We hereby inform you that the Office of the Prime Minister of The Bahamas has announced the adoption of a package of financial services legislation, which came into force on December 29, 2000. These new laws include:

The International Business Companies Act, 2000
The Financial and Corporate Service Providers Act, 2000
The Central Bank Act, 2000
The Financial Transactions Reporting Act, 2000
The Financial Intelligence Unit Act, 2000
The Criminal Justice (International Co-operation) Act, 2000
The Proceeds of Crime Act, 2000
The Dangerous Drugs Act, 2000

The alleged purpose of this legislation is to bring the laws, regulations and supervision of The Bahamas' financial services sector into full compliance with the new and evolving standards established by the Basle Committee on Banking and strengthen its processes with regard to international cooperation.

We have listed below some of the highlights of the changes to the IBC Act. Also listed are some the highlights that our trust company will be required to comply with under the new Financial and Corporate Services Providers Act, 2000.

The International Business Companies Act, 2000

1. IBCs already in existence on or prior to December 29, 2000 have 180 days (within 6 months - until June 30, 2001) to satisfy the new requirements of the IBC Act, 2000. Companies will be struck off the Register for non-compliance.

2. IBCs may no longer issue Bearer Shares and all Bearer Share issued prior to December 29, 2000 must be recalled, cancelled and substituted with registered shares by June 30, 2001. Those not recalled and cancelled by that time will be null and void for all purposes of law. We can provide you with nominee shareholders if necessary.

3. Amendments to the M&As (resolution of members or directors) must be submitted to the Registrar within 14 days after the amendment.

4. Changes in the address of the registered office of a company must be notified to the Registrar within 7 days after the change is made.

5. The Articles of Association must state whether or not certificates in respect of its shares shall be issued.

6. Name and address of persons holding shares (none of which may be bearer) must be noted on the Shareholders' Register.

7. The Board of Directors of a company must consist of two or more persons who may be individuals or companies.

8. Any unanimous shareholder agreement, executed or terminated, must be filed with the Registrar within 15 days after execution or termination, and no such agreement shall be legally effective until notice of its execution shall have been filed with the Registrar.

9. Names and addresses of persons who are directors and officers must be noted on the Directors' and Officers' Registers. We can provide you with nominees if necessary.

10. The Register of Directors and Officers, commencing from the date of the registration of the company, shall be filed with the Registrar and shall be open to inspection by members of the public during official hours.

11. M&As fix a quorum, but if not so fixed, a quorum is one half the total number of directors, but in no case can less than two directors, present in person or by alternate, form a quorum.

12. The name of an alternate director, if any, shall be disclosed and notified to the Registrar.

13. A general meeting of all IBCs shall be held at least once in every year.

14. A quorum for a meeting of the members is fixed by the M&As, but if not so fixed, a meeting of members is properly constituted if at the commencement of the meeting there are present in person or by proxy shareholders representing more than one half of the shares of each class or series of the company.

15. The notice of the commencement and the completion of a dissolution must be advertised in a publication of general circulation both in The Bahamas and in the country or place where the company has its principal office.


16. The dollar value of the registration and Annual fees payable under the repealed Act shall remain in force until December 31, 2001, at which time the fee will increase from US$250.00 to US$350.00.

17. The due date of the payment of annual government fees as of 2002 will be January 1, with a 30-day grace period allowed by the Registrar for payment. After that, a 10% penalty will accrue until October 31 when a 50% penalty will accrue, with strike off on December 31. Annual Government Fees for 2001 are due and payable on or before April 30, 2001.

Please note that the change in fees payment dates from April 30 of each year to January 31 of each year will take effect starting with calendar year 2002. Accordingly, action should be taken to inform your clients that their corporate fees will be due by January 31 beginning next year.

Financial and Corporate Service Providers Act, 2000

1. An Inspector of Financial and Corporate Services will be appointed to monitor the proper administration of the Act.

2. The Inspector will conduct annual onsite and offsite examinations of the business of the licensees under this Act and require that any books, records, information, explanation or documents be produced.

3. Licensees shall verify the identity of their clients who request the provision of financial or corporate services.

4. Licensees shall keep a record of the name and address of the beneficial owners of all IBCs and the details of the client's principal place of business, business address, telephone, facsimile, telex numbers and electronic address of the principals or professionals concerned with the client and two sources of reference to provide adequate indication of the reputation and standing of the client.

We believe that several of the new measures introduced by the IBC Act and to the Financial and Corporate Services Providers Act, 2000 may present potential problems to our clients, particularly the following:

1) IBCs may no longer issue Bearer Shares. This can be solved by issuing the shares in favour of a nominee who would then issue a declaration of trust in favour of the beneficial owner, so we believe that this provision does not present a serious problem.

2) We must keep a record in our Bahamas office of the name and address of the beneficial owner of all IBCs, and two sources of reference to provide adequate indication of the reputation and standing of the client. Although this information would be kept in our offices and not be open to the public, this represents a change from previous legislation which did no require us to have this information in our offices. We would only have to provide this information to the authorities in case of a criminal investigation involving the Company, so this should not be a matter of major concern.

It is important to note that you will not need to provide us with the name of the beneficial owner of a company if you are a financial institution (as defined in Section 3 of the attached Financial Transactions Reporting Act, 2000) located in one of the countries listed in the First Schedule of the Act, as long as we receive written confirmation from you that you have verified the identity of the beneficial owner of the company.

3) The Register of Directors and Officers, commencing from the date of the registration of the company, shall be filed with the Registrar and shall be open to inspection by members of the public during official hours. Nominees should be used for future incorporations in those cases where the client does not wish his name to appear on the Public Register.

4) A general meeting of all IBCs must be held at least once a year. We will be glad to prepare draft minutes and send them to the clients for signature when necessary.

The Annual Licence Fee has been increased from US$250.00 to US$350.00.