Bahamas: Types of Company
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 fees for the registration of a Bahamas foundation are: $500 if registered in the first quarter; $375 if registered in the second quarter; $250 if registered in the third quarter; and $125 if registered in the fourth quarter. 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.