Bahamas: Types of Company
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.
Comprehensive new Private Trust Companies legislation passed both houses of parliament in the Bahamas in December 2006. Under the legislation, a Bahamian PTC, like other structures such as foundations, does not require regulatory approval. The PTC need only arrange its affairs with a regulated Bahamian service provider or Registered Representative.
The legislation which allows for the formation of Private Trust Companies (PTCs) is the Banks and Trust Companies Regulation (Amendment) Act, 2006, and the Banks and Trust Companies (Private Trust Companies) Regulations, 2007.
Under the legislation this class of trust is defined by reference to the Designated Person(s). The Designated Person(s) is an individual(s) who is identified at the establishment of the PTC and with whom all other settlors of trusts, for whom the PTC acts as trustee, must be related. With the requirement that the Designated Persons must be related, and that all other settlors of trusts, for whom the PTC acts as trustee, must be related, the PTC can act as Trustee for an unlimited number of trusts and can benefit anyone (subject to due diligence requirements) from the assets of the trusts.