Doing Business in The Bahamas with Elco Bank


Elco Bank and Trust Company Limited specialises in the provision of a comprehensive range of financial and corporate services from its office in The Bahamas.

The Company brings together a multi-disciplined team of qualified professionals specialising in Banking, Trust, Accounting, Brokerage and Property matters, thus enabling the Company to offer an unparalleled level of experience and expertise of the broadest spectrum to meet client requirements. The size and structure of our Organisation permits our executives to deal with all client matters on an individual and personal basis.


We are able to offer through our Associate Companies and professionals:

International Taxation Planning

The incorporation and administration of no tax and low tax jurisdiction companies and United Kingdom Companies including the provision of directors, and nominee shareholders.

The execution of Trusts in the Turks and Caicos Islands, the Bahamas, Belize, and Cyprus.

The establishment and administration of Insurance Companies.

The provision of accounting and auditing services.

Immigration, residency and work permit applications.

Registration of both merchant vessels and pleasure yachts.

Commercial and residential property identification, negotiation and acquisition.

We have attempted in this short brochure to explain in simple terms the criteria relating to the effective use of companies incorporating low tax and no tax jurisdictions and most other types of tax planning vehicles.


Our commitment to our clients is:

that we will employ the highest levels of professionalism available in all matters.

that we will handle all clients affairs with the utmost confidentiality and discretion.

that we will retain our fees at competitive levels at all times and quantify in advance the total financial commitment of the client.

that we will undertake to execute the clients' instructions in the most efficient, practical, and cost efficient manner at all times.


- The legal framework

Any company which is incorporated must meet certain legal requirements and criteria in respect of its structure. Detailed herewith are those requirements, explained in simple terms.


All companies are required to nominate a suitable name that is acceptable to the Registrar of Companies in the jurisdiction in which they wish to incorporate . Reasons for refusal by the Registrar to accept the proposed name are that a company exists already on the Register with an identical or similar name, or contains unacceptable words inferring connection to a Government, Statutory Body, English or Foreign Royal Family, or suggestion that the company is a Bank or Insurance company without meeting the necessary licensing requirements. Permitted names differ between jurisdictions, for example the words "International" and "Trust" are accepted in some jurisdictions, whilst not in others. The availability of any particular name can normally be confirmed within 24 hours by the Registrar of Companies prior to the application for incorporation being submitted.


All properly constituted companies are required to maintain a registered office in their country of incorporation, where they are able to accept the service of official notices, although the registered office is not necessarily the location where the business is actually carried out.

In certain jurisdictions, especially those in the Caribbean area such as the Bahamas, Belize and the British Virgin Islands there is a statutory requirement to appoint a "local resident agent" or "local registered agent" who customarily will be located at the registered office, and will be the person responsible for accepting such process or service of official notices. It should also be pointed out that certain jurisdictions also call for the appointment of either or both a resident company secretary, and a local director, who may similarly be located at the registered office of the company.


The Memorandum of Association will specify what acts the company is legally able to carry out. In certain jurisdictions such as The Bahamas, The British Virgin Islands, and Panama, no "Ultra Vires" rule applies in the case of International Business Company (IBC) type corporate entities, which consequently means they can undertake any lawful business (excluding acting as Banks or Insurance Companies). This effectively is the meaning of a company being "Generally Empowered".


The Articles of Association represent the contract between the Company itself and its shareholders, and stipulates the specific rules for the management of the company's affairs and for the conduct of its business. Additionally the Articles of Association gives details of the subscribers who formed the company, including the shares taken up by them and the total authorised share capital and share classes of the company.


The amount of authorised capital is without limit, although in most jurisdictions duty is payable to the Government at the time of incorporation based on the quantum of authorised capital. It is thus normal to state the maximum authorised capital for the minimum amount of duty payable. It is possible subsequently to increase the authorised share capital by board resolution, and the payment of extra duty to the Government.


This will normally reflect the total liability of the members of the company, the requirement being that only the minimum required number of shares are paid up (subscribed) and issued.


The Shareholders are the legal owners of the company. The minimum number of shareholders is stated in the company legislation for the particular jurisdiction. Shares of different classes, type and values can be issued, subject to authority being given within the Articles of Association . In some jurisdictions it is also possible to issue shares in Bearer form and also in Registered form. In most jurisdictions the details of shareholders are filed on public records.

The method by which the anonymity of the actual owners can be protected is to appoint nominee (or trustee) shareholders, who will hold the shares "under Declaration of Trust" on behalf of the actual beneficial owners. This involves the issue of a legal "trust deed or declaration"


The Directors (who need not be shareholders) of the company will be appointed to administer the Company, duly acting on the instructions of the beneficial owners on a day to day basis. Similarly to Shareholders the responsibilities of the directors are set out in the Articles of Association of the Company. Sometimes directors, who will customarily be tax resident in a low tax or tax free jurisdiction so as not to render the company tax resident in the country from where it is administered.


The concept of "Trust" is unique to "common law" countries and has existed in English law since medieval times. Developed from English Laws of Equity it was widely used in the United Kingdom as both an effective and legal tax planning medium.

As the concept has evolved it has been introduced by legislation into the laws of a number of civil jurisdictions. A trust is generally created by a written document by which the "Settlor" (person who controls the subject assets), transfers the legal ownership of those assets to an independent third party known as the "trustee", who subsequently holds those disposed assets in favour of either known or unknown beneficiaries under the terms of the trust deed.

Customarily a "Protector" could be nominated by the Settlor who will protect the interests of the beneficiaries of the trust.

It must be noted that for a trust to be effective the title to the asset(s) must pass to the trustee(s). If this is not done it could be claimed that the trust was not legally settled and therefore was not properly constituted trust instrument.

Such transfer infers a heavy burden of responsibility on the trustees, who in practice are more commonly the Trustee Departments of Banks or other financial Institutions or Government licensed "Trust Corporations" or "Trustees" of a corporate nature, which would be bonded accordingly by the respective overseas Government.

Modern trust legislation is being constantly improved upon and such jurisdictions as The Bahamas, Nevis, The Cook Islands, and Belize are regarded as leaders in workable up to date legislation.

Trusts may be used to protect assets from taxation, currency control, potential creditors, or litigious ex spouses. They can provide a means to pass on the settled assets without exposure to inheritance tax or transfer tax.

Many countries are now implementing anti-avoidance legislation to lessen such advantages. It is therefore extremely important that the trust deed is drafted with due consideration being given to anti-avoidance legislation which may exist in the jurisdiction of residence of either the Settlor or of the beneficiaries.

Elco Bank and Trust Company Limited are fortunate in having two Attorneys on their staff who specialise in all Trust...

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