OFFSHORE JURISDICTIONS: CHOICES, CHALLENGES AND CHANGES Written and presented by: Melissa A. Hurst, Managing Partner International Registries, Inc. The Wealth Management Forum 2003 Geneva, Switzerland November 13, 2003 My expertise is from an offshore jurisdiction’s perspective, in particular the Republic of the Marshall Islands (the Marshall Islands), but over the last decade, I have spoken to many lawyers, accountants, management/service companies, bankers and end-users worldwide about the offshore jurisdiction industry…so, the content of this presentation is a summary of that information…information necessary to review the choices when considering an offshore jurisdiction, the challenges that offshore jurisdictions are confronted with and finally the changes facing the offshore industry. First, the easy question… Why Form Offshore? The use of a tax haven, or as those in the industry prefer to call it an “offshore jurisdiction”, has been an accepted part of tax and estate planning and asset protection arrangements since World War I (WWI). Liechtenstein, one of the oldest offshore jurisdictions, came into being after WWI to attract foreign investment. The International Business Corporation, or IBC, was legislated into being in 1926 and became the first step for Liechtenstein toward recovery following the devastation its economy suffered after the fall of Austria in WWI. The legislation was part of an overall plan by the government to disassociate itself from Austria and more closely affiliate itself with Switzerland. By creating and passing this legislation, Liechtenstein successfully carved a niche out of post WWI Europe by responding to the financial needs of Europeans and thus creating a model for the modern day offshore jurisdiction. Today, offshore jurisdictions exist for a variety of reasons. The most important reason is that as our world becomes smaller, and fewer businesses are local, there is an increasing need for internationalization. We think, plan and work with an eye toward expanding our horizons both at home and abroad. No longer will a domestic corporation satisfy the needs of a beneficial owner. Corporate structuring and planning have achieved higher levels of complexity than ever before, while the need for anonymity remains strong. IBCs are used outside of the place of incorporation for a limitless variety of activities including holding assets, manufacturing and tax minimization. IBCs are often used for trading with or in countries where satisfactory local commercial or corporate law is deficient or absent. Joint ventures often use IBCs when the participants are from different countries and prefer to incorporate in a jurisdiction neutral to all of the parties. IBCs can also serve to isolate or separate activities, assets or profit centers for tax, accounting or liability reasons. Where assets are cumbersome or expensive to transfer, such as patents, copyrights, trademarks, and real estate it is sometimes more advantageous to have such assets held by separate IBCs allowing the individual to transfer the shares in the corporation rather than the asset itself, thus not affecting title of the asset. Moreover, the ease of administration of an IBC encourages some users to take the entity public and offer the stock for sale on a major stock exchange. Offshore jurisdictions seek to make it attractive to incorporate IBCs in their country. In fact, since there are so many offshore jurisdictions an initial problem is how to select from the available options. Professionals and ultimately beneficial owners must keep pace and have a clear understanding of the characteristics of offshore jurisdictions. Therefore, it is important to identify some of the necessary choices that should be reviewed when considering an offshore jurisdiction. CHOICES Confidentiality Confidentiality may be the single most important feature that any offshore jurisdiction can offer. This is usually the impetus for moving offshore in the first place. The ability to protect the beneficial owner is the true test of an offshore jurisdiction. This, however, can be a double edged sword: too much information on the public record leaves the individual exposed and vulnerable to scrutiny while, too little information creates suspicion and raises “red flags”. This is a scenario where it would be beneficial to find a jurisdiction that does not require the mandatory filing of the names of officers, directors, and shareholders but allows the voluntary filing of the names of directors and officers. An even better scenario would be the ability to voluntarily file the names of directors and officers with the Registered Agent instead of the Government; thus, the information would be filed within the jurisdiction but not on the public registry. The issue of confidentiality also always leads to a discussion about bearer shares. At one time, most offshore jurisdictions allowed for bearer shares. Today, it is harder to locate a jurisdiction that offers these type of shares because of money laundering and terrorism concerns. Words such as “transparency” are used to heighten standards of offshore jurisdictions but secrecy is not necessarily associated with being dishonest. Europeans, in particular, quickly realized the need for easily portable assets. By not mentioning the specific name of the owner, whoever has physical possession of bearer shares can control the corporation and thus the assets owned by the IBC. Shares can be left outside the home jurisdiction and managed from another jurisdiction. This alleviates concerns over what happens to the family, or more importantly the family fortune, should the patriarch or matriarch suddenly be seized or killed in his/her home jurisdiction.1 Modern Legislation