Incorporation

Under the Companies Act, a company means “a body corporate that is incorporated or continued under the Companies Act”. It is a separate legal entity from its shareholders or, in the case of a non-profit company, from its members. Upon its incorporation, a company has the capacity, as well as the rights, powers and privileges of an individual.

One of the important considerations behind a decision to incorporate a company as distinct from conducting business as a sole trader, or in partnership with others, is the fact that upon incorporation, the liability of the owners or shareholders of the company is limited to the amount invested in the company or any amount unpaid on their shares.

Similarly, in the case of a non-profit company having no share capital, the members of the non-profit company incur no personal liability or individual responsibility for the debts or other liabilities of the company.

Section 59 of the Companies Act, Cap.308 provides that a private company must have at least one (1) director, while a public company must have no fewer than three (3) directors, at least two (2) of whom are not officers or employees of the company or any of its affiliates.

A company may be incorporated by one or more competent persons (known as “incorporators”). Competent individuals, as well as bodies corporate may apply to incorporate a company by signing and filing articles of incorporation with the Registrar of Companies. The Companies Act, Cap. 308, expressly prohibits the following individuals from forming or joining in the formation of a company under the Act, namely any individual who is:

• • under 18 years of age;
  • a bankrupt;
  • is of unsound mind and has been so found by a tribunal in Barbados or elsewhere.

An incorporator (whether an individual or a corporation) may form a corporation which has shareholders, officers and directors that are completely different persons from the incorporator.

“One-man” companies are permissible under Barbados law in as much as a single incorporator may form a company and also be the sole director, officer holder and shareholder of that company.

Incorporators are responsible for organizational matters such as filing of the articles of incorporation and designating the first directors of the company who will assume responsibility for the company upon its incorporation. Section 4(1) of the Companies Amendment Act 2021 states that one or more persons may incorporate a company by signing and sending articles of incorporation to the Registrar together with a statutory declaration by each signatory to the articles that he is not an individual described in subsection (2).” The statutory declaration referred to in subsection (1) is, for the purposes of this Act, conclusive of the facts therein declared.

• To create a legal entity separate and distinct from its shareholders or members;
• To limit the personal liability of the shareholders or members as this will make investment attractive;
• To create a legal entity with the capacity, rights, powers and privileges of an individual;
• To create a legal entity with a perpetual existence and which can, in theory, outlive its shareholders and members;
• To qualify for incentives as an “approved small business” under the Small Business Development Act,1999.

Broadly, there is no legal restriction or limit on the type of business activity which may be conducted through the medium of a company incorporated under the Companies Act. The Companies Act gives companies the same capacity, rights, powers and privileges as an individual has.

Accordingly, in the absence of any express restriction on its activities which might be set out in its articles of incorporation, a company may carry on any business which an individual may carry on.

There are, however, some commercial activities such as banking, insurance business, and the businesses of trust and financial companies and merchant banks, which may more conveniently be carried on through a company incorporated under the Companies Act than by private individuals.

In this regard, the Financial Institutions Act, 1996 (which regulates the operations of financial institutions in and from Barbados) expressly provides that no license may be issued to any person other than a body corporate.

Provided that the required documentation filed with the Registrar is in order, incorporation of a company may be achieved within five (5) business days or less.

It should be noted that all urgent requests for incorporation are expedited provided that the prescribed fee is paid and the appropriate documentation is in order.

The following documents are required to be filed with the Registrar of Companies on application for incorporation of a company:

• Approved Name Search and Name Reservation Form (Form 33)
• Notice of Address or Change of Address of Registered Office (Form 4)
• Notice of Directors or Notice of Change of Directors (Form 9)
• Articles of Incorporation (Form 1)
• Declaration by each signatory to the Articles of Incorporation

These documents are seamlessly incorporated in our digital system with the exception of the Declaration which is uploaded by the applicant.

Through the Corporate (Miscellaneous Provisions) Act 2021, the requirement under section 4(4) of the Companies Act of having an Attorney-at-law complete a Declaration on behalf of an incorporator has been removed. The amendment now requires each signatory to the articles to declare that he/she is not an individual described in subsection (2).” The statutory declaration referred to in subsection (1) is, for the purposes of this Act, conclusive of the facts therein declared.

However, an Attorney-at-Law may provide valuable advice and it is strongly suggested that one be consulted to advise on the legal implications of company formation.

Apart from the initial filing fee of BDS $30.00, which is required for the approval of the company name, a fee of BDS $750.00 is payable to the Registrar for the filing of articles of incorporation.

Of course, if you obtain legal advice when completing your articles of incorporation professional fees are payable to the Attorney-at-Law in addition to the filing fees. The legal fees are regulated under the Legal Profession (Attorneys’-at-Law) (Remuneration for Non-contentious Business) Rules, 1983.

Yes. A company must have a “common seal” with its name engraven thereon in legible characters.

Except when required by certain enactments to use its “common seal”, the company may, for the purpose of sealing any document, use its “common seal” or any other form of seal. (Section 25(1))

A company may, if authorized by its by-laws, keep an “official seal” for use in a country other than Barbados. The “official seal must be a facsimile of its “common seal” and bear in addition on its face the name of every country other than Barbados where it is to be used. (Section 25(2))

It should be noted however that every document to which an “official seal” of the company is duly affixed binds that company as if it had been sealed with the “common seal” of the company. (Section 25(3))

Articles of Incorporation must follow the prescribed form and set out, in respect of the proposed company, inter alia:-

1. The proposed name of the company;
2. The classes and any maximum number if shares that the company is authorized to issue, and
   • where there will be two or more classes of shares, the rights, privileges, restrictions and conditions attaching to each class of shares, and
   • where a class of shares can be issued in series, the authority given to the directors to fix the number of shares in, or to determine the designation of, and the rights, privileges, restrictions and conditions attaching to, the shares of each series;
3. Where the right to transfer shares of the company is to be restricted, a statement that the right to transfer shares is restricted and the nature of those restrictions;
4. The number of directors, or the minimum or maximum number of directors of the company;
5. Any restrictions on the business that the company may carry on.