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BAHAMAS COMPANY REGISTRATION
Bahamas Company Registration presents an opportunity for individuals and businesses seeking a favorable business environment in a renowned offshore jurisdiction. Starting a business in the Bahamas is a desirable option for international investors because of the country’s zero-rated taxation regime. With the financial and tourism sectors serving as the main drivers of economic expansion, the Bahamas continues to be welcoming and open to new investors.
The regulations in the Bahamas addressing foreign direct investment are designed to create a favorable environment for businesses to invest in setting up business there.
KEY REQUIREMENTS OF COMPANY INCORPORATION IN BAHAMAS
TIMELINE OF BAHAMAS COMPANY FORMATION
Shareholder and Shares
A minimum of one shareholder is required for company formation in the Bahamas. The shareholder can be an individual or a corporate entity, and they hold shares representing ownership in the company.
Minimum of One Director: Similarly, a minimum of one director is required, and there are no residency requirements for directors. The director can be a natural person or a corporate entity, and they are responsible for managing the company’s affairs.
Registered Office Address
A legal registered office address within the Bahamas is required for company registration. This address serves as the official address of the company for receiving legal correspondence and official notifications.
It is essential to appoint a local registered agent.
The standard authorized share capital for a Bahamian company is typically set at US$50,000. This represents the maximum value of shares that the company is authorised to issue to its shareholders. The minimum paid-up share capital is US$1.
TYPES OF BUSINESS ENTITIES IN THE BAHAMAS
Domestic Companies are businesses established in accordance with the Companies Act of 1992. These businesses may be public firms or private entities restricted by shares or a guarantee. There must be a minimum of two shareholders, two directors, and a registered office in the Bahamas in order to incorporate as a domestic business. The organization must have annual general meetings and publish the names and addresses of its executives and directors.
Private companies limited by shares
This organization permits the continued issuance of shares. The personal liabilities of Members and Managers to the Company are limited. In the event of the company’s dissolution, neither the directors nor the management will be held legally responsible for the debts and obligations of the business.
The company is fundamentally a distinct legal entity from its directors and members. The applicant must specify the kind of business entity, the maximum number of shares, the company’s authorized capital, the classes of shares, and particular information about its rights, restrictions, and requirements on the company’s memorandum of association in order to register a company limited by shares.
Private companies limited by guarantee
For its members, this corporate structure also offers some kind of security. The organizational structure separates the individuals’ personal liabilities from those of the corporation. The directors or managers will not be held personally accountable for the debts and obligations of the firm upon its dissolution, similar to private companies limited by shares.
The greatest amount for which a member may be held responsible is the whole of their investment or a previously agreed-upon sum. Members’ responsibility is, therefore, limited to the sum specified in the company’s memorandum.
Private company limited by shares and by guarantee
The registration process for this structure, which is a hybrid of the two business entities, is not too difficult. In the firm’s memorandum of association, they must specify the legal structure of the business entity, the maximum number of shares, the authorized capital of the company, the amount each member wishes to contribute, the classes of shares, and specifics about its rights, restrictions, and requirements.
Exempted Limited Partnership
General partners and limited partners make up an exempted limited partnership. In the event of a company’s dissolution, general partners may be held personally liable for the obligations and debts incurred by the organization, but limited partners will not be. A limited partner, however, is not permitted to participate in company operations.
To receive notices and communications, all exempt limited partnership businesses must have a registered office in The Bahamas. By law, Exempted Limited Partnership Companies are not allowed to conduct any business with The Bahamas’s general public unless it is essential for the expansion of their offshore operations.
International Business Company (IBC)
Due to its rigorous standards, IBC is the structure that foreign investors like the most. They are mainly used for doing business abroad. One shareholder and one director are needed in order to register as an IBC. Annual General Meetings are not necessary, and there are no requirements to file any annual reports or an annual statement, unlike Domestic Companies. IBCs must, however, keep a file of its current officers and directors.
A public company’s shares are usually freely traded on the stock exchange, but a private company’s shares cannot be freely traded.
DOCUMENTS REQUIRED FOR BAHAMAS COMPANY INCORPORATION
- Application form
- A registered physical office
- Copies of the passports of the shareholders and business owners
- A certificate of incorporation
- Articles of association and the memorandum
- Proof of residence
- Meeting transcripts
- Certificates for shares
- Register of Directors and Shareholders
Proof of residence, dated not less than three months, is required for all shareholders and directors. This can be in the form of utility bills, bank statements, or other documents that clearly demonstrate their residential address.
PROCESS OF REGISTERING A COMPANY IN THE BAHAMAS WITH RELIN CONSULTANTS
- Decide on the Company Name – Relin consultants will help you reserve a company name for the offshore company. The name should comply with the regulations of the Bahamas and should not be identical or too similar to any existing companies in the jurisdiction. Relin Consultants will assist in choosing the right company structure for your business.