In order to ensure confidentiality, legislation of the offshore jurisdiction must be carefully reviewed. Keeping corporate laws current is to the maximum benefit of the beneficial owner. Also, worldwide familiarity of a jurisdiction’s corporate law is essential so that the beneficial owner can conduct business with the IBC in any location. The most popular jurisdictions have a legal system derived from a major western country. Professionals prefer western style legislation since it provides a familiar basis for legal interpretation and facilitates an understanding of the laws’ international practice, particularly in developed countries. In addition, inherent in the western tradition are the concepts of protection of private property and the promotion of international trade. A practitioner also needs to consider whether the corporate law of an offshore jurisdiction contains provisions invoking case law of another jurisdiction, or, in the alternative, offers a satisfactory local body of legal precedent.2 In order to be successful, a corporate law must provide IBCs the legal capacity to conduct all forms of commercial activity anywhere in the world. In order to accomplish this task, the IBC’s infrastructure must be flexible. Flexibility The most recognizable differences in offshore jurisdictions are those that are based on United Kingdom (UK) style and Civil Code corporate laws and those that are based on United States (US) common law style corporate laws. UK style and Civil Code jurisdictions usually require that the corporation keep corporate records in the jurisdiction itself. Not only does this basically force the IBC to use nominee officers and/or directors but it also automatically increases the cost and administrative burdens of the IBC. US style jurisdictions do not require the filing of names of officers, directors or shareholders. In addition, corporations are not required to file an annual report. This increases the confidentiality of general corporate business, as well as decreases the overall cost of corporate administration. The terminology is also different between UK and US styles of laws. UK style corporations use Memorandum of Association and Articles of Association, the equivalent of US Articles of Incorporation and Bylaws respectively. An important difference is that Articles of Association are filed and become part of the public record. An ideal jurisdiction would take advantage of the UK style infrastructure (Managing Director/Corporate Secretary) without the usual UK requirement of annual filings of directors and officers’ names and would add the ease of administration of a US style entity. Consideration must also be given to the flexibility of the law, has it or can it be amended to accommodate and allow for modern financing arrangements and communication capabilities. Directors and shareholders should be able to meet anywhere, conduct telephone meetings or take action by unanimous written consent. Flexibility should also include the name of the IBC. The name of the entity should be available in any language and any internationally recognized corporate suffix should be acceptable, allowing the IBC to conduct business in any location around the world. Along those same lines, filed documentation, including the Articles of Incorporation, should be able to be accompanied by a foreign language translation so the IBC can blend into the business environment of any country.3 Expenses/Costs Of course, the bottom line is always a consideration. The cost of formation and maintenance of the IBC. Formation/Annual Fees Costs may vary considerably, with incorporation fees ranging from US$500 to US$3,500. Minimum annual fees vary from US$450 to over US$1,000 depending on the jurisdiction and local maintenance requirements. There should be no additional mandatory fees or charges either upon incorporation or for the maintenance of the corporation.4 Tax Rate (if any) Today, most offshore jurisdictions are zero tax jurisdictions but due to outside pressures, this tax regime can readily change. To ensure zero tax, consideration should be given to a jurisdiction that statutorily exempts IBCs from taxes.5 Capitalization Tax In addition to general taxes, some thought should be given to any capitalization tax that the jurisdiction might impose upon the capital structure of the IBC not only upon incorporation but also as part of the annual fee. A higher rate of taxation is not unusual where the IBC has a large amount of capital stock or high total par value. However, some jurisdictions levy a fee for capital structure on an annual basis. This is a fee beyond the basic annual fee and should be figured into the total cost and maintenance of the IBC.6 Ease of Formation/Filings Ease of formation is another choice that depends on a jurisdiction’s resources. Formation procedures must be efficient. An offshore jurisdiction should have an option to produce standard Articles of Incorporation to alleviate the preparation of documentation by the client. Moreover, a jurisdiction should be able to “customize” Articles, so upon formation the client can refer to his/her own set of Articles of Incorporation. Formation is also aided if the jurisdiction allows for only one director and officer and if one individual can fill both positions. Or better yet, if the jurisdiction allows for corporate directors and officers. Careful thought must also be given to the amount of time that will be necessary to maintain the IBC for the duration of its existence. The most common features associated with “easy administration” are maintenance of corporate records in the offices of the corporation regardless of location (versus mandatory requirements that the books be kept in the jurisdiction of domicile), ability for directors to be located anywhere and no annual filing requirements. Other considerations with regard to administration should include the ease with which subsequent filings may be made. In today’s modern technological society, facsimile filings should be an option. When a filing is necessary, such as an amendment, no legalization and/or consularization should be required since this adds to the time and cost of filing the documentation. However, a jurisdiction should have the authorization to Apostille documents. An Apostille is an internationally recognized form of legalization, giving the IBC the ability to conduct business anywhere in the world. In order to issue an Apostille, an offshore jurisdiction must be signatory to the Hague Convention. 