Geography, Population, Languages
Located midway between Indonesia and Hawaii, the Marshall Islands are the easternmost island group in Micronesia. The Marshall Islands are spread over approximately 2 million sq. km in the Central Pacific, with two 1,280 km long parallel chains of atolls and volcanic islands separated by 179 km of sea. The islands feature sandy beaches ringed by coconut-laden palm trees and surrounded by crystal-clear lagoons teeming with tropical fish, giant turtles and colourful coral. The islands have a population of over 60,000, most of whom live in the capital, Majuro. The languages spoken are Marshallese and English. English is used in business and legislation.
History, Political Structure and Law
The islands were first settled 4,000 years ago. In the 16th century, the Spanish were the first in a long series of visitors. Later, Russian navigators explored the islands more extensively. In the 18th century the British naval officer John Marshall rediscovered and gave his name to the islands. Germany annexed the Marshall Islands in 1885. After World War I, the islands were administered by the Japanese under a League of Nations mandate. After World War II, the Marshall Islands became a United Nations Trust Territory of the Pacific Islands under United States administration. The Republic of the Marshall Islands gained independence in 1986. It became a full member of the United Nations in 1991.
The Republic of the Marshall Islands signed its Constitution in 1979, this Constitution being based on the American and British models of government. Under the parliamentary system, the legislature (Nitijela), elects a president from among its members. The President nominates a Cabinet of 6-10 members. Courts whose judges are appointed by the Cabinet administer the legal system.
Marshallese Common Law is based on Anglo/American Common Law.
Economy and Infrastructure
The infrastructure in the Marshall Islands is more sophisticated than that of most other nations in the region. The two islands where most of the population live, Majuro and Ebeye, both have reliable power plants and water systems. There are two international airports and 26 airstrips scattered throughout the larger islands. There are also 12 deep-water docks for large ocean-going ships.
There are excellent international satellite communications on Majuro and Ebeye for telephone, fax and telex. Currently there are two major Pacific region banks, as well as the Bank of the Marshall Islands, all on Majuro.
Large-scale commercial fishing is an important industry. Japanese fishermen, who are licensed to fish Marshallese waters, haul in roughly 42 million pounds of tuna each year. The export of coconuts (copra) is also important to the islands’ economy.
The Marshall Islands have a rapidly growing shipping registry, which increased by over 50% between 1994 and 1995. Vessel types include oil tankers, bulk carriers, container ships and fishing vessels.
The Marshall Islands only recently began to be viewed as a tourist destination. For environmental reasons, controlled tourism is the watchword, whether on Majuro or the outer atolls. The lagoons and ocean offer snorkelling, scuba diving, fishing and sailing.
The currency is US Dollar. There is no exchange control.
The principal corporate legislation is the Associations Law of the Republic of the Marshall Islands 1990, which incorporates the Business Corporation Act (BCA) and the Partnership Act. Although the Marshall Islands BCA is modelled on the corporate laws of the United States, certain provisions have also been borrowed from British law. A Company incorporated in the Marshall Islands has the same powers as a natural person. The language of legislation and corporate documents is English.
The type of Company used for international trade and investment is the Non-resident Domestic Corporation, which is easy to form and administer.
Incorporation procedure: the Marshall Islands have an exclusive franchise with one company that is licensed to incorporate all non-resident companies. After the name is approved, companies can be incorporated using standard Articles of Incorporation.
With standard Articles, the request to incorporate must contain the following information:
- Company name.
- Number of shares.
- Whether shares are with or without par value (if with par value, the amount per share).
- Whether the shares are to be in bearer and/or registered form.
- If clients’ own Articles of Incorporation are to be used, these must be prepared in accordance with the Marshall Islands BCA.
Trading activity is subject to the following restrictions:
- A Company cannot trade within the Marshall Islands.
- A Company cannot engage in the business of banking, trust services, insurance, assurance or reinsurance.
A registered office must be maintained in the Marshall Islands at the address of the licensed Trust and Management Company.
Company names are subject to the following requirements and restrictions:
- A name can be in any language as long as Roman letters are used. The Registrar may however require an English translation if a foreign language is used to ensure that the proposed name is not a restricted name.
- A name cannot be identical or similar to that of an existing company.
- The following words or their derivatives may not be used: bank, chartered, establishment, foundation, insurance, partnership or trust.
- A standard corporate suffix or its abbreviation, for example Corporation, Incorporated, Limited, Gesellschaft mit beschrankter Haftung, Aktiengesellschaft, Societe Anonyme, Sociedad Anonima, must be used to denote limited liability.
The minimum number of directors is one. The directors may be natural persons or corporate bodies. They can be of any nationality and need not be Marshall Islands residents. A Marshall Islands Corporation must appoint a company secretary who may be a natural person or a corporate body. The company secretary can be of any nationality and need not be resident in the Marshall Islands. The minimum number of shareholders is one.
The standard authorised share capital is 500 shares without par value or a capital with par value of up to US$ 50,000. The authorised share capital may be in any currency. The minimum issued share capital is either one share without par value or one share with par value.
Marshall Islands corporations may have the following classes of shares: registered shares, bearer shares, preference shares, redeemable shares, shares with or without par value and shares with or without voting rights.
Annual Taxation and Fees
Non-resident Marshall Islands companies are exempted from taxes.
There is no requirement to file financial statements, but records should be maintained to reflect a company’s financial status.