Marshall Islands bearer shares are corporate stock certificates granting ownership rights to whoever physically holds them. Unlike registered shares—which are usually registered in a centralised Government database—the ownership of bearer shares transfers seamlessly through physical handover of the share certificate, allowing for anonymity and simplicity in share transactions.

The Republic of the Marshall Islands (RMI) remains one of the limited jurisdictions worldwide where bearer shares are legally permitted. Governed by the Marshall Islands Business Corporations Act (BCA), bearer shares can be issued under specific regulatory conditions designed to balance privacy and asset protection with international transparency standards. According to the FATF – as of November 2023 – the RMI had over 38,000 registered non-resident domestic corporations (NRDCs), all permitted to issue bearer shares, although the exact number that actually do so is not publicly disclosed due to confidentiality. 

In this article, we explore how bearer shares are practically issued in the Marshall Islands, discuss the rules and regulations surrounding them, and outline important considerations to ensure full compliance.

Legal Basis for Bearer Shares in the Marshall Islands

The legal authority enabling bearer shares in the Marshall Islands is clearly outlined within the Marshall Islands Business Corporations Act. According to the Act, companies incorporated in the Marshall Islands may issue bearer shares, provided they adhere to defined regulatory procedures.

The RMI regulatory framework aligns closely with international standards—particularly those established by organizations like the OECD—to prevent misuse of bearer shares for purposes like money laundering, tax evasion, or terrorist financing. As such, bearer shares in the Marshall Islands are subject to strict controls, despite retaining their traditional advantage of shareholder privacy.

Regulatory Requirements for Issuing Bearer Shares

Issuing bearer shares in the Marshall Islands involves compliance with several regulatory obligations:

1. Custodian Requirement

Marshall Islands regulations mandate that all bearer shares must be held by an approved custodian or licensed professional intermediary. Companies issuing bearer shares must appoint a custodian authorized by the government or licensed according to the BCA. This custodian is legally required to maintain accurate records of the identities of the beneficial owners, ensuring that ownership information can be disclosed to relevant authorities upon valid legal requests.

2. Record Keeping

Though bearer shares themselves are anonymous certificates, Marshall Islands law requires custodians to keep updated and verified records of beneficial ownership. The beneficial owner’s identity and proof of address must be available for inspection upon request by government authorities or authorized international bodies. These records are confidential but accessible when legally mandated, ensuring compliance with international transparency standards.

3. Transfer Procedures

When transferring bearer shares, physical certificates must pass directly to another party. However, transfers are valid only when recorded by the licensed custodian, who must update beneficial ownership information accordingly. Thus, while bearer share certificates maintain their transferability advantage, transactions are tracked to maintain regulatory compliance.

4. Compliance with Anti-Money Laundering (AML) Regulations

Companies and custodians involved with bearer shares in the Marshall Islands must comply strictly with international AML and KYC regulations. Custodians must conduct proper due diligence procedures to ascertain the source of funds, verify beneficial ownership identities, and maintain comprehensive records for regulatory inspection.

Practical Steps to Issue Bearer Shares in the Marshall Islands

To practically issue bearer shares in a Marshall Islands company, follow these essential steps:

Step 1: Incorporation of Company

• Incorporate your business entity in the Marshall Islands under the Marshall Islands Business Corporations Act.
• Specify clearly within your company’s Articles of Incorporation that it intends to issue bearer shares.

Step 2: Engage an Authorized Custodian

• Select and formally appoint a licensed custodian authorized to hold bearer shares under Marshall Islands law.
• Enter into a custodial agreement outlining duties, responsibilities, compliance obligations, and fees associated with maintaining bearer share records.

Step 3: Issue Share Certificates

• Prepare physical bearer share certificates clearly marked as “Bearer Shares.”
• Certificates must state explicitly that ownership transfers upon delivery but must also indicate the custodian’s details for regulatory compliance.

Step 4: Beneficial Owner Verification

• The custodian performs AML/KYC procedures, verifying the identity, residential address, and financial details of beneficial owners.
• Ownership details are confidentially recorded by the custodian for potential inspection by regulatory authorities.

Step 5: Custody and Record Maintenance

• Once issued, bearer shares are physically retained in the custodian’s secure custody.
• Any transfer or change of beneficial ownership must be reported to and recorded by the custodian, updating the beneficial ownership register accordingly.

Opening a Bank Account with Bearer Shares

While bearer shares have traditionally posed challenges when opening offshore bank accounts due to heightened scrutiny from financial institutions, OVZA simplifies this process through established partnerships with international banks. By leveraging its specialized relationships and deep expertise, OVZA can swiftly facilitate offshore banking arrangements for Marshall Islands companies issuing bearer shares.

Through OVZA’s network, obtaining a bank account becomes straightforward and hassle-free. Companies working with OVZA benefit from streamlined due diligence procedures and clear guidance, ensuring rapid compliance with international AML and KYC standards. 

OVZA’s banking partners readily accept companies with bearer shares, provided a licensed custodian maintains appropriate beneficial ownership records. This coordinated approach eliminates the typical concerns associated with bearer shares, making offshore banking setup not only achievable but efficient and straightforward.

What are the Benefits of Bearer Shares?

Bearer shares remain popular among investors and business owners due to several attractive advantages, particularly for companies registered in jurisdictions like the Marshall Islands. They are designed to simplify ownership and provide enhanced privacy compared to traditional registered shares.

The primary benefits of bearer shares include strong confidentiality for shareholders, as ownership is anonymous and transfers require only the physical handover of certificates. Ownership can thus change hands quickly and seamlessly, significantly reducing administrative complexity compared to registered shares.

Below is an overview of the key benefits and considerations for registering a Marshall Islands bearer shares company:

Bearer shares remain appealing due to their strong focus on privacy, ease of use, and simplicity in asset management. However, it’s crucial to weigh these advantages carefully against the increased regulatory scrutiny and compliance obligations associated with bearer share structures.

Conclusion

Bearer shares in the Marshall Islands provide significant privacy benefits while still aligning with contemporary international regulatory standards. By appointing licensed custodians, implementing strict AML/KYC procedures, and meticulously maintaining beneficial ownership records, companies in the RMI can confidently issue bearer shares. Careful adherence to these guidelines ensures that bearer shares remain both practical and compliant, enhancing asset protection and shareholder privacy within a robust legal framework.[/vc_column_text][/vc_column][/vc_row]