General Partnership (GP) in the Marshall Islands Explained

Understanding the General Partnership (GP) in the Marshall IslandsCopy link to section

A general partnership in the Marshall Islands is a vehicle open to non-residents of any nationality, governed by one of the more modern partnership statutes in the world and administered by the offshore registry run by International Registries. For a foreign owner, the single fact to grasp first is that a GP gives no liability shield: partners are jointly and severally liable for the firm's obligations, and personal assets can be exposed. This guide explains how the GP works, who tends to use it, how it is taxed, and when a limited-liability entity is the wiser choice.

The structure suits a narrow group, mostly parties who are themselves corporate entities and who value flexible profit-sharing over corporate formality. Individual founders seeking asset protection should read the comparison with the LLC further below before committing.

Legal Basis and Governing Law for General PartnershipsCopy link to section

The governing statute is the Revised Partnership Act, codified as 52 MIRC Chapter 2 (P.L. 2005-28), which sits within the broader Associations Law alongside the Business Corporations Act, the Limited Partnership Act, and the Limited Liability Company Act. The earlier Partnership Act of 1990 was folded into this revised text.

This body of law is modelled on the corporate statutes of the US state of Delaware, which gives foreign advisers a familiar legal logic to work from. One consequence matters at the outset: under the Act, a partnership is treated as a separate legal entity distinct from its partners, unless the certificate of partnership existence and the partnership agreement provide otherwise.

Amendments to the Act have tracked updated OECD and FATF standards on transparency and the availability of ownership information for tax purposes. That direction of travel explains the beneficial-ownership and economic-substance duties covered later in this article.

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Defining Features: No Separate Legal Personality and Unlimited Partner LiabilityCopy link to section

Separate entity status is the default, but it is not absolute. Partners can contractually opt out of separate legal personality through the certificate and the partnership agreement, which makes careful drafting essential rather than optional.

The liability position is the defining trait for a foreign founder. No partner enjoys a liability cap; each is jointly and severally liable for all obligations of the firm, and personal assets may be reached if partnership assets fall short.

A partnership may sue and be sued in its own name. Property the business acquires belongs to the partnership rather than to the partners individually, unless the certificate and agreement say otherwise.

There are no shares and no par value in a GP. Partners hold partnership interests, and a partner cannot demand a distribution in kind beyond a share proportionate to that partner's distribution entitlement.

Ownership, Partner Structure, and Internal ManagementCopy link to section

A GP requires at least two partners; one person alone cannot form one, and there is no statutory maximum. Partners may be natural persons or legal entities, and a foreign corporation, partnership, LLC, or trust is not deemed to be "doing business" in the jurisdiction merely by holding a partnership interest.

Management is vested in the partners or as they delegate it in the partnership agreement. Each general partner acts as an agent of the firm with authority to bind it, and gains and losses may be allocated freely under the agreement rather than by a fixed statutory formula.

The structure carries no corporate overhead. There is no board, no company secretary, and no requirement for a resident manager or local officer.

Following amendments in 2018, partner meetings may be held using communications equipment that lets participants speak with one another, and consent given by electronic transmission counts as written. Partner names are not filed in any public registry, which preserves confidentiality, yet the firm must maintain current internal records of the names and addresses of all beneficial owners.

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Who May Register a General Partnership and the Reality for Foreign FoundersCopy link to section

The registry imposes no citizenship, residency, or geographic restriction on partners. A foreign entity acting as a partner benefits from an explicit safe harbour: it is not treated as carrying on business locally simply by reason of that interest.

To bring a GP into existence, a Certificate of Partnership Existence is filed with the Registrar. The certificate names the partnership, gives the registered agent's name and address, confirms the agent will accept service of process, and states that a Certificate of Cancellation will be filed on dissolution and winding up.

A registered agent must be maintained continuously. The default agent for non-resident entities is The Trust Company of the Marshall Islands, Inc., and a firm that fails to keep an agent faces dissolution or revocation of its authority to do business.

For a founder abroad, the practical position is straightforward: no local director, manager, or partner is needed, and the entity can be formed remotely. The one constraint is procedural, since formation requests must be submitted by a professional intermediary, such as an attorney, accountant, or corporate service company, through a recognised IRI office.

Typical Uses and Who Chooses a General PartnershipCopy link to section

The GP is one of the less common choices for non-resident use, with the International Business Corporation far more popular. Where it is selected, the reason is usually flexible management and the ability to allocate profit and loss as the partners agree.

Several patterns recur:

• Joint ventures between known parties that trust one another and prefer contractual flexibility to corporate formality.
• Maritime and vessel-owning structures, where owners of locally flagged ships are typically non-resident domestic entities, and a GP can sit within that arrangement.
• Fund and investment structures that want pass-through treatment in the partners' home countries, since a GP is usually fiscally transparent abroad.
• Intra-group holding of a jointly held asset by two related corporate entities.

The common thread among sensible users is that the partners are themselves limited-liability entities. Because partners carry unlimited personal exposure, the GP is poorly suited to individual founders with personal assets to protect.

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Taxation and Compliance Treatment at a High LevelCopy link to section

Non-resident entities pay no local tax. Since the Associations Law took effect in 1990, non-resident companies have been exempt from income, corporate, capital-gains, dividend-withholding, and stamp duties, and a non-resident GP falls within that exemption.