7 Service/Speed Ease of formation and filings will also depend on service and speed. These choices may be affected by how the offshore jurisdiction is structured. An attribute that a beneficial owner may consider when choosing an offshore jurisdiction is whether the corporate program is privatized. Privatization means that a non- governmental body is actually administering the corporate program. The benefit of this is that it reduces bureaucratic red tape and speeds up the incorporation process, resulting ultimately in better service. Competition among offshore jurisdictions is so great today that a superior level of service should be the norm, not the exception. Service is comprised of many items. First, adequate knowledgeable personnel willing to accommodate the needs of a professional and/or beneficial owner is necessary. Formation time is also a key element in the overall popularity of any offshore jurisdiction. The ability to incorporate in 24 hours (same day formations) or less as well as the ability to reserve names instantly are standard features of a competitive jurisdiction. The same speed should apply to the provision of filings and issuance of documentation. These services should be obtainable without delay at any time and their accuracy should never be an issue. Also, the ability to have rapid access to current and reliable information with respect to laws, including notification of any amendments to the corporate legislation. Moreover, an offshore jurisdiction should have easy access to lawyers who can render legal opinions immediately. 8 Resources: Size/Location Service and speed are also related to a jurisdiction’s resources. An offshore jurisdiction should have multiple offices with the ability to produce IBCs and file documentation, meaning the jurisdiction should be decentralized. Convenience, speed and cost serve as the main impetus behind decentralization. Practitioners should be able to use any administrative office of the jurisdiction for all needs. Each office should be adequately equipped to form corporations the same day that it receives instructions. Furthermore, each office should be able to reserve corporate names, issue Certificates of Goodstanding, and accept discretionary filings. With any formation or filing, documentation should be received within one or two business days. The ability to work with and form an IBC at a local office can save an individual a significant amount of time and money. With increased competition, it is imperative that a jurisdiction’s infrastructure be large enough and located in major cities in order to adequately service an international clientele. 9 Political Stability However, adequate infrastructure is not enough. A desirable jurisdiction should also be politically neutral, and must be acceptable to other countries in which the IBC may be operating and/or trading. Political stability is also essential to ensure continuity in rule of law and in the jurisdiction’s administration of the corporate program. Moreover, instability may lead to international sanctions that could affect a jurisdiction’s reputation and inhibit a beneficial owner’s ability to effectively use the IBC. 10 Ease of Movement The political and legal instability of some offshore jurisdictions has created an unsuitable environment to continue to maintain IBCs in these countries. The problem of what to do is vexing to many beneficial owners of offshore corporations. Dissolving the IBC is usually the most drastic and least practical solution. Staying in the current jurisdiction is a losing proposition at best. Merging companies can create tax issues. The final and most logical option is to redomicile/domesticate the IBC into a jurisdiction that is suited for the beneficial owner’s needs. A competent and competitive offshore jurisdiction should recognize this problem by offering a redomiciliation program to enable beneficial owners to enjoy the use of a jurisdiction that has both political and legal stability and a high level of confidentiality.11 Multiple Lines of Business Besides IBCs, a jurisdiction should offer a complete line of entity products. An example of this is the increasingly popular Limited Liability Company (LLC). A LLC provides for the liability protection of a corporation as well as the flexible management system of a partnership. A LLC is a cost effective way to maximize profits while minimizing liability and is an excellent vehicle for transactions requiring a considerable degree of passive investment such as venture capital projects, investments in real estate, oil or technology, as well as research and business development. The jurisdiction should also allow conversion, which allows a corporation to convert into another entity, including a LLC. 12 Reputation/Commercial Recognition Last but not least, is the reputation of an offshore jurisdiction. Does the jurisdiction constantly receive negative press? Is a jurisdiction widely accepted within the financial