Redomiciling a Marshall Islands Company
20 May 2021
Why redomicile from one jurisdiction to another?
Occasionally, a shipowner / operator (or indeed, an entire Group) may decide to redomicile (or 'transfer') from its original jurisdiction of incorporation to another jurisdiction (sometimes taking all of its SPV subsidiaries with it to the new jurisdiction). More often than not, this transpires because of the geographical relocation of regional headquarters and / or for other tax efficient strategy planning reasons, including choice of flag, but where the owner / operator may wish to continue their corporate history and branding, etc.
This article provides a brief analysis of the procedures to redomicile from/to the Republic of the Marshall Islands ("MI").
Redomiciling to / from the MI
Section 15(p) of the MI Business Corporations Act1 ("BCA") allows an MI corporation to "domicile, redomicile, domesticate, file or register itself, or move or transfer its place or situs of initial or subsequent registration, domicile, siege social or sitz or any other equivalent thereto from or to any place and to continue as a corporation of any place".
Division 14 (sections 126-129) of the BCA cover transfer into (and out of) the MI.
Transferring into the MI
Transferring a foreign business entity in to the MI is easy and currently2, free. The office of the Marshall Islands Maritime and Corporate Administrators, Inc. (the "MI Registry") will request: (a) prescribed articles of domestication; (b) underlying articles of incorporation (in English); (c) new, i.e. MI-standard, articles of incorporation; (d) evidence of corporate existence; and (e) [proof of] appointment of the registered agent (always the Trust Company of the Marshall Islands). The articles of domestication must certify various factual matters (e.g. date of first incorporation, name, original domicile, place of business, transfer is not prohibited and made in good faith, etc.).
Redomiciliation does not affect prior obligations (which carry over, although note only mortgage security can be registered at the MI Registry) and all previous property remains vested. MI law takes effect from the date the domestication becomes effective, i.e. the registration as a (redomiciled) MI entity. When a foreign entity redomiciles to the MI, the entity is only changing corporate jurisdictions - a new and separate entity is not created. Therefore, the name and the date of existence will remain unchanged. However, the MI Associations Law will govern the entity after redomiciliation (the BCA, in the case of corporations).
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. The Maples Group fiduciary services team in Hong Kong is considered an "approved agent" by the MI Registry for these purposes.
Any non-MI business entities may redomicile to the MI, including foreign corporations, partnerships, limited partnerships ("LPs"), limited liability companies (LLCs), or their foreign equivalents, provided transfer out / redomiciliation is not expressly prohibited by the foreign jurisdiction.
For an LP, a certificate of limited partnership domestication and certificate of limited partnership (together, the "Certificates"), both of which must have been pre-cleared by the MI Registry in advance, must be signed by a person authorised to sign on behalf of the non-MI entity (a clear scanned copy will suffice for the MI Registry's purposes).
In addition to the Certificates, the following documentation is also required:
(a) A certified copy of the previous jurisdiction's certificate of formation, charter, or other document upon which the existence of the non-MI entity is based, issued by the appropriate government agency; and
(b) Recent government-issued evidence of the non-MI entity's current existence (e.g. certificate of good standing) or, if government certification is not possible, certification by a lawyer of the jurisdiction that, to their knowledge, the non-MI entity has current legal existence.
Once the required documents are received and the MI Registry has finished its compliance checks, filing will be done within one (1) business day of remittance. When the process is complete, a duplicate copy of these Certificates, as filed, will be returned to the client (typically within four (4) business days).
Transfer out of the MI
A MI corporation may transfer its domicile from the MI to a foreign jurisdiction if such foreign jurisdiction permits the transfer by filing a certificate of transfer of domicile ("Certificate of Transfer") pursuant to section 128 of the BCA. Section 128 requires that the following be stated in the Certificate of Transfer:
• The jurisdiction which constitutes the new domicile of the corporation
• The name and address where the corporation may be served with process in its new domicile
• The effective date of the transfer of domicile
• The name and address of its authorised registered agent in the MI.
One (1) acknowledged set of the Certificate of Transfer must be signed by a person authorised to sign on behalf of the MI corporation and must be submitted to the MI Registry in two (2) duplicate copies. Photocopies are acceptable as duplicate copies provided the signatures are legible. Acknowledgement of signatures may be accomplished: (a) before a notary public; or (b) by the person signing the instrument under penalty of perjury pursuant to section 5 of the BCA.
Properly prepared documents shall be forwarded to any office of the MI Registry for processing. When processing is complete, a duplicate copy of the Certificate of Transfer, as filed, is returned to the client (which may take several business days). Once the paperwork is finalised, the MI Registry will produce a Certificate of Transfer as confirmation that the entity ceases to exist under MI law.
The filing fee for the Certificate of Transfer is US$500 (note this has not been waived). Outstanding fees and charges due to the MI Government, the MI Registry and / or the registered agent must be paid prior to filing the Certificate of Transfer before the redomiciliation can proceed.
Once the Certificate of Transfer (also known as a certificate of intent to transfer the domicile) has been filed with the MI Registry, the MI Registry will treat the entity as redomiciled (assuming all fees have been paid to the date of the filing) – and produce a certificate of transfer of domicile. At the client's request, the Maples Group can issue a 'transfer by way of continuation' opinion.
As of September 2020, the US$500 redomiciliation filing fee has been waived.
In addition, we specialise in the registration of aircraft and security interests over private aircraft and corporate jets in the Cayman Islands and Luxembourg, as well as the registration of vessels in the BVI, the Cayman Islands and Luxembourg.
We also assist with all applications to the CISR and VISR shipping registries including the registration of mortgages, transfers of ownership or the registration of any type of vessel.
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