THE BAHAMAS Law and Practice Contributed by: Alistair Chisnall and Erica Paine, Graham Thompson
special exemptions, concessions or incentives to be granted to the developer under the Hotels Encouragement Act, 1954 or otherwise). Developers of major projects may also need to secure utility franchise agreements from the local utility statutory corporations and, at the time of applying for acquisition and develop - ment approvals, might seek approval-in-princi - ple from the NEC/BIA for the right to enter into such agreements. 4.7 Enforcement of Restrictions on Development and Designated Use The failure to adhere to and observe restric - tions on development and designated use may result in fines under the P&S Act. The minister responsible for the environment has certain stat - utory powers to access and inspect premises to ensure that such matters are complied with, and to investigate non-compliance. This may also result in an action for judicial review or for an injunction against works or activities being brought by private citizens. 5. Investment Vehicles 5.1 Types of Entities Available to Investors to Hold Real Estate Assets The following entities are predominantly used by investors in The Bahamas to hold title to real estate: • a “Domestic Company” (also often referred to as a “Local Company”) incorporated under the Companies Act, 1992, which is the pre - ferred entity used by Bahamian investors; • a Bahamian IBC incorporated under the Inter - national Business Company Act, 2000, which is the preferred entity used by non-Bahamian investors; or
• a foreign corporation (eg, a US limited liability corporation) that is registered as a “Foreign Company” with the Bahamas Companies Registry. 5.2 Main Features and Tax Implications of the Constitution of Each Type of Entity Domestic Company A Domestic Company has limited liability (unless it is formed specifically as an unlimited liability company) and may carry on any business in, or from within, The Bahamas. A Domestic Company will be designated as “resident” for exchange control purposes under the Exchange Control Regulations if it owns land in The Bahamas or carries on business in the domestic economy, or if the beneficial owner is Bahamian or a work-permit holder or a perma - nent resident with the right to work. A Domestic Company can only maintain foreign currency accounts with the prior permission of the Central Bank of The Bahamas. IBC An IBC is a limited liability company that may carry on business in any part of the world and is primarily intended to operate outside The Baha - mas. To conduct business in or from within The Bahamas, an IBC requires certain government regulatory approvals. An IBC is restricted from carrying on business with persons (corporate and individual) resident in The Bahamas, unless they are designated “resident” for exchange control purposes; where that is desired in con - nection with the intended or pending purchase of real estate, an application for the appropriate designation of a land-owning IBC would cus - tomarily be made in the course of the transac - tion.
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