Marshall Islands company formation
The Republic of the Marshall Islands, a country located middle of the Pacific Ocean, just west of the International Date Line and just north of the Equator, has relatively low profile as a corporate haven, despite the fact that it offers many unique possibilities for offshore investors, combined with political stability and a professional corporate register.
Political stability: association with United States
In 1986 independence was attained by Marshall Islands under a Compact of Free Association with the United States. Most citizens of Marshall Islands may live and work in the United States, and most U.S. citizens and their spouses may live and work in Marshall Islands. The Compact of Free Association allows the United States to operate armed forces in Compact areas, to demand land for operating bases (subject to negotiation), and excludes the militaries of other nations without U.S. permission.
Professional corporate registry: private joint venture
Through a legislatively endorsed joint venture agreement with the Government of the Marshall Islands, Marshall Islands Corporate Registry is administered by International Registries, Inc. headquartered in Reston, Virginia, USA.
IRI is the world’s oldest and most experienced privately administered maritime and corporate registry, providing for the specialized needs of the shipping and financial services industries across a broad commercial and economic spectrum. IRI operates 23 full service offices in major shipping and financial centers around the world.
The Corporate Registry of the Republic of the Marshall Islands has witnessed dynamic growth in recent years, with 23 IBCs and one LP going public to raise capital on exchanges in London, New York, and Singapore, and several IBCs in the process of going public on other stock exchanges around the world.
Tax haven: There no local taxes for Marshall Islands corporations
As a general rule, non-resident domestic or foreign corporation, partnership, trust, unincorporated association or limited liability company is exempt from any corporate tax, net income tax on unincorporated businesses, corporate profit tax, income tax, withholding tax on revenues of the entity, asset tax, tax reporting requirement on revenues of the entity, stamp duty, exchange controls or other fees.
Interest, dividends, royalties, rents, payments (including payments to creditors), compensation or other distributions of income paid by a non-resident corporation to another non-resident corporation or to individuals or entities which are not citizens or residents of the Marshall Islands are exempt from any tax or withholding provisions of the laws of the Marshall Islands.
Protection of privacy: Possibility of using "shadow" directors and "shadow" corporate officers
Directors and other officers do not need to be disclosed in the corporate register and thus it is not possible to obtain from the public record any form of evidence concerning their identity.
Unfortunately, it can sometimes create difficulties, if a Marshall Islands company is to enter into a contract, since the Counter-Party must follow the paper trail to ensure they are dealing with duly elected officials of the Company. For this purpose, Marshall Island corporations can voluntarily file such information as needed to conduct their business.
Protection of privacy: Transfer of shares is unrestricted and there is no list of shareholders maintained by any third party
A restriction on the transfer of shares of a corporation may be imposed either by the articles of incorporation or by the bylaws or by an agreement among any number of shareholders or among such holders and the corporation. In case no restrictions are imposed, shares are transferred by execution of a plain Instrument of Transfer, without a disclosure to any unrelated third parties, like a registered agent, or even to the company itself.
This creates significant advantage in comparison with other offshore jurisdiction, where transfer of shares has to be registered by directors and / or registered agent of the company, because as long as the corporate service provider has proof of the identity of the ultimate beneficiary of a firm, the veil of secrecy is vulnerable to being pierce.
Protection of privacy: bearer shares are allowed without any restrictions concerning custody of such shares
Shares may be issued either in registered form or in bearer form provided that the articles of incorporation prescribe the manner in which any required notice is to be given to shareholders of bearer shares.
The transfer of bearer shares is executed by delivery of the certificates
The articles of incorporation may provide that on request of a shareholder his bearer shares shall be exchanged for registered shares or his registered shares exchanged for bearer shares.
Please note that legal entities conducting business with financial institutions will often find that their banks require them to establish a clause in the articles of incorporation mandating that shares be issued in registered form exclusively. Some other banks might accept bearer shares, but their require to deposit them in the custody of the bank.
Sophisticated corporate law: Delaware state laws are directly applicable to companies formed in the Republic of Marshall Islands.
The Associations Law of Marshall Islands, directly states that the aforementioned act shall be applied and construed to make the laws of Marshall Islands uniform with the laws of the State of Delaware and other states of the United States of America with substantially similar legislative provisions. Insofar as it does not conflict with any other provision of Associations Law, the non-statutory law of the State of Delaware and of those other states of the United States of America with substantially similar legislative provisions are adopted as the law of Marshall Islands.
Delaware General Corporation Law is one of most sophisticated and flexible corporate laws. Over 50% of U.S. publicly-traded corporations and 60% of the Fortune 500 companies are incorporated in that state. Because of the extensive experience of the Delaware courts, Delaware has a more well-developed body of case law than other states, which serves to give corporations and their counsel greater guidance on matters of corporate governance and transaction liability issues.
International cooperation
Marshall Islands has executed Tax Information Exchange Agreements with Australia, Denmark, Ireland, Faroe Islands, Finland, Greenland, Iceland, Korea, Netherlands, New Zealand, Norway, Sweden, USA.
Offshore companies formation
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