The Bahamas is becoming more competitive in the area of private trusts in light of recent amendments made to legislation focused on improving that sector.
Heather Thompson, a partner at the Higgs & Johnson law firm, said the changes which took effect in December 2012 make The Bahamas much more competitive in attracting private trust business.
In 2007, the Banks and Trust Companies (Private Trust Companies) Regulations introduced a light touch regulatory regime for private trust companies in The Bahamas. Effective December 17, 2012, the regulations to the act were amended by the Banks and Trust Companies (Private Trust Companies) (Amendment) Regulations.
"I think it makes us more competitive than we would have been. We came out with a very good piece of legislation when the amendments to the Banks and Trust Companies Regulation Act and the regulations themselves were passed," she told Guardian Business.
Under these changes, companies limited by guarantee can be formed and not just companies limited by shares.
"Other jurisdictions would permit companies limited by guarantee so in some instances you may have missed opportunities that you could have otherwise encountered. And the other amendments are basically tidying up to make sure that the regulator has the controls in place that are desirable from their point of view," Thompson noted.
"The changes are mainly enhancements. The most significant one from a private practitioner's point of view is you can now form companies limited by guarantee rather than companies limited by shares, so that you can have a private trust company which doesn't have an ownership structure on top of it."
Thompson believes these changes couldn't come at a better time. The amendments allow for private trust companies limited by shares or by guarantee, with a minimum share capital or guarantee of $5,000. Previously, only companies limited by shares could qualify as private trust companies.
This change eliminates the need for a holding structure for the shares of a private trust company such as a purpose trust or a foundation, potentially simplifying trust structures and reducing costs.
Before the changes, the responsibility for notifying the inspector of a change in registered representative fell with the private trust company under the act. A private trust company would be exempt from the requirement to obtain a business license provided that the criteria to qualify as a private trust company are met.
"I think it comes at an important time because a lot of clients now are looking at private trust companies and this gives them one other option to consider, having the company limited by guarantee rather than strictly just by shares. So I think it comes at a good time because we are seeing an increase in inquiries regarding private trust companies," Thompson added.

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