Establishing and Maintaining Bank Accounts
The Central Bank of Barbados is charged with safeguarding the safety and soundness of the financial system. The Bank Supervision Department is responsible for regulating and supervising commercial banks, merchant banks, trust and finance companies and international banks licensed in Barbados. The financial system also includes a Stock Exchange.
Barbados has been a member of the International Monetary Fund since 1973. The Barbados dollar is backed by gold and foreign assets, which have promoted stability and confidence in the currency. Since 1975 the country’s dollar has been fixed at BB$2.00 to US$1.00.
The banking system in Barbados is well established, and the island has a competitive commercial banking sector. The commercial banks currently licensed to operating in Barbados are: FirstCaribbean International Bank (Barbados) Limited (majority owned by Canadian Imperial Bank of Commerce), RBC Royal Bank of Canada, Bank of Nova Scotia, Barbados National Bank (majority owned by Republic Bank of Trinidad), Butterfield Bank (Barbados) Limited and RBTT Bank (Barbados) Limited. These commercial banks provide a wide range of modern financial services to domestic and international clients. The international business sector client can maintain foreign currency accounts with these commercial banks.
Barbados’ exchange control regime (discussed above) functions primarily to monitor foreign exchange transactions. However, companies operating under the special facilities, for example IBCs, benefit by having no restrictions on their international currency transactions.
There are also several finance companies in Barbados. Apart from collecting deposits, these companies complement the commercial banks in financing the purchase of construction equipment, motor vehicles and other consumer durable goods.
As with banks located elsewhere, the requirements to establish relations with any commercial bank in Barbados meet the international standard. Internationally accepted, verifiable client acceptance and due diligence information must be submitted prior to any account being established.
Barbados currently has one stock exchange, the Barbados Stock Exchange (“the BSE”). The BSE is an association of Member-Brokers, operating a Central Marketplace for trading securities. The original trading facility, the Securities Exchange of Barbados (SEB), was established in 1987, under the Securities Exchange Act, Cap 318A, of 1982. The BSE was re-incorporated on August 2, 2001 simultaneously with the enactment of the Securities Act 2001 -13, which repealed and replaced the original Act of 1982. However, the BSE remains a privately owned (by its Members), non-profit organization. The affairs of the BSE are administered by a Board of Directors, through a General Manager. The BSE has set standards and rules of conduct to which members must adhere. The BSE is responsible for creating a market to promote trading of financial securities and to encourage investment by the public in business enterprises.
On July 4, 2001 the BSE switched from the manual, open auction outcry method of trading, to electronic trading using the Order routing method. Only registered members and or licensed brokers are allowed to trade securities on the Exchange.
In most cases, a company wishing to be listed on the Exchange must satisfy the following basic criteria:
- The company must be incorporated in Barbados or registered as an external company with the Registrar of Companies.
- The company must be a profit making venture with minimum assets of US$500,000.
- The company must demonstrate adequate working capital and provide evidence of competent management.
- The company must have a positive dividend profile over the three preceding years; and
- The company must agree to the basic ongoing disclosure requirements.
Upon meeting the above criteria, the company must issue a prospectus (which must comply with the Companies Act and the Securities Exchange Act) to the Securities Exchange of Barbados for review and approval. Companies which do not qualify for full listing may also be listed on the Exchange. This may be achieved via the Unlisted Securities Market which was introduced in 1992. The requirements for such companies, though less onerous, are similar to the requirements for a full listing.
Maintenance of Accounting Records
The Companies Act Cap. 308 of the Laws of Barbados requires that certain records, including adequate accounting records, must be prepared and maintained by the company. Further, these records shall be kept at the registered office of the company or at some other place in Barbados designated by the directors; and those records must at all reasonable times be available for inspection by the directors. When any accounting records of a company are kept at a place outside Barbados, accounting records that are adequate to enable the directors to ascertain the financial position of the company with reasonable accuracy on a quarterly basis must be kept by the company at the registered office of the company or at some other place in Barbados designated by the directors.
Companies are required to present comparative financial statements, duly signed by one or more directors, to their shareholders. Public companies have broader reporting responsibilities under the Companies Act. Public companies (as well as those companies whose gross revenues exceed US$1m or whose assets exceed US$1m) must, in addition to presenting comparative financial statements to their shareholders, file a copy of such statements with the Registrar of Companies. All companies licensed under international incentive legislation are exempt from this filing requirement.
Every company must keep at its registered office, a copy of the financial statements of each of its subsidiaries, the accounts of which are consolidated in the financial statements of the company.
Preparation of Financial Statements
The requirements for financial reporting are set out in The Companies Act. The Companies Act requires that directors of a company place before the shareholders at every annual meeting of the shareholders a set of financial statements; one should be minded that the directors of a company must call an annual meeting of shareholders not later than 18 months after the company comes into existence, and subsequently not later than 15 months after holding the last preceding annual meeting. As required by The Institute of Chartered Accountants of Barbados, the presentation of financial statements must conform to International Financial Reporting Standards. These standards are comprehensive and, when combined with accounting methods that are well established in practice, provide a well-defined framework for the preparation of financial statements.
Financial statements are comparative, showing current and prior year results, and include a balance sheet, a statement of income and retained earnings and a statement of cash flows.
Under the provisions of the Companies Act, all public companies in Barbados are required to appoint auditors to audit the financial statements presented to the shareholders.
In the case of other companies, the shareholders may resolve not to appoint an auditor provided that the gross revenues or the assets of the company as shown in the most recent financial statements do not exceed USD$1m. Such a resolution is not valid unless it is consented to by all the shareholders, including shareholders not otherwise entitled to vote, and is, in any event, valid only until the next annual meeting of the shareholders.
The report of the auditor, if any, must be placed before the shareholders at every annual meeting. An individual, or firm licensed to practice in Barbados, qualifies for appointment as auditor if he or she is a member of the Institute of Chartered Accountants of Barbados and holds a practising certificate of the Institute.