community? A beneficial owner may want to consider a jurisdiction with a strong maritime program. This is usually an indication of a widely accepted offshore jurisdiction. If the international banking community is willing to finance multi-million dollar vessels, it is usually willing to open a bank account for a beneficial owner using an IBC from the same jurisdiction. Also, commercial recognition and acceptability are important. Commercial recognition is a feature of an offshore jurisdiction that is earned. It is imperative to find a jurisdiction that is widely used within the banking community so that banks worldwide are familiar and comfortable with the jurisdiction’s legal system and corporate documentation. Therefore, one might want to choose a jurisdiction where a number of IBCs are listed on major stock exchanges. The professional and beneficial owner also needs to take into account the experience of the offshore jurisdiction. Consideration should be given to how long the current administration has been administering the corporate program for the offshore jurisdiction.13 CHALLENGES Reputation of a jurisdiction is also a proper introduction to the second part of this presentation, entitled Challenges…challenges within the offshore industry and challenges for offshore jurisdictions. There has been a lot of scrutiny of offshore jurisdictions, especially since September 11. Worldwide these events have produced reactions from international organizations, as well as banks. There is a perception that terrorists are hiding their money or using bearer shares to hide behind an IBC involved in illicit activity. In addition to the perception that a terrorist can be hiding behind an offshore company, there is seen a need by various international organizations to control and eliminate substandard offshore jurisdictions. Can criminal activity occur using an IBC in an offshore jurisdiction? The obvious answer is yes, but criminal activity can also occur using a corporate entity in an onshore jurisdiction. However, there are ways for an offshore jurisdiction to try to limit its exposure. Maintaining a quality offshore corporate program may be difficult but not impossible. A large part depends on the jurisdiction’s formation policy and its know your customer (KYC) rules. A reputable jurisdiction may want to limit formation requests to qualified intermediaries only and not end-users. An example of a qualified intermediary would be a lawyer or an accountant. These individuals not only know how to organize and operate an IBC, but have an obligation to conduct due diligence on the clientele (beneficial owner) that uses the IBC. Offshore jurisdictions might also want to place business limitations on IBCs, such as restricting an IBC from conducting any type of banking and/or insurance activities. However, a beneficial owner obviously does not want to choose a jurisdiction with too many business prohibitions. 14 A beneficial owner also wants to choose a jurisdiction that is not on the Financial Action Task Force (FATF) blacklist. Outside Pressures: Financial Action Task Force The FATF was established by the G-7 Summit in Paris in July 1989 to examine measures to combat money laundering. The FATF, comprised of twenty-six governments15 and two regional organizations, set up forty recommendations to fight money laundering. In 1996, the recommendations were revised to reflect changes in money laundering trends. On February, 14, 2000, the FATF published an initial report on the issue of non-cooperative countries and territories in the international fight against money laundering. The February 2000 report set out twenty-five criteria to identify detrimental rules and practices, which impede international cooperation in the fight against money laundering. Finally, at the FATF’s meetings in June 2000, the FATF approved a report that listed many offshore jurisdictions as non-cooperative countries.16 The Marshall Islands was placed on the list even though it was not an offshore banking jurisdiction and no evidence of money laundering was proffered. At that time, the Marshall Islands Government focused its energy on the main reason stated for placing the Marshall Islands on the FATF list; the lack of anti-money laundering legislation. Using a model anti-money laundering act provided by the United Nations as a template, the Marshall Islands carefully crafted its anti-money laundering legislation. On October 31, 2000, the Nitijela (parliament) enacted the Marshall Islands Banking (Amendment) Act. The Act forms the legislative foundation for the Marshall Islands' anti-money laundering regime. In short, the Act criminalizes money laundering, establishes KYC requirements for banks and non-bank financial institutions and institutes reporting and record-keeping requirements for the regulated institutions. In addition, the Act facilitates international cooperation and mutual assistance in deterring money laundering.17 In conjunction with enacting anti-money laundering legislation, the Marshall Islands Government, in November 2000, established a Domestic Financial Intelligence Unit (DFIU) to administer the anti-money laundering system. The DFIU, which is headed by the Commissioner of Banking, is similar to other financial intelligence units (FIUs) around the world. It analyzes suspicious activity and cash transaction reports from financial institutions and non-bank financial institutions in order to detect money laundering activities. When money laundering activities are suspected, the DFIU informs and forwards its findings to law enforcement agencies so that an investigation may be commenced. The DFIU also has the important role of acting as a conduit for the sharing and receiving of financial information