- LLC or SLLC? It All Depends on You!
- The Limited Liability Company Name
- Cost of Setting Up an LLC in the Marshall Islands and Annual Fee
- What is the Set of Original Documents I Receive When I Register My Company in the Marshall Islands?
- Cost of Extra Services for Companies Registered in the Marshall Islands
LLCs are well known worldwide for their convenience and simplicity. From their early days in the state of Delaware, USA, this legal form has been adopted by many states and countries, both onshore and offshore. It is popular because it combines many of the benefits of companies and partnerships, with an emphasis on cutting through unnecessary bureaucracy.
Today we will zoom in on a specific jurisdiction that we like working with a lot: the Republic of the Marshall Islands. How can an LLC registered in the Marshall Islands be of use as part of your international banking and asset protection strategy? And what special forms of LLC are allowed in the Marshall Islands?
In many ways, the classic Marshall Islands Business Corporation is like a great old-fashioned offshore company in the tradition of the BVI, Belize etc – no tax whatsoever, and no requirement to file annual accounts. The Marshall Islands LLC, however, goes a step further in sophistication, while keeping management and compliance tasks to the minimum.
A couple of caveats: The limitations imposed by the Marshall Islands jurisdiction are the same for all forms of incorporation. Marshall Islands does not allow registration of banking or trust businesses (except Private Trust Companies), nor insurance or reinsurance companies. In addition, the organization of forex or gaming in any form is also not possible with a company incorporated in the Marshall Islands. And finally, Marshall Islands is not yet crypto friendly. They will not register a company that has a declared goal of crypto trading, even for its own account.
So why would a business person choose Marshall Islands for offshore incorporation? There are several good reasons:
- As of October 2019, the Republic of the Marshall Islands was excluded from the EU offshore blacklist and later in 2020 from the French domestic blacklist. The country implements all the requirements that the European Union imposes on it regarding the information exchange. Thanks to this, the reputation of this jurisdiction and its companies has improved and immediately attracted the attention of businesses seeking a credible, whitelisted jurisdiction.
- The country operates the second largest shipping and yacht registry in the world. This is serious business!
- The Marshall Islands Companies Registry is operated by a proactive private company that has a vested interest in the success of the jurisdiction. Unfortunately, not to name names, but we have found many offshore island governments have taken a ‘mañana’ approach, bogged down in internal politics and corruption. Others, like the British territories and the Channel Islands, have been taken over by legions of lawyers – who deliberately make things more and more complicated so that they can justify charging higher and higher fees, driving out all but those with the deepest pockets. Marshall Islands, meanwhile, has been quietly but confidently developing its offshore financial centre into the perfect business-friendly, outward looking and globally compliant jurisdiction.
- A company registered in the Marshall Islands may be used for regular commercial operations and is particularly suited to online business.
- The legislation of the Marshall Islands was modeled on the basis of one of the most advanced and favorable business laws of the U.S., the laws of the state of Delaware. In particular, the registration and operation of a business in the form of a Limited Liability Company is governed by the Marshall Islands (RMI) Limited Liability Company Act. It is generally recognized that this document allows incredible flexibility in the use of LLCs and even provides certain opportunities that LLCs registered in many other offshore jurisdictions do not have at all.
In general, an LLC in the Marshall Islands combines the positive properties of a partnership (LLP, Limited Liability Partnership) and an International Business Corporation (IBC). Namely, the flexibility of managerial control that allows for freedom in determining distribution of profits and losses between the partners who established the LLC.
In addition to that, the founders of an LLC are protected from personal liability exceeding their share of the LLC capital. Depending on one’s wishes, an LLC may resemble more a limited liability partnership (where founding members take equal part in managing the company) or be closer to a corporation (where certain founding members are passive investors and delegate the management function to one or more founders or hired managers).
Unlike many other jurisdictions, the Marshall Islands have no minimum requirements for the authorized capital. An LLC can be formed with a capital of USD 100.
LLC as a form of incorporation has gained a perfect reputation for commercial operations, Internet services, private venture capital, and other services.
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LLC or SLLC? It All Depends on You!
Here we come to the most important highlight of the LLCs registered in the Marshall Islands. The point is that the Marshall Islands Limited Liability Company Act allows you to designate the LLC to be registered as a Series Limited Liability Company. This is a relatively little-known option in the offshore industry, but it will allow you to appreciate the degree of flexibility of the LLC instrument and the managerial freedom that the legislation of the Marshall Islands provides. First of all, let’s find out what additional advantages SLLC can provide compared to the run-of-the-mill Marshall Islands LLC.
At its core, an SLLC is nothing more than an LLC with completely independent series (in other words, subdivisions or units). Each such unit is liable for its own obligations – but only to the extent of its share in the total authorized capital of the LLC.
Each such unit may also have its own bank account (not necessarily with the same bank), its own managerial staff with individually assigned authority, and engage in its own business, completely unrelated to other units. Each division can have its own portfolios of assets, risks, etc.
Depending on what you seek, the relationship between these units of the limited liability company may be structured so that it looks more like a partnership, or it may be closer to a stock corporation.
These units can even be each other’s creditors and run commercial operations and credit or debit ledgers with each other. In other words, the essence of SLLC is nothing more than both a holding company and subordinate companies, independent from each other, but only within a single legal entity.
What businesses may be the most interested? Well, for example, given the Marshall Islands’ seafaring nature, and as the world’s second largest ship and yacht registry, it’s hardly surprising that the SLLC is very convenient for ship-owning companies.
