The majority of companies formed in the Bahamas for offshore purposes are incorporated under the International Business Companies Act 1989 (see below). However this law did not supersede the existing companies law, most recently re-stated in the Companies Act 1992, which is based on English law and is used to form various types of company used by businesses trading in the Bahamas, and also for certain other special purposes.

Companies formed under the Companies Act 1992 can be private companies limited by shares or by guarantee, or can be public companies. For all these types of company, Memorandum and Articles of Association must be filed at the Companies Registry, there need to be a minimum of two members, and there must be a registered office in the Bahamas. If a company is going to trade locally, it will need an appropriate business license.

Bahamas International Business Company
The International Business Company is the most widely used vehicle for offshore operations in the Bahamas; it normally takes the form of a private company limited by shares. The governing legislation is the International Business Companies Act 1989, updated by the International Business Companies (Amendment) Act 1994, the International Business Companies Act 2001, and the International Business Companies (Amendment) Act 2004.

Until 2001, there was no need to register details of beneficial owners, directors or officers, but under the International Businesses Companies Act 2001 which came into force at the start of 2001 IBCs are required to submit their identities, addresses and names of directors and owners to the Registrar General's Department. Otherwise, statutory requirements are minimal, and flexible:

• Only one director, who may be corporate, and two shareholders are required;
• Shareholders, directors and officers need not be resident in the Bahamas and there is no stipulation as to their nationality;
• There is no minimum capital requirement; shares must be registered and may be issued in any currency; bearer shares however are no longer permitted;
• Accounts need not be kept; however, if they are kept there is no requirement for an audit.
• A share register needs to be kept; it is unclear whether nominee shareholders are still permitted;
• Shareholders and directors meetings need not be held in the Bahamas and can be held by telephone;
• The Memorandum and Articles of Association are the only documents to be held on the public record;
• The legislation contains asset protection clauses against actions emanating from without the Bahamas; it also contains provisions for the protection of minority shareholders;
• An IBC is exempt from Bahamian Exchange Control, from stamp duty and from other taxes and estate duties for 20 years from the date of incorporation;
• an IBC can be managed, controlled and operated from the Bahamas.

A company incorporated or (if foreign) registered under the Companies Act 1992 can switch to IBC status if it qualifies under the legislation.
IBC status is granted subject to certain conditions:

• No business may be transacted with residents in the Bahamas;
• No ownership interest in real property in the Bahamas is permitted; property may be leased for office use only;
• Banking, insurance or re-insurance business is not permitted;
• Engaging in the business of company management or providing registered facilities for Bahamian incorporated companies is not permitted.

IBCs are permitted to own shares in other Bahamian companies, maintain bank accounts in the jurisdiction and employ the services of local professionals.

It is usual to use a registered agent in the Bahamas to incorporate an IBC (eventually it is obligatory to appoint one anyway). Fees for incorporation of an IBC are based on the company's authorised share capital. Normally, the incorporation process takes no more than one day.
Statutory incorporation and annual registration fees are as follows:

Amendments to the International Business Company legislation in 2004 permit the continuation of an IBC as a Bahamian company under the Companies Act, and enable an IBC to be licensed as an external insurance company.

Bahamas Foreign Company
A foreign company can operate a branch in the Bahamas with minimal formality and no registration requirements, but once the branch is recognised as an 'undertaking' under the Companies Act 1992, or as a 'trading' branch, it has to register with the Registrar-General. The following amount to having 'undertaking' status:

• the keeping of a place of business;
• the holding of a licence (or the requirement to hold one) for specified business;
• the holding of a licence (or the requirement to hold one) for selling securities; or
• having a local telephone listing.

Registration involves filing a notarised and legalised copy of the company's Memorandum and Articles of Association (or its Statutes) and details of the directors and officers. A Certificate of Registration is issued, and the company (the branch) then has the same position as a Bahamian incorporated company, ie it must maintain a local registered office, etc etc as above.

