CESRA 2023: Registered Agents Must Report, But Entity Directors Must Verify

Registered Agents in The Bahamas are now subject to reporting requirements on behalf of the corporate entities they manage. The expert corporate lawyers at ParrisWhittaker advise businesses and Registered Agents in The Bahamas and are happy to explain the impact of the new rules.

The Commercial Entities (Substance Requirements) Act 2023 came into effect on September as part of The Bahamas’ international reporting obligations. It repeals the 2018 Act (but continues to provide that a commercial entity conducting relevant activities must meet the economic substance test) and amends corporate entities’ reporting requirements.

CESRA, as it is referred to, requires specific entities engaged in ‘relevant activities’ to file annual economic substance declarations to the Ministry of Finance (as competent authority) within specified time limits to remain compliant. Failure to file as required could lead to warning notices being issued, and potential penalties where there is a continue breach.

For the purposes of CESRA:

• A corporate entity is an entity that is incorporated, registered or continued under CESRA. It does not include investment funds, resident-owned entities in The Bahamas or those that are tax resident outside of The Bahamas

• A ‘relevant activity’ includes (but is not limited to) banking and insurance, financing and leasing, fund management, distribution and service centre business, shipping and holding businesses.

The CESRA provisions are particularly of practical relevance to Registered Agents and businesses who appoint Registered Agents, such as ParrisWhittaker.  A helpful 42-page guidance document has also been published by the Ministry of Finance which will be periodically updated as required.

What does the new legislation do?

CESRA now requires:

• Registered Agents to report on behalf of commercial entities they manage.  CESRA requires them to submit their report within 9 months of an entity’s fiscal year-end.

However, Registered Agents do not have any obligation to verify the information provided by a corporate entity – it is for the directors of such entity to be responsible for assessing and classifying whether or not it is not in scope of the Act and to report relevant information to its Registered Agent.

• Commercial organisations who do not use Registered Agents must directly report to the Compliance Commission. The commission will then act in the role of reporting agent to the Ministry of Finance.

The implementation of the new legislation was followed closed by the launch of new economic reporting substance portal (replacing an earlier portal). Access is via the BOSS Registered Agent portal.

It’s important to note that CESRA has retrospective effect in respect of the previous year, which means 2022 filings must be refiled through the portal.

What should we do?

It’s important to understand if you are impacted by the new CESRA and to what extent, so that you can ensure you remain compliant with any reporting requirements. For urgent advice, contact the experienced corporate and commercial lawyers at award-winning ParrisWhittaker.

Call Jacy Whittaker on +1.242.352.6112 or you can email him at info@parriswhittaker.com