Every vessel may be owned by a separate unit, independent of the others. Each such unit that owns its own vessel may enter into contracts with another separate unit dealing only with crewing, and may also enter into charter contracts with customers. In this case, all operations conducted by other units are fully protected from any trouble and risks associated with a single asset (vessel).
Everything is limited by the liability of a single unit only. In other words, if the contract is made by a certain unit, in the event of a claim on the contract only the specific unit will be held liable for it. The SLLC in general and its other subdivisions will not have a conflict of interest if the contracts are executed correctly, and all other assets will operate as if nothing happened.
It is no coincidence that we gave the example of an industry where the benefits of the Marshall Islands SLLCs are most pronounced. The Marshall Islands have earned an excellent reputation for its extensive local ship registry services. The relatively small island nation has more than 1,600 merchant ships of every nationality flying its flag (ship owners may even be residents of such non-maritime countries as Switzerland). So, for a ship-owning company, registration in the Marshall Islands and exactly in the form of SLLC is a logical decision.
We are sure you can think of dozens of possible applications for this kind of flexibility in terms of management structure for your business. Real estate is another big one, with each building being one of a Series. Wherever or whenever you need to separate business operations of one business unit from another, keeping them within the same legal entity, the advisability of SLLC incorporation is beyond doubt.
The Limited Liability Company Name
In the Marshall Islands, one can register a company with a name in any language, as long as it uses Latin letters only. In case the first option is taken, when placing an incorporation order it is advisable to offer another alternative name to avoid any delays back and forth. The name must end in Limited Liability Company, with such abbreviations as LLC or L.L.C. being acceptable. It is absolutely prohibited to use the following words in the LLC name: Bank, Insurance, Assurance, Reinsurance, Foundation, Charity. But this is very similar to most other offshore jurisdictions.
We will check the availability of the company name options you offer within a day. The stated capital of your limited liability company incorporated in the Marshall Islands can be of any amount, and it can be denominated in any currency, or you can issue interests with no par value.
In order to register an LLC in the Marshall Islands, the following documents will be required:
- Copies of passports of the company or partnership founders
- Proof of residence. For example, this can be a copy of the utility bills issued in your name. These documents must not be older than 3 months by the time the set of documents is submitted for registration.
- If you have chosen the option of corporate (i.e. represented by legal entities) managers, you will additionally need to present registration documents for these legal entities (Certificate of Incorporation, Memorandum & Articles of Association, etc.).
New substance rules came into force in 2018. They impose requirements of providing and maintaining beneficial ownership information of corporations, general and limited partnerships, and LLCs.
It is now required that all corporations (other than publicly traded ones) and partnerships make an effort to obtain and keep updated the names and addresses of their beneficial owners. LLCs are additionally required to obtain and keep updated the names and addresses of all company managers.
It is also required that reasonable efforts be made to notify beneficial owners of the new requirements and ask them for the necessary information.
This information must be kept by any non-resident company and be made available upon request of the registered agent or upon government request.
Every year starting from the date of incorporation or from November 9, 2018 (for companies registered earlier), companies are required to undergo a review, i.e. to verify that the available list of directors, beneficial owners, managers and other officers as well as their addresses is up-to-date.
In case these requirements are violated or the information provided is false, incomplete or reviewed incorrectly, the company may be fined for up to USD 50,000, or it may be revoked or dissolved as a last resort.
Our experts hope that our clients will not allow this last resort to be reached! Basic compliance is essential in order to avoid fines and striking off. This service is included in our annual corporate maintenance fee, just as in other jurisdictions.
Tougher requirements for the beneficial owners’ identification are also in place, based upon the requirements of the Organization for Economic Cooperation and Development and FATF. The main task is to combat the laundering of illegal funds.
Cost of Setting Up an LLC in the Marshall Islands and Annual Fee
The cost of setting up an offshore company in the Marshall Islands starts from 1750 USD. This fee includes the following:
- Payment of the state registration fee;
- Services of the registered agent in the Marshall Islands;
- Registered office (legal address);
- One set of original corporate documents;
- Apostille on corporate documents;
- Courier delivery worldwide.
Should you wish to obtain a set of corporate documents with their apostilled copies at once, please let us know in advance.
Companies registered in the Marshall Islands must be renewed annually. This will cost USD 2,250 per year. This price includes:
- Payment of the state renewal fee;
- Services of registered agent in the Marshall Islands;
- Registered office (legal address).
What is the Set of Original Documents I Receive When I Register My Company in the Marshall Islands?
- Certificate of Formation;
- Operating Agreement (optional);
- Service fee receipt (for the first year).
Cost of Extra Services for Companies Registered in the Marshall Islands
Should you need extra security for your personal data, we can provide the services of professional management and trustee membership. Please feel free to ask about the exact cost by sending us a request at firstname.lastname@example.org.
Banks also require information about the ultimate beneficial owners of the company.
Important GDPR notice: In connection with the updated legislation in many countries, including all EEA member states, the requirements for personal data security have increased. In order for us to transfer your data for company registration in the Marshall Islands, you must also fill out a consent form for the processing of your personal information: date of birth, identification document numbers, family status, etc.
This form remains valid for 5 years. During that time no further authorization will be required. You have the right to withdraw your consent to the processing of information at any time, but in this case certain services will not be available.
Should you still have any questions related to LLCs or other forms of company registration in the Republic of the Marshall Islands jurisdiction please do not hesitate to ask our experts by sending us an email at email@example.com.
Should you need any extra services related to any company registered in the Marshall Islands (even if it wasn’t us who helped you register it) starting from opening an account for it with an offshore bank and ending with the registration of vessels and yachts in its name … don’t hesitate! Please feel free to contact us at the same address.