Payments of interest, dividends, royalties, rents, compensation, or other income from one non-resident entity to another, or to persons who are not citizens or residents, escape any local tax or withholding. Partners remain bound by their own home rules, however, and US persons and taxpayers in countries that tax worldwide income must declare their share of GP income at home.

The compliance load centres on economic substance. Under the RMI Economic Substance Regulations 2018, in force from 1 January 2019, every non-resident domestic entity must file an annual report on economic substance, and a GP is such an entity. You can review the regulator's guidance on the economic substance page.

An entity is "relevant" and within scope unless it is centrally managed and controlled outside the jurisdiction and tax resident elsewhere, with objective evidence of that foreign tax residence supplied to the Registrar. Relevant activities include distribution and service-centre business, financing and leasing, fund management, headquarters business, holding company business, intellectual property business, and shipping.

Reports are filed through the registry's secure online portal within 12 months of the entity's anniversary date. A relevant entity that fails the substance test can be fined up to USD 50,000 for the period, have its formation documents revoked, or both, and failure across two consecutive periods raises the ceiling to USD 100,000.

There is no requirement to file financial statements or annual returns, though internal records must be kept. Beneficial-ownership records must be actively maintained and kept current; failure can draw a fine of up to USD 50,000 and revocation of formation documents.

Advantages and Limitations of the General PartnershipCopy link to section

The case for a GP rests on flexibility and low friction. The case against it rests almost entirely on unlimited liability.

Electronic signatures and remote partner meetings are accepted, and capital may be expressed in any currency with no exchange controls. The absence of a recognisable share structure, however, means some foreign banks ask for additional papers to confirm the firm's legal standing.

When a Limited-Liability Company Is the Better ChoiceCopy link to section

For most foreign owners, the LLC is the more sensible route. It combines the limited liability of a corporation with the flexible management and allocation features of a partnership, governed by the Limited Liability Company Act of 1996.

An LLC protects members from personal liability beyond their capital contribution, which a GP does not. Like a partnership, an LLC allows flexible allocation of gains and losses, and it accommodates passive investment in real estate, venture projects, research and development, technology, and energy.

Prefer an LLC or limited partnership over a GP when any of the following holds:

1. A partner or member is a natural person with personal assets at stake.
2. Passive investors are involved who should not carry unlimited exposure.
3. The structure must satisfy institutional counterparties or banks expecting a recognisable limited-liability entity.

The GP keeps a place only in narrow cases, chiefly where every partner is itself a corporate entity with its own liability cap and where clean tax pass-through without entity-level complication is the priority.

Formation Overview at a GlanceCopy link to section

Formation is light and quick; the detailed procedure is covered in the dedicated incorporation guide. The essentials below are enough to plan around.

• Governing statute: Revised Partnership Act (52 MIRC Ch. 2, P.L. 2005-28).
• Registry: Registrar of Corporations for Non-Resident Domestic Entities, administered by International Registries Inc. and The Trust Company of the Marshall Islands, Inc.
• Formation document: a Certificate of Partnership Existence, which may be general but must state the partnership name, the registered agent's contact details, and a commitment to file a Certificate of Dissolution on winding up.
• Timing: entities can typically be formed and documents issued within one business day.
• Who files: a professional intermediary submits the request to a worldwide IRI office.
• Registered agent: mandatory and continuous; the default for non-resident entities is The Trust Company of the Marshall Islands, Inc.
• Local roles: no local director, partner, or secretary required.
• KYC: a notarised copy of a valid passport (notarised within the last three months) and notarised proof of address showing the holder's full name and physical residential address in English; P.O. Box addresses are not accepted.
• Annual fee: payable to the Registrar, with cancellation as the remedy for non-payment; confirm the current amount with IRI or an authorised agent before relying on a figure.
• ESR declaration: due within 12 months of the anniversary date, filed through the registry portal.
• Dissolution: a Certificate of Dissolution is filed on winding up.

Redomiciliation runs both ways: a foreign partnership may move into the Republic, and a domestic partnership may transfer out.

ConclusionCopy link to section

A general partnership in the Marshall Islands offers genuine flexibility, no local tax for non-residents, and fast remote formation, but it asks every partner to accept unlimited personal liability in return. That trade-off works only where the partners are themselves limited-liability entities and where pass-through treatment is the goal. Individual founders, passive investors, and anyone facing institutional counterparties will almost always be better served by an LLC. Whichever route you take, the partnership agreement, the registered-agent duty, and the annual economic-substance filing deserve attention from the start.

How Expanship Can Help Your Business in the Marshall IslandsCopy link to section

Expanship advises foreign owners on whether a general partnership fits their objectives, drafts and reviews the partnership documentation, and handles the filing with the registry through an authorised channel. The same team supports the wider needs of a non-resident entity, from formation through ongoing compliance.

• Entity formation, including general partnerships, LLCs, and IBCs
• Registered agent and registered office services
• Tax registration and home-country reporting coordination
• Annual economic-substance and beneficial-ownership compliance management
• Accounting and bookkeeping support
• Introductions to banking providers

To discuss the right structure for your situation, contact Expanship Marshall Islands.

Frequently Asked QuestionsCopy link to section