BAHAMAS Trends and Developments Contributed by: Castino Sands, Lennox Paton
In the case of a cross-border statutory merger/consol - idation, the surviving company may be incorporated under the laws of The Bahamas or a foreign jurisdic - tion. The laws of the jurisdiction of the surviving entity will determine the effect of the merger. However, from a local law perspective, the surviving company, as an automatic function of law, will accede to all of the rights, duties and obligations previously held by or vested in the former constituent companies. Generally, although not always, the statutory merger/ consolidation is employed not in the context of a third party’s acquisition of the business of an unrelated counterparty, but typically in the context of closely held holding structures for personal or family assets. Accordingly, while this procedure is defined statutorily as a merger, with the effect of combining two separate companies, it is generally not used in The Bahamas as a tool for one company to acquire or merge with the business of another unrelated company. Bahamas Companies In M&A Transactions Notwithstanding the foregoing, it goes without say - ing that the Bahamian international business company is a well-known, efficient and flexible vehicle widely used in international finance today and has been for many years. Any number of companies engaged in business across the globe have used and continue to use Bahamian IBCs in their corporate ownership, holding and financing structures. Accordingly, when these companies inevitably begin to consider and then proceed with, expanding their product and ser - vice offerings and their industry or geographical profile through M&A transactions, their Bahamian affiliates and subsidiaries will most certainly play a role in struc - turing these transactions. With this in mind, we have seen a number of ways in which Bahamian compa - nies have actively participated in cross-border M&A by large multinationals. Firstly, there are cases where the target group (ie, the group whose business a third party wishes to acquire) maintains a part of its asset base or conducts com - mercial activities in jurisdictions outside of The Baha - mas through entities incorporated under the IBC Act. Accordingly, where Bahamian IBCs are included in the target group structure, it will invariably be necessary to carry out due diligence prior to the acquisition being
consummated. These due diligence exercises are typically structured as red-flag due diligence, which seeks to identify any matters from a Bahamian legal and/or regulatory perspective that would prevent a proposed transaction from proceeding. Similarly, such due diligence exercises typically uncover items that are not necessarily detrimental to the transaction as a whole, but that require specific representations and warranties to be incorporated into the suite of transac - tion documents. Secondly, there are instances in which the Bahamian entity is involved in the purchasing group. There are cases where the purchasing group are engaged with third-party financial institutions to fund the acquisition in circumstances where the Bahamian IBC acts as borrower, guarantor or otherwise provides collateral support for the proposed acquisition financing. This generally involves considerations of conflicts of laws rules related to proprietary issues involved in creating a security interest over assets held by such compa - nies, whether located in The Bahamas or otherwise. Very often, acquisition financing structures of the kind described herein will require the preparation of Bahamas law-specific transaction agreements (e.g., equity purchase agreements and/or share pledge agreements). Relevant Legislative Developments As a side point and in the interest of completeness, it is worth noting that there is currently no central reg - istry in The Bahamas for registering security interests over the equity of a Bahamian international business company. This is especially relevant in circumstances where the company’s equity has been given as col - lateral security to support financing the acquisition of a third-party group. With that said, both houses of parliament in The Bahamas have recently passed the Movable Property Security Interests Act, 2025. How - ever, the said Act has not yet been brought into force and it is unclear when it will be. The Movable Property Security Interests Act, 2025 The Movable Property Security Interests Act of 2025, when brought into force, will apply to every transaction that creates a security interest over movable property, without regard to the form of the transaction, the type of movable property, the status of the debtor, secured
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