from international FIUs when suspicious transactions arise. Once the legislation was passed and a body was in place to administer the system, it was necessary to change the focus to implementation. In order to accomplish this, the Marshall Islands’ had to establish an effective regulatory scheme to implement the Banking Amendment Act. The Commissioner of Banking and members from the Office of the Attorney General worked with the Federal Deposit Insurance Corporation (FDIC) to draft a set of regulations that provided the criteria and standards for reporting and compliance as required under the Act. The regulations, codified on May 27, 2002, were modeled after the anti-money laundering regulations established in the United States and Australia. The regulations included the following: 1) ownership control reporting requirements for financial institutions and cash dealers; 2) establishment of written anti-money laundering policies, appointment of compliance officers within each financial institutions and cash dealers, and training programs by financial institutions and cash dealers; 3) record keeping requirements for accounts; 4) record keeping requirements for transactions; 5) suspicious transaction reports; 6) cash transaction reports; and 7) civil monetary penalties. Once the regulatory framework was in place, the initial task of the DFIU was to educate all of the financial institutions and cash dealers on the new requirements that needed to be followed and executed. The members of the DFIU were well prepared for this enormous responsibility. Several times during the preceding months, the DFIU members traveled around the globe and received training from foreign FIUs and international bodies on the intricacies of money laundering. Once the financial institutions and cash dealers implemented their own internal controls and began submitting reports to the DFIU, as required under the Act, the Banking Commissioner started to audit the regulated entities. In September 2002, a team from the FATF visited the Marshall Islands to determine if the implementation was effective. The team discovered that the Marshall Islands had established an effective anti-money laundering system in line with international standards. The team recommended that the Marshall Islands be the first Pacific Island nation to be removed from the list. In its October Plenary Session of 2002, the FATF announced that the Marshall Islands was removed from the list of non-cooperative jurisdictions, thus ending the FATF challenge faced by the Marshall Islands. Since the de-listing the emphasis has been on maintenance of the system and cooperation with international FIUs. Internally, the DFIU continues to provide training and conduct audits of financial institutions and cash dealers on a regular basis. Internationally, the DFIU works closely with corresponding FIUs from around the world to assist with the detection and prevention of money laundering. Being listed as a non-cooperative country can impact an offshore jurisdiction and beneficial owner in many ways. Most importantly, is the ability of an IBC to operate within the financial community since most international banks will not conduct business with an IBC incorporated in a jurisdiction that is on the FATF blacklist. International Banking: Ability to Open Up Bank Accounts Whether it is a threat of money laundering or terrorism, IBCs have received intense scrutiny by the international banking community. The increased scrutiny in large part stems from new KYC requirements, due diligence and anti-money laundering laws and regulations that have been imposed on the banking community by various governments. Failure to effectively implement these rules and regulations can result in sizeable sanctions and fines for the banks. The outcome of this heightened scrutiny is that it is more difficult for IBCs to open bank accounts. Therefore, an offshore jurisdiction has to be able to work closely with the banking community to ensure the continued acceptance of its IBCs. The jurisdiction must educate compliance officers about its corporate program, including the type of documentation that is typically issued by the jurisdiction for an IBC. Furthermore, this type of interaction enables an offshore jurisdiction to understand what corporate documents are required to open an account and allows a jurisdiction to create an IBC package that will satisfy most documentation requirements. This scrutiny will probably not get any easier in the future. Changes are definitely in the air….changes that will result in the survival of fewer and fewer offshore jurisdictions due to a jurisdiction’s inability to effectively operate in an increasingly regulated international marketplace. For the last decade, I have been told that offshore jurisdictions will not last. This is not a true statement; however, there definitely will be a smaller group of viable offshore jurisdictions to choose from in the near future. CHANGES Although no single choice will influence the selection of an offshore jurisdiction…factors such as confidentiality, legislation, expense, political stability, reputation and service all have the potential to impact an IBC’s capacity to conduct business, open a bank account, hold real estate, and go public around the world. Also, challenges facing offshore jurisdictions such as outside pressures from international organizations and heightened scrutiny from the international banking community will dictate the ultimate success or failure of an offshore jurisdiction. One would need a crystal ball to speculate on the future of offshore jurisdictions, but I can assure you, that for the short term…offshore jurisdictions are here to stay…however, the choices of the beneficial owner and challenges confronted by the various corporate registries will dictate which offshore jurisdictions are here to stay for the long term. So taking all of this information into consideration, choose wisely, because in the end… THE CHOICE IS YOURS! _________________________ 1 The Marshall Islands provides maximum confidentiality, allowing for voluntary filings and bearer shares. 