Paul Winder examines the recent legislation to provide Bahamas Executive Entities.
A robust regulatory framework, progressive Legislative, tenure, prestigious international financial institutions and independent, political and economic stability coupled with a knowledgeable and experienced workforce are all prerequisites for a premier International Finance Centre. The Bahamas has all of the above and is truly a globally competitive international business centre for private wealth management.
Recent legislative amendments have added to The Bahamas Advantage:
Rule Against Perpetuities Abolished
Arbitration of Trusts 2011
And finally, the pioneering Executive Entity “EE”
An EE is a legal entity established by Charter with limited liability and specific powers to carry out executive functions in its own right.
The main features of the EE are:
The EE can undertake the following Executive/Advisory & Holding functions
Recently a LATAM based Patriarch advised that he wanted to undertake dynastic planning for his family with respect to said family’s retail business which is in its third generation. He has two sons who work within the business and a daughter that does not as she is engaged to be married and plans to move to Europe.
The Patriarch has undertaken substantive research with respect family protocol and corporate governance and wanted to include this within the eventual structure whilst ensuring that both the business and his children are protected and provided for especially as he is considering an IPO. Whilst approaching various international service providers, he does not have an established relationship and is wary of passing ultimate control to a third party as well as management of his soon to be newly acquired wealth through the IPO.
In view of the requirements of the Patriarch the following structure is a possible solution to meet the required objectives.
Steps to consider
Now that the dynastic family structure is in place the Patriarch can turn his attention to the issue of the management of the newly acquired wealth post IPO. The benefit of the PTC is that the patriarch will be involved at every stage of the appointment and asset allocation directly as a Director of said PTC as opposed to through a third party professional trustee.
The above is a possible solution to clients' concerns regarding who should occupy key ownership, management, supervisory and investment advisory positions within their wealth preservation structures. It protects the confidentiality of the wealth preservation structure whilst at the same time giving the Patriarch greater certainty. It also facilitates the application of best practice family and corporate governance principles to protect against internal and external conflict whilst providing for control and protection of the decision making at the top level of the structure within a confidential, straightforward and best practice framework.
Paul Winder, Managing Director, ATC, The Bahamas