In 2022, the Financial Action Task Force introduced enhanced beneficial ownership standards under Recommendation 24, aimed at addressing the misuse of nominee arrangements in money laundering and terrorist financing schemes. In response, the legislature of The Bahamas amended the Companies Act, 1992 (the “Companies Act”) and the International Business Companies Act, 2000 (the “IBC Act”) through the enactment of the International Business Companies (Amendment) Act, 2025 (No. 30 of 2025) (the “IBC Amendment Act”) and the Companies (Amendment) Act, 2025 (No. 29 of 2025) (the “Companies Amendment Act”) (collectively, the “Amending Acts”).
The Amending Acts came into force on 19 January 2026 (the “Appointed Day”). Each Act amends its respective principal statute in substantially identical terms and should be read alongside the relevant provisions of the Register of Beneficial Ownership Act, 2018 (the “RBO Act”).
The amendments address two forms of nominee arrangements: nominee shareholders and nominee directors. With respect to nominee shareholders, the Amending Acts impose several requirements where shares are held on behalf of another person. First, the fact that a shareholder is acting as a nominee must be expressly stated in both the Memorandum of Association and the Register of Members. Second, the nominee shareholder must execute a declaration of trust identifying the beneficiaries on whose behalf the shares are held, and a record of that declaration must be maintained at the company’s registered office. Additionally, nominee shareholders are required to disclose the identity and relevant particulars of the beneficial owner in accordance with sections 8 and 9 of the RBO Act. Under the RBO Act, companies must notify their registered agent within fifteen days of any change in beneficial ownership particulars. Registered agents are, in turn, required to take reasonable steps to verify the identity of beneficial owners and to collect and maintain the prescribed information in their records. Nominee shareholders must also provide all necessary particulars to ensure compliance by both the company and its registered agent with the RBO Act.
Further, sections 11, 14, 15, 16, and 17A of the RBO Act now apply to nominee shareholder arrangements. These provisions establish, among other things, an ongoing obligation to keep beneficial ownership information current (including through periodic reviews for higher-risk entities), protections for registered agents acting in good faith, criminal liability for the provision of false or misleading information, and the imposition of general offences, penalties, and administrative sanctions. For the purposes of the Amending Acts, a “nominee” is defined as a person who holds shares in their own name on behalf of another pursuant to an express or implied agreement, while a “beneficiary” refers to a natural person who ultimately owns or controls the company, whether directly or indirectly.
In contrast to the regulated treatment of nominee shareholders, the Amending Acts impose a complete prohibition on nominee directors. Pursuant to section 80A of the Companies Act and section 41A of the IBC Act (as inserted by the respective Amending Acts), a person may not be appointed or serve as a director if they act under any agreement, arrangement, or understanding—whether express or implied—to follow the instructions, directions, or wishes of another person in exercising their duties or powers. A “nominee director” is defined broadly to include any individual appointed on behalf of another and subject to their control or influence, whether direct or indirect, formal or informal, except where such influence arises solely from proper corporate governance or fiduciary obligations.
Any individual who acts as a nominee director in contravention of these provisions, as well as any person who facilitates or permits such an appointment, commits an offence. Upon summary conviction, such persons are liable to a fine not exceeding $50,000, imprisonment for up to twelve months, or both. Companies are also subject to a positive obligation to take reasonable steps to ensure that no nominee directors are appointed or continue to serve.
The Amending Acts include transitional provisions for existing nominee directors. Any individual acting as a nominee director on the Appointed Day must cease to do so within six months and must, within seven days of ceasing, submit a declaration to both the company and the Registrar of Companies confirming that they are no longer acting under the direction or control of another person. Failure to comply will result in the Registrar issuing a notice of disqualification, and the individual will be deemed disqualified from serving as a director of any company incorporated under the relevant statute. Additionally, any company that retains a nominee director in breach of these transitional provisions is subject to a civil penalty of up to $3,000 per day for each day the breach continues.
Legal Implications
The enhanced requirements for nominee shareholders impose clear obligations on both nominee shareholders and companies to ensure that beneficial ownership information is accurately identified, recorded, and maintained at the offices of registered agents. These measures significantly strengthen transparency and regulatory oversight.
With respect to the prohibition on nominee directors, it is important to recognize that this reform does not introduce a fundamentally new legal principle. Under common law, directors have long been subject to fiduciary duties to act in the best interests of the company as a whole, regardless of how they were appointed. What the Amending Acts achieve is the statutory codification of this principle by expressly prohibiting arrangements that undermine a director’s independence. Directors must exercise their own judgment rather than act in accordance with the instructions of another person. Furthermore, companies are now under a positive statutory duty to ensure compliance with this prohibition within six months of the Appointed Day, failing which they will be exposed to the legal consequences outlined above.
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