British Naval Captain John William Marshall gave his name to the area now known as the Republic of the Marshall Islands (RMI) which is located in the Pacific Ocean, and is part of the larger island group of Micronesia, comprised of many individual atolls and islets lying north of the Equator. The population of over 60,000 is spread over 70 square miles of small coral islands, where the largest and most populous atoll is Majuro, which acts as the islands capital. In 1986, independence as a sovereign nation was attained under a Compact of Free Association with the United States. As a result of this the local currency is the US dollar, with English and Marshallese being the islands two most widely spoken languages.
Currently the Marshall Islands is a democratic and independent state, which has had no legal reform in the last 12 months. The foundation of the legal system in the Marshall Islands partially derives from the legislation of Delaware State, which ensures friendliness and flexibility of the legal infrastructure towards the business community, making it a suitable choice for international corporations, Partnerships, Limited Liability Partnerships and Limited Liability Companies in various capacities.
The RMI maintains a politically stable, democratically elected parliamentary system of government, consisting of two legislative chambers which elect the President from among their members for a four-year term. The jurisdiction has one of the biggest ships registers so would be the perfect location for companies that are planning to own and manage yachts and ships.
Known as a highly versatile jurisdiction for conducting international business, incorporating a corporation, LLCs and partnerships in Marshall Islands offers the following benefits:
- Exceptionally fast incorporation time of only one business day.
- All LLCs partnerships and corporations registered by non-residents and receiving its income outside the jurisdiction are statutorily exempt from taxation.
- No requirement to file financial statements or to complete annual returns.
- High level of confidentiality and in terms of potential risk of information disclosure to foreign Governments, the Marshall Islands is probably one of the most secure and confidential offshore jurisdictions.
- No currency exchange controls and capital can be expressed in any currency.
- No requirement for residency of Directors or Shareholders, and there is no obligation for an annual meeting to be held in the Marshall Islands.
- Extremely low share capital required for incorporation of only $1 USD.
- Migration of domicile permitted both into and out of the jurisdiction.
Tax and Accounting Regulations
Below is an overview of the tax and accounting regulations in the Marshall Islands:
Marshall Islands non-resident corporations, Partnerships, Limited partnerships and Limited Liability Companies are statutorily exempt from all forms of taxation in the Marshall Islands. There is zero taxation on all income, profits, dividends, royalties, compensation or other related sources of revenue.
Annual Reporting Requirements
With an international company in the Marshall Islands, there is no requirement to:
- Prepare Accounts.
- Prepare Audited Documents.
- Employ Local Auditor.
- File Annual Accounts.
- File Annual Return.
Whilst there is no obligation to file audited financial statements with local authorities, a Marshall Islands international company is required to keep financial records to reflect its financial position.
Government Licence fee and Annual Maintenance Fees:
A government license fee must be paid by all Marshall Islands international companies in order to operate. The annual cost of company maintenance would include Service Pro’s fees and governmental licence.
Recurring Annual Maintenance Fees are due on the anniversary of incorporation and include:
- Provision of registered office and registered address.
- Provision of resident agent and Company Secretary.
- Payment of annual government fees.
Company Administration Guidelines
The Marshall Islands jurisdiction includes all the necessary characteristics of an offshore jurisdiction, such as bearer shares, facsimile filings, and execution of documents without notary affidavits. Each corporation may be organised in the U.S. style with a President, Secretary and Treasurer, or in the U.K. style with a Managing Director and Corporate Secretary. The Marshall Islands Association Law was recently republished in a new publication, which includes the Business Corporations Act, Partnership and Limited Partnership Act, Unincorporated Associations, and the Limited Liability Company Act.
Share Capital for Corporations
There is no specific minimum capital requirement for international corporations. The standard authorised share capital is 500 shares without par value or a capital with a stated par value up to USD $50,000. The authorised share capital may be expressed in any currency. The minimum issued share capital is either one share of no par value or one share of par value.
The following shares are permitted:
- Bearer shares.
- Preference shares.
- Redeemable shares.
- Shares with or without par value.
- Shares with or without voting rights.
A minimum of one shareholder is required which may be an individual or a body corporate. The details of company Beneficial Owners and Shareholders are not part of the public records.
A Marshall Island corporation requires a minimum of one Director, who can be a physical person or a body corporate. Details of Company Directors do not have to appear on public file and there is no requirement to have resident Directors. A Local Registered Agent is required and is provided upon incorporation at no additional cost.
Restrictions on name and activity
Marshall Islands corporations’ names must end in one of the following words, or their relevant abbreviations:
Corporation, Incorporated, Limited, Public Limited Company, Aktiengesellschaft, Société Anonyme, Sociedad Anónima, Société Anonyme à Responsabilité Limitée, Berhad, Proprietary, Naamloze Vennootschap, Besloten Vennootshcap, Aktiengesellschaft.
Names may be in any language as long as Roman characters are used and any standard corporate suffix is acceptable.
The following words cannot be used in the name of a Marshall Islands corporation: bank, chartered, establishment, foundation, insurance, partnership or trust. Names denoting any connection to local, state or national governments are generally prohibited and the Registrar may require an English translation if a foreign language is used to ensure that the proposed name is not one that is restricted.
Every company, registered in the Marshall Islands is required to have a registered office and address, which should be notified to the Registrar. A Registered Agent is required to ensure that the corporation has an assigned representative at a known address to receive all service of process (legal notices) on its behalf.
A Marshall Islands Corporation must appoint a Company Secretary who may be a natural person or a body corporate. The Company Secretary can be of any nationality and need not be resident in the Marshall Islands.
The Directors and Shareholders meetings need not be held in Marshall Islands; and there is no requirement for an Annual General Meeting. All meetings may be held outside Marshall Islands, by telephone or other electronic means. Alternatively, directors and shareholders may vote by proxy.
The most popular company form used by international investors in the Marshall Islands is a Non-Resident Corporation.
Non-Resident Corporations have certain restrictions:
- Cannot trade within the Marshall Islands.
- Cannot undertake the business of banking, trust services, insurance, assurance or reinsurance and gaming.
As there is no Public Registrar of Companies, there is an extremely high level of privacy for a corporation in the Marshall Islands. Nominee Directors and Shareholders are also accepted to maintain this level of confidentiality. Shadow Directors are permitted within all Companies as Directors are not required to be registered.
The approximate timescale for incorporation is one business day upon submission of all the required documentation to the Registrar. Corporate documents also can be legalised via Apostle within one business day.
Procedure of company formation
Incorporation of an international Corporation, LLC or Partnership in the Marshall Islands is extremely efficient and can be completed within a matter of days. The Marshall Islands Associations Law 1990 provides the legal framework for the incorporation of an international company. This is comprised of the Business Corporations Act; Revised Partnership Acts; Limited Partnership Act and Limited Liability Company Act, dependant on which type of company you wish to form.
The summary below provides an overview of the process and the documents needed, and dependant on which type of company you require, to form an international company in the Marshall Islands, an application form must be completed, signed and scanned containing information about a preferred name, details of Directors and details of any Shareholders if applicable.
- A scanned and notarised copy of the passport for the Directors and Shareholders is required.
- A scanned copy of proof of residence, such as a utility bill, Bank statement or Bank reference no longer than 3 months old. (Via our online client verification system).
- At this point Eltoma will confirm the company name availability and issue an invoice.
- Upon receipt of payment Eltoma will start the company formation process. It takes approximately 5 working days to fully incorporate an offshore company in the Marshall Islands and up to 5 working days for a courier delivery. (Taking into consideration that we receive all the signed required forms in time).
- Annually Eltoma will issue an invoice to cover renewal fees.