The Segregated Accounts Companies (SAC) Act expands the legislative framework that strengthens The Bahamas' comparative advantage in the securities and capital markets areas.
An SAC may segregate each of its assets into separate accounts which are thereby shielded from exposure to losses or claims of creditors of the SAC itself, or on other accounts within the SAC. Also known as a Protected Cell Company, an SAC allows the compartmentalization of risks within a single corporate structure. As a result, the financial performance of an individual account does not affect any other accounts of the SAC itself.
In effect, the separate accounts of the SAC act like separate limited companies -- but all under common management -- reducing senior management time, capital requirements, administration and costs.
Designed originally for the international captive insurance market, assets held for clients could be segregated from the assets and liabilities of the insurance company. In the event of the liquidation of the insurance company, the clients’ assets would not be available to the creditors of the insurance company.
SACs are now being used by some to structure wealth management solutions for clients with highly diversified portfolios including investment funds and structured products.
"The enactment of the Segregated Accounts Companies Act will improve the usefulness of the new Investment Funds Act that was passed in 2003," said Attorney General The Hon. Alfred Sears. "The Investment Funds Act with its regulations and SMART funds templates, and the new Segregated Accounts Companies Act, place The Bahamas in a strong position to strengthen its capital markets industry."
Bahamian SAC legislation has set the standard of providing the platform for segregation of assets and liabilities for its use in other areas of business such as a holding company for property or luxury items. The use of an SAC for these and all other purposes does require approval and the oversight of the relevant regulator.
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