The Companies Act 1982 legislates companies in Barbados.
It was modelled on the Canadian Business Corporation
Act. Company forms available under the Act are limited
liability companies, companies without share capital
(for non-profit purposes) and mutual insurance companies.
Most offshore operations in Barbados make use of the
limited liability company form, and then take offshore
status under one of the enabling pieces of legislation,
including the International Business Companies Act 1991,
the Foreign Sales Corporations Act 1984, and the various
specialised financial company forms.
are formed under the Companies Act by submitting Articles
of Incorporation, Notices of Directors and Registered
Address and Request for Name to the Registrar of Companies.
The Registrar issues a Certificate of Incorporation,
and the company exists as from the date of the Certificate.
Incorporation usually takes two or three days; shelf
companies are not available. The Companies Regulations
1984 establish registration fees for companies formed
under the Companies Act. A fee of BDS750 is payable
to the Government on incoporation and an annual fee
of BDS250 thereafter.
companies need to have a registered office, and must
keep various documents there, including minutes of directors'
and shareholders' meetings, registers of shareholders
and debenture holders, and accounting records. There
needs to be a company secretary. Annual returns are
not required; neither are audits unless total assets
exceed BDS1m, and they do not have to be filed.
pressure from the OECD, Barbados is effectively merging
its offshore and onshore sectors, and the Companies
Act is in the process of being modified.
Barbados Limited Liability Company
needs to be only one shareholder and one director, who
may be corporate; public companies must have at least
three directors. Any company which is not a public company
is a private company. The Companies Act does not set
any minimum level of capital. Different classes of share
are possible; bearer shares are not provided for in
the Act; shares of no par value are allowed.
Barbados Company Without Share
without share capital (non-profit company) must limit
its activities to purposes that are religious, philanthropic,
educational etc etc. There must be at least three directors.
Barbados Mutual Insurance Company
insurance company must be owned directly or indirectly
by its members, and must provide insurance or reinsurance
for the benefit of its members.
Barbados External Company
companies are defined by the Companies Act as incorporated
or un-incorporated bodies formed under the laws of a
country other than Barbados. An external company must
register in order to do business in Barbados. Registration
involves submission of basic corporate information to
the Registrar and payment of a fee of BDS3,000. After
registration, an annual return must be submitted to
the Registrar. Registration validates prior acts of
the company under Barbadian law.
International Business Company
Business Company is the most widely used vehicle for
offshore operations in Barbados.
is given to companies that are carrying on the business
of international manufacturing or international trade
or commerce. Broadly speaking, these activities have
to be carried out in Barbados, with exports or the provision
of services being to countries outside the Caricom area
or to other IBCs, exempt insurance companies or Foreign
Sales Corporations (ie other offshore entities).
The Act limits
the issue of an IBC license to companies that fulfill
the following criteria:
- a company should be
resident in Barbados (resident means incorporated
in or managed and controlled from Barbados; registered
foreign - 'external' - companies are deemed to be
- no more than 10% of
the assets of a company would accrue on a liquidation
to holders of its shares and loan capital resident
in the Caricom area;
- no more than 10% of
the interest and dividend payments made by a company
should go to individuals resident in the Caricom
banks, exempt insurance companies (likewise) and foreign
sales corporations (see below) are not eligible for
are issued by the Minister of Finance and are valid
for one year, renewable annually for a fee of BDS250.
The Minister will issue an assurance to an applicant
that the benefits of the Act will be available for 15
An IBC pays
tax at a low rate and is entitled to various other benefits
(see Offshore Legal and Tax
Foreign Sales Corporation
US Tax Reform Act of 1984 enabled US companies to open
'Foreign Sales Corporations' (FSC) in a number of offshore
centres, giving tax benefits to the US holding companies;
Barbados is one of those countries.