Fees payable on registration are $50 plus stamp duty of $600, then $1,000 annual registration fee.
If the foreign company (branch) intends to trade within the Bahamas or to employ more than two Bahamians, it needs to apply to the Bahamas Investment Authority for clearance from the National Economic Council, and it needs to obtain the relevant business licence as does a Bahamian company.
It is open to a qualifying foreign company, once registered, to become an International Business Company (see above).
 
Bahamas Trusts
The trust law of the Bahamas is based on English trust law, and was codified in the Trustee Act 1893, but there have been a number of recent statutes which update and extend Bahamas trust law, particularly the Trustee Act 1998 which repeals the Trustee Act 1983 and the Variation of Trusts Act Cap 166. The Trust (Choice of Governing Law) Act 1989 protects against forced heirship provisions; the Fraudulent Dispositions Act 1991 strengthened the position of asset protection trusts. In early 2004 legislation dealing with purpose trusts was introduced to the legislature. See Law of Offshore for a fuller description of the legal regime for Trusts in the Bahamas.

Bahamian trusts (other than those holding Bahamian property) do not have to be registered, and the 1998 Act disapplies Exchange Control Regulations to non-resident settlors, donors, beneficiaries and trustees - therefore it is no longer necessary for trusts to be registered with the Central Bank as non-resident. This applies to existing trusts as well as to new ones.

Trusts (other than those holding Bahamian real estate) with non-resident beneficiaries are exempt from all taxes, including stamp duty on transfers into trust.

Under the 1998 Act, new trusts need to be stamped with a $50 Bahamas revenue stamp, which can be bought for cash and does not involve any disclosures. See Offshore Legal and Tax Regimes for further details of the tax position of Bahamian trusts.

The 1998 Act provides for the appointment of a 'protector of trust', effectively a supervisor of the trustee(s), and also managing and custodian trustees.

A company offering trust services must obtain a licence under the Banks and Trust Companies Act 1965 and conform to various conditions. See Offshore Business Sectors: Trust Management

Bahamas Foundations
Foundations were introduced by the Foundations Act 2004 and accompanying regulations. Such structures are already well-known in Europe, Latin America and Asia, and the Bahamian foundation is an important tool for the jurisdiction’s expanding wealth management capability.

There are no perpetuity period rules applicable to Bahamian foundations, which immediately provides for continual unending succession if it is desired by the founder. A Bahamian foundation is not subject to forced heirship laws of a foreign jurisdiction.

A Bahamian foundation is a distinct legal entity which is convenient for ‘proper law’ questions. Assets placed within the foundation are owned solely by it, and a change in a Bahamian foundation’s governing body does not change the legal ownership of the foundation’s assets. There is no statutory requirement for an external audit unless the foundation’s charter so provides.

A foundation established in another country may redomicile in the Bahamas; and a Bahamian foundation may redomicile into another country, provided such a move is permitted in that country.
While the most common use of foundations is for estate planning, they are useful in a number of other areas. They can be used to provide for subordinated debt; to perpetuate a particular corporate governance policy; to hold the benefit of warranties for a wider or changing class of investors; for philanthropic purposes; or for the separation of voting and economic benefits.

In addition, foundations allow for investment in family companies whose economic performance may be poor, for ownership of a private trust company, for provision of an employee share option scheme, or for packaging financial instruments into marketable securities.

The registration process for a Bahamian foundation is comparable to that of a company registration, making it a legal entity that must be filed with the Registrar General of the Bahamas. Like that of a company, the name of the Bahamian foundation must be reserved at the Registrar General’s office prior to submission of the necessary documentation. The registrar will confirm that the foundation name is valid for use and that the name has been reserved for a period of 90 days.

Online registration is available. The fee for the registration of a Bahamas foundation is $500. The foundation’s charter must contain a statement that the value of the assets of the foundation may not be less than B$10,000, or the equivalent in any other currency.

Officers of the foundation must keep proper records and accounts, which can be inspected by any officer, foundation council member, founder, auditor or any other supervisory person at any time. However, confidentiality provisions restrict any person acquiring information from disclosing such information relating to the foundation, without the expressed consent from the founder and the beneficiaries, or as required by law, or a Bahamian court.