Category: Law Articles

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The Bahamas Enhances Ease of Doing Business with Companies (Amendment) Act 2020

In an effort to further improve the ease of doing business within the Bahamas, Parliament has enacted the Companies (Amendment) Act, 2020 and the International Business Companies (Amendment) Act, 2020. Not only will these amendments allow for better and easier business practices within the Bahamas by reducing outdated and cumbersome processes, but also will put

Beneficial Ownership

Bahamas Legislation used as a tool to capture information on beneficial owners to help curb global tax crimes, money laundering and other bad acts… how does it affect you?

Some view corporate vehicles including companies, trusts, foundations, partnerships and the like as being vulnerable to misuse by criminals for nefarious acts such as money laundering, bribery and corruption, insider dealings, tax fraud, terrorist financing and more.

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Guidance for Bahamian Domestic Companies and NPOs on VAT filings; and a brief digest on annual filings and business license renewals

NON-PROFIT ORGANIZATION AND VAT This article discusses VAT filing obligations for Non-Profit Organizations (NPOs) and Domestic Bahamian Companies and provides insight into annual business filings for incorporated companies. It also takes a brief look at business licence renewal requirements for “trading as” companies. Non-Profit Organization “NPO” are organizations which are established for the purposes of

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Commercial Entities (Substance Requirements) Act, 2018 (CESRA) Reporting obligations for Companies under Bahamian Law – Part I

All Bahamian entities incorporated under the Companies Act, International Business Companies Act, Exempted Limited Partnership Act, Partnership Act, Limited Liability Partnership Act and being in existence in 2019 is required to file a report with the Competent Authority by 31 December 2020

Corporate Governance continues to expand globally, and indeed in The Bahamas, as organizations as well as the legislature recognizes the need for greater transparency in companies.

Legislation continues to be developed in order to ensure those with daily control of corporate entities are acting in the interest of all its stakeholders and not just for the sole benefit of any one constituent.

Minority shareholders should be in a position to receive information concerning those with greater beneficial interests in their companies and any dealings those individuals may have concerning material contracts with their companies. This is the direction taken by governance regime globally and The Bahamas is enhancing its laws to make such disclosures a requirement.

Updates to The Bahamas’ Securities Industry Rules were made by way of the Securities Industry (Corporate Governance) (Amendment) Rules, 2020 this April. The amendments requires additional disclosures be made by directors. Additionally, the Chairman and CFO must attest to the accuracy of the financial statements in writing.

In summary the new Rules provides as follows:

  1. prospective nominees to the Board of a company must disclose prior to appointment:
    a. the number and nature of any memberships he may have on other Boards,
    b. any employment or compensated commitments with other companies, public issuers or regulated entities;
  2. a nominating committee (if any) must determine whether any prospective nominee can effectively contribute to the performance of the Board where such nominee holds more than one directorship or has other employment or compensated commitments;
  3. where a prospective nominee is elected or appointed and did disclose membership on other boards, employment or compensated commitments and any of those commitments are terminated he/she must inform the board of this;
  4. external Auditors under these amendments no longer have to make disclosures of conflicts of interest (see 11 (2));
  5. directors have a duty to disclose memberships, employment or compensated commitments held as well as details of any appointments to the board committees of and any ownership interests in other companies, public issuers or regulated entities;
  6. where a director or officer is a director or officer of a company who is party to a material contract or proposed material contract with the contracting company, this must be disclosed by the director or officer of the company.

The insertion of a new paragraph 2A makes it mandatory that when directors vote on any material contract for which a fellow director or officer of the company has advised that he is an officer or director of the proposed contracting company, the vote must be by an expressed resolution and that director or officer must recuse himself and not take part in the voting.

7. The Chairman and CFO must satisfy the board that the financial statements present a true and fair view of the affairs of the company – this must be done in writing; and

8. finally, (as in the previous Rules a and b continues to apply as stated below – however, c is newly introduced) the annual report of the company must disclose:
a. directors’ interests in contracts with the company, its subsidiaries and holding company and the nature and details of the contracts and such interests of the director;
b. any service and material contracts with controlling shareholders.
c. details of any board membership, employment or compensated positions held by directors and any board committees and ownership interests in other companies, public issuers and regulated entities.

A part of a corporate secretary’s role is to assist companies in managing their corporate governance and board obligations.

It is a good idea for corporate secretaries to prepare proper board charters to aid directors and officers in complying with regulatory requirements. Corporate secretaries should work with the company’s executives in developing corporate governance policies that will ensure company wide adherence to regulations and general good governance as a whole.

The Securities Commission of The Bahamas has stated that the amendments made to the Rules are “based on a review of The Bahamas’ Ease of Doing Business rating, with a view to improving minority shareholder protections, strengthening disclosure requirements for directors, nominee directors and officers of public issuers, and addressing shareholder rights generally”.

The author of this article is a Corporate Governance Attorney specializing in assisting public issuers as well those companies whose shares are not publicly sold or listed. Capital Law Associates provides Corporate Secretary services and assists companies in preparing board charters and directors protocols. Additionally, we assist companies with regulatory filings and general counsel services. We can be contacted at info@capital-lawassociates.com.

TESTIMONIALS

A General Counsel who knows how to help businesses succeed
I have had the honor and pleasure of working with Mrs. Yvette Rahming for the past seven years. Mrs. Rahming was a part of the Sr. Management team and she played a key role in the building and development of APD Limited. Her attention to detail and her knowledge and grasp of the law and solving compliance issues were paramount to the success of APD. As In-House Legal Counsel Mrs. Rahming was responsible for the creation, negotiation and drafting of contracts and she dealt with major employment matters. Mrs. Rahming was a pioneer in leading the company to receive its ISO certifications and she was a team builder within the company’s Safety Department. She also played an intricate role in writing the Company’s Handbook and formulating safety related manuals.
Dion O. Bethell,President, CFO – APD Limited President, CFO - APD Limited
Thank for guiding us through the new lease agreement and working out the very complex lease issue.
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