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.

Companies 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 BDS$750 is payable to the Government on incoporation and an annual fee of BDS$200 thereafter.

Barbadian 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 BDS$1m, and they do not have to be filed.

There 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.

External 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 BDS$3,000. 

After registration, an annual return must be submitted to the Registrar. Registration validates prior acts of the company under Barbadian law.

The International Business Company is the most widely used vehicle for offshore operations in Barbados.

IBC status 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 resident);

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 region.

Offshore banks , exempt insurance companies (likewise) and foreign sales corporations  are not eligible for IBC status.

IBC Licenses are issued by the Minister of Finance and are valid for one year, renewable annually for a fee of BDS$200. 

The Minister will issue an assurance to an applicant that the benefits of the Act will be available for 15 years.-

An IBC pays tax at a low rate and is entitled to various other benefits.-

Partnerships 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.

Barbados 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 is banking).

There are 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.

The Society 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;

limited liability for the members;

legal personality in Barbados;

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.

Exempt SRLs are subject to the same limitations on ownership and trading as International Business Companies (see above) and receive the same tax treatment.

Non-exempt 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 SRL´s.)

Trusts in 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. Exchange controls apply to local trusts.

The Hague Convention has not been implemented; the maximum perpetuity period is 100 years.

Local (domestic) trusts are taxed as separate entities.-

The International 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.

International trusts have considerable tax advantages 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.

Original Barbados legislation for the financial services sector dates from the Sixties, and the Government has pursued the creation of an international offshore financial centre with increasing vigour in the last 20 years. In 1989 the Government formed an Advisory Committee on International Business bringing the public and private sectors together, and the Committee has been effective in maintaining up-to-date legislation in a number of sectors including banking, insurance, shipping and trusts. 

At the end of 1997 in Barbados there were about 2,500 International Business Companies and 2,000 Foreign Sales Corporations. In 1997 the Government undertook a review of existing legislation in all offshore sectors, and this has led to a programme of legislative reform in a number of sectors.

In July 2000, Barbados pledged to make changes to its financial supervisory regime in order to remove its name from an OECD blacklist.

Offshore entities are usually formed as LLC (Limited Liability Companies or External Companies and then take appropriate form depending on their purpose

Exempted Limited Partnership

International Trust

Shipping management Company

Society with Restricted Liability

International Business Companies pay corporation tax as follows:

The Minister may agree a different rate at his discretion, but it may not be less than 1%. Foreign tax credits are deductible, but only in so far as the tax paid stays above 1%.

An external IBC (incorporated outside Barbados) pays tax only on its local revenues. IBC´s are exempt from stamp duty on transfers to other IBCs or non-resident persons; they are exempt from exchange control regulations; they are exempt from customs duties on goods and materials imported for their international business, and they are exempt from withholding taxes on payments of all types made to other IBCs or to non-resident persons.

The Minister may grant exemption from income tax on a proportion (usually one third) of the earnings of those IBC employees or sub-contractors who are essential to its business but are difficult to attract or retain.

They are exempt from withholding tax on payments to nonresidents or other offshore entities, from customs duties on goods and materials imported for their offshore business, from estate duties on any of their shares, securities or assets owned by a non-resident, and from property transfer tax on the transfer of shares, securities or other assets. Their offshore transactions are exempt from exchange control, and they are exempt from ad valorem stamp duty.

A stamp duty of BDS$10 is payable on documents, agreements, assignments, bills of exchange, bonds, covenants, debentures and deeds.

The Minister may grant exemption from income tax on a proportion (usually one third) of the earnings of those offshore bank employees or subcontractors who are essential to its business but are difficult to attract or retain.

Nonresident partners will be exempt from income tax, capital gains tax, withholding tax and all other direct taxes on partnership income attributable to them. 

An Exempted Limited Partnership may import duty- and tax-free all types of goods and materials that are exclusively for the use of the partnership.

There is exchange control under the Exchange Control Act 1967, applying to inward investment, local borrowing by foreigners, and remittance of funds abroad. Transactions involving foreign investment are normally approved readily. 

Most types of offshore or nonresident entity and transaction are exempt from exchange controls, as described individually above. 

Non-national residents of Barbados are allowed to maintain external accounts with authorised dealers, and may credit their (after tax) salaries to these accounts; 25% of these net amounts may be transferred overseas without specific approval.

The prohibitions on local activity applying to the different types of offshore entity are described in this brief summary:

International Business Companies may manufacture for export and may trade in external goods and services; they can deal in Barbados freely with other IBCs; they may not deal with resident domestic banks;

Offshore banks can raise money externally but not domestically;

Exempt Insurance Companies cannot write domestic business;

Foreign Sales Corporations may not trade with resident persons;

Exempted Limited Partnerships and Societies with Restricted Liability can deal freely with other offshore entities, but may not do business with resident persons.

The employees of offshore entities in Barbados require 'Temporary Work and Residence (TRE) Permits', which are issued by the Central Bank. 

For this purpose, employees are categorized either as Executives or Non-Executives.

In effect, Executives are defined as senior management, and three only of them are permitted unless the Central Bank can be persuaded otherwise. 

The minimum age for an Executive is 24, and the minimum salary is CY£12,000 pa.

Non-Executives are those foreigners employed in managerial, professional, administrative, technical and clerical positions. 

The employer must make an effort to recruit suitable local personnel. Permits are issued by the Ministry of Labour.

In both cases, a fair amount of documentation is required by the authorities. 

Permits are normally issued for 2 years, renewable for a further three years.