BAHAMAS Trends and Developments Contributed by: Castino Sands, Lennox Paton
Regulatory Approvals It is generally the case that cross-border M&A transac - tions in which the target does not conduct any busi - ness in the local economy are not subject to local regulatory approvals. Much of what is required from a regulatory approvals perspective is driven by sec - tor-specific requirements. This is equally true, having regard to the characteristics of the parties involved. For example, in the case of the purchase and sale of the electricity transmission and distribution grid, which was acquired by Bahamas Grid Company Ltd. from The Bahamas Power and Light Limited, it goes without saying that the electricity sector in The Bahamas is subject to the regulatory supervision of the Utilities Regulation and Competition Authority (“URCA”). Accordingly, Bahamas Grid Company Ltd. was required to obtain a licence from URCA and the transaction as a whole was subject to URCA over - sight and approval. Parties operating in different regu - lated segments of the economy will generally require the prior approval of their respective regulator when engaging in any M&A transactions. Additionally, as noted above, the profile of the parties involved in the proposed transactions will also be a relevant consideration when considering any neces - sary approvals that may be relevant. Unwritten Baha - mas government investment policy is such that any investment in the local economy by a non-Bahamian will generally trigger a requirement to obtain the prior approval/no-objection from the Bahamas Investment Authority (“BIA”). Accordingly, any non-Bahamian per - son or group seeking to acquire a business operating in the local economy will require BIA approval. Furthermore, the Bahamas maintains a foreign cur - rency exchange control environment, under which all resident persons and entities, for exchange control purposes, require approval from the Exchange Con - trol Department of the Central Bank of The Bahamas (the “Central Bank”) to deal in foreign currencies and securities denominated in a foreign currency. It is similarly the case that persons who are non-resident for exchange control purposes will also require Cen - tral Bank approval where they seek to acquire the business of a company generating Bahamian Dollar income in the local economy.
The foreign currency exchange control environment in The Bahamas is governed by the Exchange Con - trol Regulations, 1956 (the “Exchange Control Regu - lations”). Pursuant to the Exchange Control Regu - lations, a person in The Bahamas (legal or natural) may be designated as either resident for exchange control purposes or non-resident for exchange con - trol purposes. Generally, persons deemed resident for exchange control purposes are Bahamian citizens residing in The Bahamas, permanent residents of The Bahamas with no restrictions on employment, per - sons otherwise conducting business in The Bahamas and generating income in Bahamian Dollars or per - sons designated as “resident” by the Central Bank and legal entities owned and controlled by them. Non- resident persons and entities are those that do not meet the requirements to be designated as resident. On the basis of the foregoing, a non-Bahamian group seeking to acquire all or a part of the business of a resident company will require Central Bank approval. Taxation Finally, in relation to taxation in The Bahamas, where a Bahamian company is the vehicle through which the target group does business, there may be local law tax implications where the business of the com - pany is acquired. The rules regarding what constitutes carrying on business in The Bahamas are clear and beyond the scope of this discussion. It is sufficient to say at this stage that if the target group carries on any business in The Bahamas, the purchase and sale of such business or a part thereof will qualify as a sale of business under the Stamp Act, 2024. A transaction comprising the sale of a business to the extent that the transaction involves the sale of property other than land, save for cash and deposit accounts, shall attract a stamp tax of 6% of the consideration attributable to property other than land. For the avoidance of doubt, a sale of business under the Stamp Act includes: • the sale, exchange or other transfer or disposition in whole or in part of the goodwill or other property comprised in a business, either directly or indirect - ly, to another person; • the transfer or issuance of shares in a company that owns the goodwill or other property of that business; and
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