A limited liability company (LLC) combines the best traits of an International Business Corporation (IBC) and a partnership. Like shareholders in a corporation, the members are protected from personal liability in excess of their capital investment. Like the partners in a partnership, members can flexibly allocate gains and losses. Flexible management makes the LLC an excellent vehicle for transactions requiring a considerable degree of passive investment, such as venture capital projects, investment in real estate, oil, or technology, as well as research and development of business. In addition, the LLC may be conveniently employed in the types of parent-subsidiary arrangements inherent to large corporations because either an individual or an entity may be a member.
Members are not required to participate in the management of the entity; instead, they may designate “managers” to manage the affairs of the LLC. However, even if members elect to be actively involved in managing the LLC, they still retain their limited liability.
LLCs are registered and governed pursuant to the Republic of the Marshall Islands (RMI) Limited Liability Company Act.
Another valuable aspect of the RMI Limited Liability Company Act is the opportunity to create a Series LLC (SLLC), which is one company, an LLC, that contains separate series or units. An SLLC allows each individual unit to own separate assets, have different members and/or managers, and, most importantly, be fully operational and individually isolated from the liability exposure of the other units. In other words, a client can have the benefits of multiple LLCs, all with different assets, risk portfolios, etc., but with the convenience and confidentiality of forming one LLC.
The main documents for forming and governing an LLC include:
1. Certificate of Formation
2. Operating Agreement Sample
3. Certificate of Amendment
4. Certificate of Cancellation
The Certificate of Formation establishes the LLC and the Operating Agreement defines the economic organization, management responsibilities, and other arrangements for members or managers of the LLC. Disclosure of the LLC Operating Agreement, or the names of the members or managers, is not mandatory but may be voluntarily filed or recorded.
Click here to view an article comparing RMI LLCs and other worldwide business entities.
Full instructions on how to form a LLC are available here.
If you would like a copy of the RMI Limited Liability Company Act, model forms, or for further information, please complete our Visitor Form.