BAHAMAS Trends and Developments Contributed by: Castino Sands, Lennox Paton
Introduction The Commonwealth of The Bahamas has a long and rich history of international financial services, having established a foothold in the global financial sector by the 1960s. There is no doubt that The Bahamas has established a reputation as a well-regulated interna - tional financial centre. The jurisdiction is well-known for its robust regulatory environment, fully compliant with international best-practice standards. With that said, however, most international observers would find it quite surprising to discover that The Bahamas, for as robust as the legal and regulatory framework underpinning its financial services sector is, does not have a comprehensive suite of legislative provisions that focuses on the regulation of mergers and acquisi - tions, either on a cross-border basis or in the domestic space. Very often, when assessing the legal and regulatory environment applicable to mergers and acquisitions in The Bahamas, the framework governing the regulatory considerations and indeed the consents and approv - als required by a transaction, will depend largely on the sector of the economy in which the transaction occurs or the participants involved. This is especial - ly true when discussing cross-border transactions, where the legal and regulatory implications are primar - ily determined by international considerations rather than domestic ones. Similarly, The Bahamas, unlike many other more mature, dynamic and multifaceted economies, has yet to develop a body of laws to incorporate antitrust and anti-competition laws into domestic legislation. These considerations are traditionally central themes at the core of M&A transactions conducted on a cross-bor - der basis. However, rather than being determined on the basis of domestic rules, any antitrust and anti- competition matters, to the extent relevant, are typi - cally settled under the laws of jurisdictions outside The Bahamas where the underlying transaction is structured. Moreover, even in the context of cross-border M&A Transactions, there is no central authority in The Baha - mas having regulatory oversight and responsibility for any relevant antitrust/anti-competition elements of the transaction. This very fact brings into sharp focus the
question of exactly what is meant by an M&A Transac - tion in The Bahamas. Background/Overview In The Bahamas, limited companies incorporated under the laws of the jurisdiction are either incorpo - rated under the Companies Act, 1992 (as amended, the “Companies Act”) or the International Companies Act, 2000 (as amended, the “IBC Act”). In both cases, the legislation describes a statutory merger/consoli - dation process, the key elements of which are largely prescribed by statute. The statutory merger process describes a corpo - rate procedure in which two or more companies are merged and consolidated, with one of the proposed constituent companies emerging as the surviving company. The statutory merger process involves pre - paring a plan of merger/consolidation in the statuto - rily prescribed form and having it approved by the boards of directors and shareholders of the constitu - ent companies. Thereafter, articles of merger, also in the statutorily prescribed form, shall be filed with the Registrar of Companies. At the conclusion of this process, the Registrar of Companies will issue a cer - tificate of merger or consolidation, which evidences that the process is complete and that the merger or consolidation has been approved in accordance with the terms and subject to the conditions contained in the plan of merger. For the avoidance of doubt, the statutory procedure discussed above, while it applies in the domestic con - text for the purpose of regulating a merger of two or more entities incorporated under the Companies Act or the IBC Act, it should be noted that cross-border statutory mergers between a Bahamas-incorporated company and a foreign company are also permitted. The process of achieving such a cross-border merger, so far as Bahamian law is concerned, is largely pro - cessed in the same way as discussed above; provid - ed, however, the laws of the foreign jurisdiction permit the cross-border merger to occur. Where permitted under the laws of the foreign jurisdiction, the cross- border statutory merger/consolidation, in addition to observing all of the formalities prescribed by the IBC Act, shall also comply with any formalities prescribed by the laws of the foreign jurisdiction.
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