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Liberia
Company formation in brief
The Liberian Associations Law based on the US Corporations Act in many aspects provides for the establishing of companies in such legal and organisational forms as:
• Corporation
• Registered business company
• Limited Liability Company
• Limited partnership
• Foundation
• Not-for-profit corporation
• Foreign maritime entity
Registration of all companies, keeping their records and registers, and providing a registered address to all companies with foreign investors without exception are performed by trust company Liberian International Ship and Corporate Registry (LISCR) which as authorised agent of the Ministry of Foreign Affairs of Liberia acts as the Registrar of Companies in Liberia. Currently, LISCR has several rolled out and administrative offices - in the United States, Switzerland, Greece, Hong Kong and London.
In addition, LISCR performs various administrative functions of the local registered agent, namely, holds meetings on behalf of companies’ shareholders, prepares minutes and provides other services. All required documents are quite promptly registered and issued, and it takes no more than 24 hours to agree all formalities related to the company name and statutory activities.
There is no need to specify the Liberian company’s objectives in the company charter - it is sufficient to note that the company will not carry out any activities prohibited by law, that include banking, insurance, stock exchange and casino in Liberia.
In Liberia, corporate officials, directors and shareholders are not restricted in terms of citizenship and place of residence. Directors and shareholders of non-resident companies in Liberia may be legal entities and physical persons.
Both registered and bearer shares may be issued; However, bearer share certificates must be kept for this purpose in a specially authorized depositary. If the company does not want to observe the rule, it may issue registered shares only and this should be specified in the statutory documents.
Shareholders’ and directors’ meetings may be held and the company’s records may be kept in any part of the world.
A Liberian corporation should have at least three directors if the number of its shareholders is not less than three. If the number of shareholders is less than three, the number of directors may also be less than three but not less than the number of shareholders.
Every corporation should have a president, a secretary, and a treasurer. One person may occupy all positions in the corporation, provided that this is a physical person.
Each registered business company may have one shareholder and one director, but the director and the secretary who should be appointed pursuant to the law in each registered business company in Liberia may not be the same person.
Each Liberian limited liability company may have one member and one manager.
Each Liberian partnership may have one general unlimited partner and one limited partner.
Foundations in Liberia are generally used for holding shares of a foreign maritime entity in trust and, as a consequence, for owning a Liberian ship.
Foreign maritime entities are legal entities incorporated outside Liberia that obtain the Foreign Maritime Entity status if they own and operate a ship or ships flying the flag of Liberia. At the same time, foreign entities do not lose their legal status in the countries of their registration but operate vessels on behalf of a Liberian company. Liberia's merchant fleet is one of the largest in the world, and shipowners around the world register their ships there. Every Liberian ship must be owned by a Liberian corporation. Each ship, regardless of its tonnage, is subject to a fixed administrative fee; this attracts shipowners from all the world.
Although the Registrar of Companies of Liberia neither demands that names of beneficial owners–non-residents of Liberian companies be disclosed nor maintains a public register of directors and shareholders, this information must be kept at the company’s registered agent office in Liberia and provided upon authorized persons’ request.
However, the Registrar of Companies of Liberia, upon a client’s request and on the basis of documents provided, may issue a certificate indicating any information that the client deems necessary to be reflected in that document for his own needs.
Any Liberian offshore company (actually, all Liberian companies owned and run by foreigners are offshore) may be liquidated for a failure to pay the annual fee upon renewing registration. The company will be recovered to normal status after all accumulated duties and penalties have been paid. However, it is possible that the company may not have the former name since if someone reserves a similar name in the Liberian register during the time when the company is deleted from it, the Registrar may not reject it.
Non-resident businesses are exempt from all types of taxes in Liberia provided that they do not make profit on its territory and do not have real estate items in Liberia.
IMPORTANT!
Since April 2020, the Liberian Companies Act has been amended to include, in particular:
- new definitions of “beneficial owner”, “nominal holder”, “ultimate effective control”, “ultimate ownership” and public companies,
- all legal entities are required to privately register each year information of the number of directors, management and ownership,
- bearer shares are cancelled.
The Republic of Liberia has amended its Associations Law, Title 5, Liberian Code of Laws Revised on April 6, 2020.
The amendments maintain international standards established by international multi-governmental organizations such as the OECD (Organization for Economic Cooperation and Development) and the FATF (Financial Action Task Force).
Key changes in the Associations Law include:
• Adoption of non-statutory Delaware Corporation and Business Entity Laws;
• Execution of Corporate documents for filing reduced to one officer or an authorized person;
• Acknowledgement of filing documents outside of Liberia without notarization and apostille;
• Acceptance of electronically transmitted corporate documents for filing, as well as, signatures, records and seals that are created, transmitted, signed and stored electronically;
• New definitions of “beneficial owner,” “nominee,” “ultimate effective control,” “ultimate ownership” and public companies;
• A mandatory requirement for all corporate entities to privately record information on the number of directors, management and ownership with the registered agent, The LISCR Trust Company, annually.
The most important procedural changes introduced by the amended Associations Law are:
Disabled bearer shares conversion deadline December 31, 2020
The amended Associations Law confirms the disabled bearer share conversion deadline of December 31, 2020. In practice, all corporations who were previously authorized in their Articles of Incorporation to issue bearer shares, but had their Articles of Incorporation automatically amended by the Registrar, will be required to submit an Attestation to the Registrar, confirming that all disabled bearer shares were either converted to registered shares or forfeited (cancelled) by December 31, 2020. Failure to submit a completed Attestation on or before the deadline will result in the issuance of a non-compliance penalty in the amount of $3,000; therefore, affecting the good standing status of the corporation.
Annual Declaration of Shareholding, Beneficial Ownership, Management and Record-keeping of the Corporation to be recorded with the Registered Agent
The amended Associations Law compels the registered agent to mandatorily require entities for which it serves as the registered agent, to annually record information pertaining to directors, management and ownership. To comply with this requirement, the registered agent of all non-resident entities, the LISCR Trust Company, shall require all entities to submit by 31 December, 2021, and annually thereafter, a Declaration detailing the number of shareholders, beneficial owners, directors and officers of the Liberian corporation, as well as, attest to the record-keeping obligation of the corporation and provide a point of contact whom is responsible for keeping the records of the entity.
Liberia is an offshore jurisdiction with a recognised concept of a tax exempt company (and/or offshore company, International Business Company (IBC), trust, foundation etc.) registration. A company formation in Liberia could be arranged with a professional registered agent providing incorporation, virtual office and other corporate services in Liberia. To set up a company in Liberia is possible by correspondence, but to open a bank account in Liberia will, most probably, require a personal visit.
Liberia has one Double Taxation Agreement with Germany and the Tax Information Exchange Agreements with Denmark, Faroe Island, Finland, France, Ghana, Greenland, Iceland, Netherlands, Norway, Portugal, Sweden and United Kingdom.
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