A glance to Foundations in Bahamas

The Bahamas, the legal system is based on English common law, owing to its history as a former British colony. The establishment of a foundation was enacted under the Foundations Act 2004 with subsequent amendment in 2005, 2007, 2011 to reinforce the legislation on private wealth management industry. Foundations in the last few years have been more popular as an alternative from the trust in estate planning as unlike trust they are legal entity that can act and contract with third parties. Bahamas become the first common law jurisdiction to allow foundations specifically for the cross-border assets holding market. The main features according to the law are as followed and essential for the establishment:

1. Legal entity designed for holding of assets and to operate in its own right
2. Enables individuals to create a succession plan for their cross-border assets with considerable freedom and security
3. Can be used for personal, charitable or commercial purposes
4. It can sue and be sued in its own right
5. Retains accounting books, and records with no public appearance
6. Foundation do not pay taxes and only pay annual fee to the Government.

Foundation Structure

1. Founder the person who will transfer the assets to the foundation who can be a natural or legal entity
2. Foundation Council must comprise a minimum of two (2) natural person or (1) legal entity.
3. The Foundation Council must an appointment a Secretary resident in Bahamas as part of the structure.
4. Beneficiaries appointed by the founder to receive the benefits of the assets contained in a private document.
5. The minimum assets established in the foundation charter is $10,000.00.
6. The law does not require to have a foundation charter instead the provision of the Act can apply.
7. The foundation Charter may but need not to be filed at the Registry of Bahamas. In this instance that is not filed, a registration statement proving extracts of the Charter in a prescribed form may be filed in the alternate.

For incorporation before the Registry the Act required the following details

• Name of the foundation
• Dater of the Charter
• Purpose and objectives
• Name of the founder an address in the Bahamas for service documents
• Name and address of the foundation council
• Address of the registered office
• Time period for which the foundation is established
• Value of the initial assets

The legal foundation in the Bahamas offers several advantages, both for its residents and for international businesses operating within its jurisdiction:

1. Stability and Predictability: The Bahamas’ legal system, based on English common law, provides stability and predictability in legal outcomes. This is crucial for individuals and businesses seeking assurance that their rights and obligations will be consistently upheld.
2. Recognition Internationally: Being part of the common law tradition and having a respected legal framework means that legal decisions and contracts made in the Bahamas are often recognized and enforceable in other common law jurisdictions worldwide. This is particularly advantageous for international business transactions and investments.
3. Specialization in Financial Services: The Bahamas has developed specialized legal frameworks to support its status as an international financial center. This includes robust regulations and laws governing banking, trusts, investment funds, and other financial services. These frameworks are designed to attract international investors and businesses looking for a stable and secure environment.
4. Confidentiality and Privacy: The Bahamas offers strong protections for confidentiality and privacy, particularly in its financial and trust laws. This makes it an attractive jurisdiction for individuals and businesses seeking to protect their assets and financial information.
5. Tax Neutrality: The Bahamas is known for its tax-neutral environment, meaning that there are no taxes on income, capital gains, inheritance, or corporate earnings for non-residents. This can be highly advantageous for individuals and businesses looking to minimize their tax liabilities in their home countries.
6. Efficiency and Accessibility: The legal system in the Bahamas is known for its efficiency and accessibility. Courts are generally well-organized and accessible, making it easier for individuals and businesses to resolve disputes in a timely manner.
7. International Arbitration: The Bahamas has established itself as a center for international arbitration, offering arbitration services that are compliant with international standards. This provides an alternative dispute resolution mechanism that is often faster and more flexible than traditional court proceedings.

Overall, the legal foundation in the Bahamas provides a supportive environment for individuals, businesses, and investors, offering stability, confidentiality, tax advantages, and international recognition that make it a preferred jurisdiction for various legal and financial activities.

Sources:

The Foundations Act 2004 (the “Act”) came into force on October 22, 2004 in The Bahamas amendments 2007, 2011