Sales Corporation normally takes the form of a limited
liability company (see above). The governing legislation
is the Foreign Sales Corporation Act 1984. FSCs are
only permitted to operate with customers outside the
Caricom area, and such sales are termed 'foreign trade
transactions'. FSCs are licensed by the Ministry of
Trade and Commerce; an FSC must:
- be incorporated
under the Companies Act;
- carry on 'foreign
trade transactions' as its principal activity;
- be owned by
of 'foreign trade transactions' was loosened to permit
some trading with Caricom by the Foreign Sales Corporation
(Amendment) Act 1994. Barbados also introduced the 'shared'
FSC under which a number of smaller US companies can
club together to operate through an FSC, thus reducing
of an application fee of BDS200, the license application
itself is accompanied by the Certificate of Incorporation,
certain other documents, and a license fee of BDS1,000
(companies with turnover below BDS10m) or BDS2,000 (companies
with turnover above BDS10m). Similar fees are payable
annually on renewal of the license. There are substantial
local tax advantages for FSCs, as well as the beneficial
US treatment itself (see Offshore
Legal and Tax Regimes).
In 1999, the
WTO ruled against the US FSC legislation, in response
to a complaint from the EU. After a long series of appeals
and counter-appeals, the US finally accepted defeat
in 2002, and the FSC legislation was repealed in 2004,
along with a temporary replacement regime called the
Extra-Territorial Inclusion Act, which had also been
for Barbados-based US exporting subsidiaries is unclear.
Barbados General Partnership
fall under the Partnerships Act Cap 313 as amended,
which is basically similar to the English Partnership
Act 1890. No registration of partnerships is necessary,
and there does not have to be a written partnership
agreement. Partners are liable for the whole debts of
the partnership. Partnerships are fiscally transparent,
and the partnership tax assessment will fall on the
partners individually. Apart from the need to file a
tax return, there are no filing requirements for partnerships.
Limited Partnerships are governed by the Limited Partnerships
Act Cap 312 as amended. The maximum number of partners
is 20 (but only 10 if the business of the partnership
one or more general partners, with unlimited liability,
and a number of limited partners. A Limited Partnership
must be registered with the Registration Office; otherwise
it will be deemed to be a general partnership.
Exempted Limited Partnership
has announced new legislation for Exempted Limited Partnerships.
They will be equivalent to International Business Companies
in many respects, including the restrictions on local
trading and their tax treatment (see Offshore
Legal and Tax Regimes).
Societies with Restricted Liability
with Restricted Liability (SRL) is similar to the Limited
Liability Company in a number of other jurisdictions
- it is designed to allow US taxpayers to claim individual
tax treatment on their participation in an entity which
is treated as a corporation in its own jurisdiction.
SRLs are formed
under the Societies with Restricted Liability Act 1995,
and have the following characteristics:
- a maximum duration
of 50 years (this restriction was removed by a legislative
amendment in 2004);
- limited liability
for the members;
- legal personality
- restrictions on the
transferability of shares (called quotas);
SRLs do not
need to have any physical presence in Barbados, but
must maintain a local registered agent and registered
office; they are classed as exempt or non-exempt.
are subject to the same limitations on ownership and
trading as International Business Companies (see above)
and receive the same tax treatment (see Offshore
Legal and Tax Regimes). A legislative amendment
in 2004 permitted Exempt SRLs to trade within Caricom.
SRLs can trade within Caricom and Barbados, and are
not subject to the ownership limitations that apply
to IBCs. They can take advantage of tax treaties (not
open to IBCs or exempt SRLs.)
Barbados are governed by English common law and by the
Trustees Act Cap 250 as amended, which deals with the
powers of trustees. Appeal is to the Privy Council.
There is no registration requirement or stamp duty;
trustees can be non-resident as long as one is resident.
A resident corporation acting as trustee must be licensed
under the Offshore Banking Act (see Offshore
Legal and Tax Regimes). Exchange controls apply
to local trusts.
Convention has not been implemented; the maximum perpetuity
period is 100 years.
trusts are taxed as separate entities (see Domestic
Trusts Act 1995 introduced purpose trusts and asset
protection trusts, as well as strengthened protection
against forced heirship provisions, non-recognition
of foreign judgements, and protection against creditors.
The rule against perpetuities does not apply, and accumulation
of income is permitted for up to 100 years.
trusts have considerable tax advantages (see Offshore
Legal and Tax Regimes) and are exempt from exchange
control; the following conditions must be fulfilled:
- the settlor must be
non-resident when the trust is created;
- trust property must
not include Barbadian real estate.