Marshall Islands offering free redomiciliation of companies now

Why should I incorporate a company in Marshall Islands

The Republic of the Marshall Islands (RMI) is situated nearly midway between Hawaii and the Philippines, and is the easternmost island group in Micronesia. Importantly, a Marshall Islands International Business Company (IBC) is a tax-free corporation designed for engagement into all forms of international business, with no reporting and minimum record-keeping requirements, and comprehensive confidentiality features. Additionally, a Marshall Islands Company does not have the tainted “tax haven” reputation that is associated with many other offshore jurisdictions.

What are the benefits of incorporating an offshore company in Marshall Islands

• As mentioned above, Marshall Islands impose no tax or reporting requirements on companies. So incorporating an offshore company in Marshall Islands can help reduce the tax burden, as well as costs involved in statutory compliance and reporting requirements, of your company.
• The RMI is a modern, stable corporate jurisdiction that provides the flexibility and efficient service that is required by corporate users. All non-resident domestic business entities registered in the RMI are governed by the RMI Associations Law. The RMI Associations Law is primarily modelled after the corporate laws of the United States state of Delaware.
• As a high net worth individual, you can be sure of privacy, as well as save on professional fees by using a Marshall Islands offshore company as a personal holding company. These entities may be suitable for inheritance planning and reducing the costs and time delays in probate.

• A Marshall Islands company can be used as an investment company, which is investing in property, stocks and shares, commodities and other assets, while providing anonymity and tax savings.
• A Marshall Islands company can be used for inheritance planning, as the transfer of wealth to a company in Marshall Islands ensures that the wealth is protected in a stable environment well away from the unwanted attentions of the tax and inheritance laws of foreign jurisdictions.
• If you own properties in several different countries, the offshore Marshall Islands company can collectively hold these properties title. The ownership can be transferred by company shares rather than transferring the actual properties.
• Additionally, the Marshall Islands company can be used as an employment company so as to reduce payroll costs and travel expenses, or for raising capital. Many large corporations in economically and politically uncertain countries often diminish the perception of risk by moving ownership of assets and the base of their operations to stable offshore jurisdictions such as Marshall Islands.

Thus, with 36 business entities listed on either the New York Stock Exchange (NYSE) or the National Association of Securities Dealers Automated Quotations (NASDAQ), the RMI has become the jurisdiction of choice for many multinational entities.

I am convinced. Can I redomicile my company to Marshall Islands?

Corporations may transfer their domicile into the Marshall Islands by filing Articles of Domestication and Articles of Incorporation pursuant to section 127 of the Business Corporations Act (BCA).

Remember when a foreign redomiciles to the Marshall Islands, the entity is only changing corporate jurisdictions. A new and separate entity is not created. The name and the date of existence will remain unchanged. However, the RMI Associations Law will govern the entity after redomiciliation.

And don’t worry, it’s perfectly fine to redomicile your company to Marshall Islands, as most corporate jurisdictions have established redomiciliation laws. As a result, financial and legal communities are familiar with the intricacies and benefits of redomiciliation.

So in summary, any non-RMI business entity may redomicile to the RMI, including foreign corporations, partnerships, LPs, LLCs, or their foreign equivalents, provided it is not expressly prohibited by the foreign jurisdiction.

Is the Marshall Islands Corporate Registry offering free redomiciliation now?

Yes. Normally there is a filing fee of US$500 when you apply for redomiciling your company to the Marshall Islands.

But these days, with the ongoing Covid-19 pandemic, as the political and regulatory environments are evolving faster than ever, some jurisdictions that were once favoured for business, now have less than satisfactory ratings with international regulatory bodies and are not politically stable.

To help such companies the Marshall Islands Corporate Registry is currently offering free redomiciliation.

Choosing the Marshall Islands for redomiciliation (domestication) allows business entities to retain any existing assets and liabilities while transferring to a jurisdiction that is stable and rated favourably with international regulatory bodies.

What are the requirements for redomiciliation to Marshall Islands

As mentioned above, corporations may transfer their domicile into the Marshall Islands by filing Articles of Domestication and Articles of Incorporation pursuant to section 127 of the Business Corporations Act (BCA).