2 The Marshall Islands has modern corporate legislation based on US corporate law. Section 13 of the Marshall Islands Business Corporations Act (the “BCA”) states that insofar as it does not conflict with any other provisions of the Marshall Islands law, the BCA shall be applied and construed to make the laws of the Marshall Islands uniform with the laws of the State of Delaware. In addition, this section adopts the non-statutory general corporate law of the State of Delaware for non-resident domestic corporations. 3 The Marshall Islands BCA is one of the most modern statutes in the world. Although based upon US corporate law, the Marshall Islands law contains unique provisions enabling the use of UK style corporate management. Names may be in any language as long as Roman characters are used. Any standard corporate suffix is acceptable. The official legislation is in English and documentation must be expressed in English, but it may be accompanied by a translation in a foreign language. Directors and shareholders can meet anywhere, conduct telephone meetings or take action by unanimous written consent. 4 The cost to incorporate in the Marshall Islands is US$650, which includes the Registered Agent’s fee and the first year’s annual corporate maintenance fee. 5 Section 12 of the Marshall Islands BCA states that IBCs “shall be exempt from any corporate tax…corporate profit tax, income tax, withholding tax on revenues of the entity, asset tax, tax reporting requirement on revenues of the entity, stamp duty, exchange controls…” 6 Standard capital structure in a Marshall Islands IBC is 500 no par value or US$50,000 par value. A value over these amounts will incur a slight capitalization tax. This is a one time fee. 7 Either standard or custom Articles of Incorporation can be filed in the Marshall Islands. Corporate directors and officers are acceptable and corporate documentation can be kept in any location. Moreover, no resident directors are required and no annual filings are necessary. Facsimile filings are accepted and there are no legalization requirements. 8 International Registries, Inc. (IRI) is the sole administrator of the Marshall Islands corporate program. All IRI offices have the capacity to form IBCs and file corporate documentation the day the request or filing is received. IRI’s worldwide corporate staff possess a broad range of expertise, ranging from backgrounds in banking, law and accounting, enabling the corporate registry to assist and advise on any type of query. In addition, the corporate program is supported by a sophisticated computer database that provides up-to-date information on incorporations, name availability, and corporate status. Moreover, IRI has access to lawyers qualified to render Marshall Islands’ legal opinions. 9 A jurisdiction that meets all of these necessary criteria is the Marshall Islands. Currently, a Marshall Islands IBC can be formed in any IRI office worldwide, at any time, on any day. This decentralization of the corporate system enables clients to form IBCs quickly, in their own countries and time zones. 10 The Marshall Islands is a Pacific nation that enjoys political stability. It has been an independent, sovereign country since 1986 and a full member of the United Nations since 1991. It has a blend of American and British models of government with a President and a bicameral Parliament. 11 The Marshall Islands currently has an incentive program that allows entities to redomicile/domesticate to the Marshall Islands free of cost. In addition, an IBC that redomiciles to the Marshall Islands does not pay annual fees until one year after the redomiciliation date. The process is simple. One can redomicile to the Marshall Islands as long as it is not expressly prohibited in the IBC’s current jurisdiction. Articles of Domestication must be filed along with a copy of the underlying incorporation documents and a recent Certificate of Good Standing. 12 In 1996, the Marshall Islands enacted a LLC Act. The Marshall Islands law was modeled after the Delaware LLC law in the United States. Conversion is also included in the Marshall Islands BCA and LLC Acts. 13 IRI has been administering corporate registries for more than 55 years and has developed the Marshall Islands corporate program. The Marshall Islands currently has publicly traded IBCs on its corporate registry. The Marshall Islands maritime registry’s gross tonnage in its bluewater fleet has risen to over 18 million. It is now the ninth largest and the fastest growing open registry in the world. 14 IRI only forms entities for qualified intermediaries. IBCs are prohibited from conducting banking or insurance activities. 15 Argentina; Australia; Austria; Belgium; Brazil; Canada; Denmark; Finland; France; Germany; Greece; Hong Kong; China; Iceland; Ireland; Italy; Japan; Luxembourg; Mexico; the Kingdom of the Netherlands; New Zealand; Norway; Portugal; Singapore; Spain; Sweden; Switzerland; Turkey; the United Kingdom; and the United States. 16 Countries listed were Russia, Israel, Bahamas, Cayman Islands, Cook Islands, Dominica, Lebanon, Liechtenstein, Nauru, Niue, Panama, Philippines, St. Kitts and Nevis, St. Vincent and the Grenadines and the Marshall Islands. 17 The Act, however, does not adversely impact the Marshall Islands corporate registry and the issuance of bearer shares is still allowed.