The Supreme Court of the Bahamas recently dismissed an application seeking various orders in aid of bankruptcy proceedings commenced in the United States concerning various Bahamian companies placed into Chapter 11. There is no equivalent to Chapter 11 under Bahamian law by which breathing space can be created or new capital can be injected on terms acceptable to any reasonable lender.
Legislative changes to the insolvency regime in the Bahamas provide for greater international cooperation and increased mechanisms for liquidators to pursue relief against debtors. The amendments provide a more comprehensive legal framework for improved administration of liquidations in order to seek the necessary relief in areas where the statute previously failed to provide any recourse.
The Investment Funds Act provides legislation flexible enough to accommodate the needs and growing demands of the financial sector. To be a Bahamas-based investment fund, a nexus to the Bahamas must be established. An investment fund does not include a unit trust, company or partnership where the holder of equity interests cannot redeem its equity interests or require the issuer to repurchase its equity interests.
The fund structuring vehicle known as the investment condominium (ICON) is the latest investment product offering from the Bahamian financial services industry. Governed pursuant to the Investment Condominium Act, the ICON is a contractual relationship subsisting between investors, under which the investors agree to pool assets for the purposes of investing those assets as a collective.
As a common law country Bahamian courts recognise trusts and the relationships that they create. The Bahamas is not a signatory of the Hague Convention on the law applicable to trusts and their recognition, and it is not anticipated that it will be. The assets of a trust are vested in trustees for the benefit of the beneficiaries. Assets may be held directly by the trustees or indirectly through holding companies.
The Supreme Court of the Commonwealth of the Bahamas has set aside an order granting a liquidator leave to serve a summons outside the jurisdiction on a company incorporated in Bermuda, which sought the recovery of a payment as a fraudulent preference. The liquidator sought a declaration that a payment made to the foreign company before the liquidation amounted to a fraudulent preference payment.
The recent insurance industry briefing on the regulatory regime for captives has highlighted a renewed interest in the Bahamas as a jurisdiction of choice for captive companies. The Bahamas enjoys numerous advantages, including accessibility from the United States, an established financial structure and a tax-neutral environment for business. Captive companies are registered as a restricted external insurer under the External Insurance Act.
In an effort to provide tax relief and to update the real property tax register, the Bahamian government has implemented real property tax incentives. Among other things, owners of residential properties who remain current with their payments over the next three years will receive a 5% rebate of their annual real property tax assessment.
In a recent landmark insolvency decision, the Supreme Court applied the modern approach to the determination of an application by joint liquidators for the production of documents and the oral examination of the named partners of former auditors of a company in voluntary liquidation. The court held that the liquidators had been unreasonable and that their application was oppressive.
The Rule Against Perpetuities (Abolition) Act 2011 has abolished the rule against perpetuities in relation to wills and trusts. With the abolition of the rule against perpetuities, settlors and testators now have greater flexibility in relation to estate planning. Furthermore, trustees will be in a position to accumulate trust income for such period as they think appropriate given the particular needs of a trust.
With the Executive Entities Act 2011 the Bahamas has added an innovative product to its portfolio of financial services legislation, by encapsulating services currently offered in the realm of wealth management within a legal entity. Section 3 of the act provides for an executive entity which can act as an effective governance tool to carry out executive functions while protecting confidentiality in wealth preservation structures.
In a recent decision the Supreme Court clarified amendments made by the International Business Companies (Amendment) Act 2010. The court held that there is no statutory bar preventing the applicant applying for the restoration of an international business company, even if the company was struck off before the commencement of the International Business Companies Act of 2000.
The Trustee (Amendment) Act 2011 has strengthened the law relating to trusts and their administration by clarifying and expanding sections of the principal act and by making substantive amendments that have introduced new provisions. These innovative provisions show the Bahamas' continued commitment to provide for clients and reinforce its position as a leader in the area of private wealth management.
The government has amended the National Investment Policy to provide for accelerated consideration of permanent residency applications for persons purchasing a residence worth $1.5 million or more. Under the new scheme, provided that applicants have all the required documentation, they can expect to receive a response within 21 days of their completed application being delivered to the Department of Immigration.
In early 2011 Cheryl Grant-Bethel, the former Deputy Directory of Public Prosecutions, brought a case against John Delaney QC in relation to the Judicial and Legal Services Commission's failure to consider her application to be appointed director of public prosecutions. The case raised a number of important and novel issues relating to the obligations of the commission to consider applications for legal positions in the civil service.
Crawford International recently appealed a judgment relating to the determination of a preliminary issue concerning the scope of a management contract. A preliminary objection was taken to the appeal on the basis that the judgment was interlocutory and no leave to appeal had been obtained. However, the appeal court determined that the judgment on the preliminary issue was final rather than interlocutory, and as such no leave was required.
All homeowners which are renting one or more bedrooms in an owner-occupied home are required to apply to the Hotel Licensing Authority (a division of the Ministry of Tourism) for a hotel licence, which must be renewed annually. In addition, a rental tax at the rate of 10% of the rental income is payable on all owner-occupied homes which are rented.
The Business Licence Act 2010 came into force on January 1 2011. It has introduced new licensing and taxation requirements to operate a business in the Bahamas. Licence fees have now changed and will be based on turnover. Existing businesses will be deemed licensed for a period of 90 days from the commencement date of the act.
The Bahamas Maritime Authority has announced the eagerly awaited launch of the Yacht Registry. The expansion of the authority, and of the yacht sector itself, resulted in the need for a more focused and autonomous infrastructure dedicated to this area. The addition of the registry adds a new dynamic and quality component to an already well-rounded, well-developed and expansive ship registry system.
The Arbitration Act and the Arbitration (Foreign Arbitral Awards) Act have entered into force. Both acts are the result of The Bahamas' commitment to adhere to the recommendations of the United Nations Commission on International Trade Law in order to develop uniformity and harmonization in the law relating to arbitral procedures on a domestic level, as well as the specific needs of international commercial arbitration practice.