Here, the following information must be included in the Articles of Domestication:

• the jurisdiction and date when the corporation first came into existence;
• the name of the corporation immediately prior to the transfer of domicile, and ifthe name is to be amended, the name of the corporation as amended (if the name of the corporation fails to comply with section 26(1) of the BCA the corporation must, within ninety (90) days, change its name by filing Articles of Amendment);
• a statement that the transfer of domicile has been approved by necessary corporate action;
• a statement that the transfer is not expressly prohibited by the jurisdiction in which the corporation was domiciled immediately prior to the filing of the Articles of Domestication;
• a statement that the transfer is being made in good faith and will not serve tohinder, delay, or defraud existing shareholders, creditors, claimants, or other interested parties;
• the name and address of the corporation’s Registered Agent in the Marshall Islands; and
• a statement that the new Marshall Islands Articles of Incorporation are annexed thereto and will be effective as the Articles of Incorporation of the Corporation upon the proper filing of the Articles of Domestication and Articles of Incorporation.

The following information must be included in the Marshall Islands Articles of Incorporation:

• the name of the redomiciling corporation;
• the duration of the corporation if other than perpetual;
• the purpose(s) for which the corporation is organized. It shall be sufficient to state, either alone or with other businesses or purposes, that the purpose of the corporation is to engage in any lawful act or activity for which corporations may be organized under the BCA, and by such statement all lawful acts and activities shall be within the purposes of the corporation, except for express limitations, if any;
• the listing of The Trust Company of the Marshall Islands, Inc. (TCMI) as the Registered Agent of the Corporation and the registered address of the Corporation in the Republic of the Marshall Islands;
• the aggregate number of shares which the corporation shall have authority to issue; if such shares are to consist of one class only, the par value of each of such shares, or a statement that all of such shares are without par value; or if such shares are to be divided into classes, the number of shares of each class, and a statement of the par value of the shares of each class or that such shares are to be without par value;
• if the shares are to be divided into classes, the designation of each class and a statement of the preferences, limitations and relative rights in respect of the shares of each class;
• subject to the provisions of section 42 of the BCA, the number of shares to be issued as registered shares and as bearer shares and whether registered shares may be exchanged for bearer shares and bearer shares for registered shares;
• if bearer shares are authorized to be issued as provided in section 42 of the BCA, the manner in which any required notice shall be given to shareholders of bearer shares;
• if the corporation is to issue the shares of any preferred or special class in series, then the designation of each series and a statement of the variations in the relative rights and preferences as between series insofar as the same are to be fixed in the articles of incorporation, and a statement of any authority to be vested in the board of directors to establish series and fix and determine the variations in the relative rights and preferences as between series; and
• any provision, not inconsistent with law, which the directors of the corporation, subject to any required shareholder approval, elect to set forth in the Articles of Incorporation for the regulation of the affairs of the corporation.

Also note that, all corporations issuing bearer shares must record a Declaration of Holders and Beneficial Owners of Bearer Shares or a Declaration of Transfer of Bearer Shares, as required by section 80(3)(c) of the Business Corporations Act.

Additionally, it must be noted that the Articles of Domestication and Articles of Incorporation must be accompanied by the following documentation:

• A certified copy of the articles, charter, or other document upon which the existence of the entity is based, issued by the appropriate government agency; and
• Recently issued evidence of the entity’s current existence either by a government document (e.g., Certificate of Goodstanding) or if government certification is not possible, by certification of a lawyer of the jurisdiction, that to his/her knowledge, the entity has current legal existence.

Can a foreign company apply for redomiciliation by itself?

No. It’s important to note that all requests for redomiciliation must be made through a qualified intermediary who is obligated to perform due diligence. Intermediaries may include, but are not limited to: lawyers, accountants, corporate service companies, and qualified shipping companies.

Are there any alternatives to redomiciliation to Marshall Islands?

Yes, you can incorporate a Marshall Islands company first, and then choose to transfer jurisdictions by merging your foreign entity with that RMI company either as a partnership, limited partnership (LP), or limited liability company (LLC). For this, you have to file the appropriate merger documentation with any IRI office.