Minority shareholders in international business companies (IBCs) incorporated in The Bahamas have certain rights in disputes with majority shareholders or officers and directors. Resolving disputes can be tricky, so understanding Bahamian laws that protect minority shareholders is crucial.

Under the International Business Companies Act, 2000, all shares in an IBC have equal voting rights, unless the IBC's memorandum and articles of association state otherwise. In the event of a dispute, shareholders holding a total of 50% of the IBC's shares may require a general meeting to be called. Shareholders must be given 7 days' notice of the meeting.

At a general meeting, all shareholders have the right to attend, participate, and be heard. Shareholders may issue proxies to participate in meetings on their behalf.  At meetings, shareholders may resolve to make amendments to the memorandum and articles of association.

Most shareholder disputes arise when IBCs face reorganisation, reconstruction, separation of businesses or some combination of these, collectively known as “arrangements”. An arranging IBC must apply to a Bahamian court for approval of the arrangement. The court can decide the rights of minority shareholders who disagree with the arrangement. The court may order that dissenting shareholders receive the fair value of their shares (a buy-out), that they be allowed to propose amendments to the arrangement, or that they have the right to reject the arrangement.

Importantly, if the IBC faces a merger, consolidation, or sale/transfer of more than 50% of the IBC's assets, minority shareholders' rights can be limited. One or more shareholders holding 90% or more of the IBC's shares can force the company to redeem the minority shareholders' shares under the IBC Act. A dissenting shareholder may also request a buy-out of his shares in these situations.

Resolving disputes with minority shareholders may be as simple as buying out the dissenter or outvoting him at a general meeting. If a court permits a minority shareholder to propose amendments to an arrangement or reject it, the solution may be more difficult. Bahamian law allows companies to resolve disputes internally.

Facing a minority shareholder dispute in The Bahamas? Learn more by visiting Gonsalves-Sabola Chambersonline or call the office at +1 242 326 6400.