by scaling the complexity of the fund structure to meet the requirements of its promoter and investors.

4. The Recognized Foreign Fund. An investment fund licensed or registered in a prescribed jurisdiction and not suspended from operation. 

The Bahamian Investment Funds in a Nutshell

These four types of funds combine a gradual approach to regulation with a reputation for quality management that has put The Bahamas at the forefront of the fund industry. However, here you will find some extra details about each one of them:


Type of Fund

Equity interest

Licensor

Structures

Requirements

Standard

-       Equity interests are held only by investors.

-       There is no minimum investment for investors.

-       A closed-end issuer is not included but may choose to be licensed as an investment fund.

It must be approved by the Securities Commission. The licensing process takes 6-8 weeks after submitting the full application.

Company, Limited Partnership, Unit Trust and Investment Condominium.

 

 

 

-       Bahamian administrator, a foreign sub-administrator is ok as well.

-       Accounts are created following internationally recognized accounting standards (or other recognized GAAP).

-       The obligation of information is stated in the offering memorandum.

Professional

-       Equity interests are held only by investors.

-       There is no minimum investment for investors

-       A closed-end issuer is not included but may choose to be licensed as an investment fund.

Unrestricted Fund Administrator: On the same day of the approval.

Bahamian Securities Commission: Within 72 hours after the approval

Company, Limited Partnership, Unit Trust and Investment Condominium.

 

-       Bahamian administrator, a foreign sub-administrator is ok as well.

-       Accounts are created following internationally recognized accounting standards (or other recognized GAAP).

The obligation of information is stated in the offering memorandum.

SMART

In this context, equity refers to a stock, trust, or partnership owned by a fund investor and authorized to participate in the profit or loss of the issued fund. Profits from these shares can be redeemed at the investor's discretion.

SMART funds must be licensed by the following organizations:  Unrestricted Fund Administrator: Stakeholders (sponsors, lawyers, managers) approve all documents and perform due diligence and can be ready on the same day.

Or

Bahamian Securities Commission: SFM 2,5,6: The application is completed and within 72 hours of receiving a letter from the Manager or Bahamian lawyer stating that the investment fund complies with Bahamian laws. SFM 1,3,4: Within 6-8 weeks of submission of a full application.

Company, Limited Partnership, Unit Trust and Investment Condominium.

 

-       Bahamian administrator, a foreign sub-administrator is ok as well.

-       It will depend on the type of SMART Fund Model.

Recognized Foreign Fund

Equity interests are listed on a securities exchange designated by the Commission and notified in the Official Gazette.

No license is required. It only should be registered in The Bahamas with the Securities Commission.

 

Company, Limited Partnership, Unit Trust.

N/A


Documents Required to Establish a Bahamian Investment Fund

There are several types of investment funds in the Bahamas, but all the types require common documents. Including:
-Application form.
-The subscription agreement that complies with the investment fund legal requirements.
-Offering memorandum. This document must comply with the information disclosure requirements in Appendix 1 of the Regulations on Investment Funds. 
-Configuration or constitutive document. 
-Due diligence for directors, senior executives, key shareholders, promoters, investment directors or investment advisors. 
-Certificate of compliance, issued by an advisor in the Bahamas. 
-A small registration fee. 

The Securities Commission may, at its discretion, request such other documents as it deems necessary for the licensing or registration of an investment fund.

Why Setting an Investment Fund in the Bahamas?

Speed to market is a well-known factor. A few years ago, when the SCB issued the guidelines for investment funds, the agility of the process was an important aspect. As part of this process, SCB guarantees the approval of these funds within 72 hours of receiving a complete request. This is because the tracking process is completed quickly. 
What sets the Bahamas apart from other jurisdictions is the flexibility afforded to directors who must simultaneously meet and maintain specific licensing and governance requirements. Depending on the fund, this combination of SCB oversight provides a high level of flexibility in fund management in the Bahamas while providing a level of corporate governance suitable for the growing fund industry. 

What Can We Do for You?

Protecting your assets and tax optimization is an important goal to consider in difficult times. And the Bahamas Trust or investment fund can give you that. These instruments are excellent for intergenerational wealth planning. Our experts have vast experience in asset protection tools worldwide, including the Bahamas trusts, and investment funds. Also, our partners offer highly customized services that allow HNWIs or their consultants to benefit from the conditions best suited to their specific needs. Trust and funds management is at the highest level.
 Please contact us for a consultation and protect your assets and legacy for generations to come.




Новости по теме - Багамы
Arrow Arrow
КОНФЕРЕНЦИЯ
3 МАРТА 2022
15:00 GMT
Как создать
СЕМЕЙНЫЙ ОФИС
за 5 простых шагов

Конференция посвящена тому, как создать свой собственный семейный офис с помощью ведущих мировых экспертов, включая финансовые продукты и инвестиции, вторые паспорта, трасты и компании для семейных офисов, которые обычно работают только с консультантами по семейным офисам.
На этой конференции вы получите подробные инсайдерские знания, которые обошлись бы вам в целое состояние, если бы вам пришлось оплачивать услуги таких консультантов.
Страновые эксперты
Багамы
Популярные статьи
Наши сервисы