Bahamas Fund Formation
In the Bahamas there are a number of advantages to establishing an investment fund, these include:
- A tax neutral, no capital gains
- A stable political and economic jurisdiction
- A respected legal system under English Common Law
- A dedicated Commercial & Financial Services Court
- No restrictions on investment policies, strategies, or on performance and other fee arrangements
- No requirement to appoint local directors, representatives or auditors
- A fast track process available for professional funds licensed through a unrestricted fund administrator
- Relatively low start-up and on-going fees and costs
Bahamas Fund Structures
- Bahamas Professional Fund
- Bahamas Smart Fund
- Bahamas Condominium Fund
- Bahamas Closed-end Fund
- Bahamas Management Company
The Bahamas is an independent country consisting of 700 islands and over 1,000 small cays stretching from the southeast coast of Florida to the southeast tip of Cuba. The financial center of The Bahamas is the capital Nassau, which is about a two-hour direct flight from Atlanta or a 55-minute direct flight from Miami.
There are no Bahamian corporate, personal income, capital gains, withholding, inheritance and estate taxes. The Bahamas has been an offshore financial center since the 1930s. As an independent nation since 1973, The Bahamas has been able to establish legislation to meet the requirements of an increasingly sophisticated financial services marketplace. However, unlike many other offshore financial centers, which are subject to legislative changes and other pressures from outside the jurisdiction, The Bahamas, as an independent country, charts its own course. This is an important advantage to The Bahamas in these days of increasing pressure from the European Union, the U.K. in particular, and the U.S. with regard to the tax and financial privacy laws of low-tax and no-tax jurisdictions.
The Bahamas offers a range of financial services including offshore banking, trust and company formation and fund management. The introduction of the International Business Companies (IBC) Act in 1989 set the Bahamas on its way as a modern day offshore finance center, particularly helping to attract fund management groups including Templeton. The Bahamas is a very popular offshore company jurisdiction, with nearly 100,000 International Business Companies (IBCs) registered there. The Bahamas’ IBC Act is perhaps the most flexible and user-friendly of all IBC acts in the offshore world. A Bahamian IBC can be formed quickly and inexpensively within a few days. IBCs may hold Bahamian bank accounts, partnerships and trust assets, and may trade in any currency and on any international exchange or market.
The Bahamas is a popular offshore trust jurisdiction, and will likely become even more so. The Trustee Act was recently overhauled in and is now perhaps the most modern in the offshore world. In addition, the Fraudulent Dispositions Act 1991 provides certain advantages to trust settlors. Trust assets are generally protected from all litigation started more than two years after the assets were placed in the trust. Foreign judgments are not recognized; in order to recover trust assets, a creditor must bring an action in the courts of The Bahamas and must prove that a trust settlor had the intent to defraud creditors.
In addition to being an excellent environment for offshore trusts, hedge funds and companies, The Bahamas will soon launch the Bahamas International Securities Exchange (BISX) in 2000. BISX will have two tiers. The domestic exchange will be closed to international investors until the market is robust enough to handle the greater volatility of international money flows. The international tier will include international companies, listed exclusively on BISX, as well as mirror listings for those with other home exchanges.
The Bahamas also plans to introduce a new product called a Bahamas International Depository Receipt, or, BDR, modeled on the very successful U.S. American Depository Receipt (ADR). It will be marketed to small- and medium-size companies in emerging markets that cannot justify the cost and listing requirements associated with large exchanges in other financial centers, such as New York and London.
For the international investor, the advantages of The Bahamas include:
- Excellent financial supervision and regulation.
- Government very committed to supporting international financial activities.
- Trust and company law based on principles of English Common Law.
- Fast and inexpensive company and trust formation and registration.
- Low overall administrative costs.
- No Bahamian estate or gift taxes.
- No Bahamian capital gains taxes.
- No Bahamian income tax.