- Submit the Company Formation Documents – The prepared documents need to be submitted to the Registrar General’s Department in the Bahamas. The documents may need to be notarized, legalized, or apostilled, depending on the requirements of your home country and the regulations of the Bahamas. The government of Bahamas is the authority managing all types of company incorporation.
- Obtain the Certificate of Incorporation – Once the documents are reviewed and approved by the Registrar General’s Department, the applicant will receive the Certificate of Incorporation. This certificate confirms the successful incorporation of the offshore company in the Bahamas.
- Fulfill Post-Incorporation Requirements – After incorporation, the applicant may need to complete additional post-incorporation requirements, such as obtaining a business license, registering for taxes (if applicable), and maintaining proper corporate records.
- Open an Offshore Bank Account – Relin consultants will assist in opening an offshore bank account for your Bahamas company to facilitate financial transactions.
TAXATION IN THE BAHAMAS
Since there is no personal income tax, the Bahamas is certainly known as a tax haven.
Additionally, there are no wealth taxes, capital gains taxes, inheritance taxes, gift taxes, or taxes on interest and dividends from shares. The wealthy and the employed find it a particularly alluring country due to the tax system.
The majority of the Bahamas’ government’s tax revenue comes from the following taxes:
- Residents will still be required to pay social security contributions to the Bahamas National Insurance Board. Employers contribute 5.9% of employees’ earnings into social security, while employees chip in 3.9%. However, people who are self-employed would be responsible for covering 8.8% of the security costs. Additionally, the Social Security tax is capped at $3,077 BSD each month for everyone, whether employer, employee, or self-employed.
- The annual property tax is one of the few taxes that apply to the majority of foreigners who reside in the Bahamas. Depending on whether the property is owner-occupied or commercial, this tax, which is dependent on the property’s valuation, ranges from 0.75% to 2%.
- A stamp duty may be imposed on foreigners in a variety of situations. Stamp duty is charged on significant overseas money transfers and on real estate transactions. In the case of a property transaction for more than $100,000, rates might range from 2.5% to 10%. In this situation, the seller and the buyer often split the fee. The borrower is responsible for paying a 1.00% charge on the mortgage. The fee for sending money abroad is 0.25 percent.
PROS AND CONS OF BAHAMAS COMPANY FORMATION
No required minimum paid-up capital
The investors can decide the amount of share capital they wish to invest as the Bahamas does not impose any minimum share capital requirements.
Companies incorporated in the Bahamas do not have to pay any license fees, property and stamp tax or import duties.
No Need for Filings
Companies in the Bahamas do not need to file statements of accounts. They must keep records mentioning every transaction and they should keep this data for five years after the transaction date. Businesses can keep these records anywhere they want but they need to disclose them to the registered agent in the Bahamas.
Foreign companies in the Bahamas are given privacy by the International Business Companies Act. The shareholders’ names are also not required to be submitted in the corporate registry.
More than 75% of Bahamians are unable to communicate in English. Therefore, if one wants to start a business in one of the areas where English is not widely spoken, they must ensure that they are fluent in the local language. This is a further challenge for many business owners on top of the numerous tasks and challenges involved in opening a company abroad.
Seeking global corporate expansion may result in poor strategic productivity. Delivery that begins with one country and then moves to others can take a while and can make the delays more frequent.
Every country has different legal systems and resources, which might occasionally make it difficult for businesspeople to operate there.
Reach out to us at Relin Consultants for our Bahamas incorporation services.
What is the cost to register a business in the Bahamas?
In the Bahamas, forming a business costs between US$1500 to US$3,000. The entire cost covers the preparation of the necessary legal documents, company registration, payment of all taxes and registration-related costs, as well as a legal address for the firm.
Can someone from outside the Bahamas open a business?
Yes, a foreigner can establish a business in Bahamas by registering his company there.
Is it crucial for foreigners to open a bank account in the Bahamas?
Yes, opening a corporate bank account is essential for conducting business.
What is the most popular business structure for foreigners to register in the Bahamas?
The International Business Company is the most favoured business.
What restrictions apply to IBC activities?
The following limitations are put on IBCs’ operations:
- No business transactions with Bahamas citizens;
- Real estate may only be rented for office use in the Bahamas; ownership interests in real estate are not authorized.
- It is prohibited to conduct banking, insurance, or reinsurance activity.
- It is prohibited to engage in company management activities or to offer registered facilities to Bahamian-incorporated businesses.
IBCs are, however, allowed to keep bank accounts in the country, hire local experts, and own shares in other Bahamian businesses.