Key Takeaways
- Marshall Islands companies must keep proper accounting and financial records under the Business Corporations Act, even where no specific accounting standard is mandated.
- Records carry a five-year retention period, and the article explains where they must be kept and which financial documents are covered.
- Although audits and formal financial statements are not always required, sound books support banking access, substance and good standing.
- Failing to maintain adequate records exposes a company to consequences that the article sets out for non-resident owners and their advisers.
Accounting and Bookkeeping Obligations for Marshall Islands Companies: An Overview
Accounting and bookkeeping in the Marshall Islands rests on a single functional duty: a non-resident company must keep records sufficient to determine its financial position at any time. There is no obligation to file financial statements, no mandatory audit, and no public accounts register. The duty flows from the Business Corporations Act, administered for non-resident entities by the RMI Registrar of Corporations through International Registries, Inc.
This obligation applies to every non-resident domestic corporation, partnership, limited partnership, and LLC formed under the law. The article explains what records you must hold, where and how long to keep them, why no accounting standard or audit is imposed, and what happens if you fall short. It is written for foreign owners and their advisers who control a Marshall Islands entity from abroad and need to know exactly how light, and how serious, the recordkeeping regime is.
The Legal Basis: Recordkeeping Duties Under the Business Corporations Act
The governing statute is the Business Corporations Act, codified at 52 MIRC Part I within the Marshall Islands Revised Code 2004. It was first enacted in 1990 as part of the RMI Associations Law, which also houses the Revised Partnership Act, the Limited Partnership Act, and the LLC Act of 1996.
Recordkeeping sits in Division 8 of the Act, headed "Corporate Records and Reports." Section 80, which requires the keeping of books of account, minutes, and shareholder records, is the operative provision; surrounding sections cover inspection rights, the list of directors and officers, and the annual report.
A series of amendments driven by OECD and FATF transparency work expanded these duties over time, adding record obligations around directors, officers, and beneficial owners. The regulator for non-resident entities is the RMI Registrar of Corporations, with the registry managed by Marshall Islands Maritime and Corporate Administrators and administered operationally by International Registries, Inc.
One structural point shapes everything that follows. Under Section 12, non-resident domestic corporations, partnerships, trusts, and LLCs are exempt from corporate tax, net income tax, asset tax, stamp duty, exchange controls, and tax reporting on revenues; only the formation and annual fees apply.
The tax exemption removes filing duties to the local authorities, but the duty to keep books of account under Section 80 remains fully in force.
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Which Accounting and Financial Records Must Be Kept
The core requirement is to maintain, internally, accounting records that let the financial position of the company be reasonably determined at any time. In practice that means the ordinary documentary trail of a trading or holding entity.
Records that satisfy the duty include:
- Ledgers and books of account
- Contracts, invoices, and receipts
- Bank statements and other transaction evidence
- Organisational documents, minutes of meetings, and any annual reports
Beyond the financial trail, the 2017 and 2018 amendments require each non-resident corporation to maintain a list of current directors and executive officers, a record of beneficial owners with names and addresses, and its accounting records and underlying documentation, or to attest that such records are not being kept.
Since the 2019 amendments, every entity must also hold a Beneficial Ownership Register covering each individual who ultimately owns or controls 25 percent or more of the company. That register is private, kept at the registered office, and produced to the RMI government or registered agent on formal request; a fuller treatment of beneficial ownership sits outside this article.
Publicly-traded entities are carved out of certain of these obligations. For the standard privately-held non-resident company, all of the above applies.
Accounting Standards: What Applies and Why None Is Mandated
No accounting standard is imposed. The law names neither IFRS nor US GAAP nor any other framework as mandatory for non-resident domestic entities, and this absence is confirmed both in the text of the Act and across official and practitioner sources.
The obligation is purely functional: records adequate to show the financial position of the firm. How you structure those records is left to you, and nothing must be lodged on any public file.
That said, two realities push owners toward a recognised framework anyway. Companies that need a bank account or external financing usually keep their books under IFRS or the standards of the owner's home country, and management accounts remain advisable for the entity's own analysis, its investors, and its security. Both are market and banking expectations, not statutory rules of the jurisdiction.
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Where Records Must Be Kept and the Five-Year Retention Period
Records may be held anywhere in the world. There is no requirement to store them locally and no obligation to submit them, but they must exist and be retrievable.
The retention period is at least five years from the date of the relevant transaction. Every non-resident entity must appoint a registered agent and maintain a registered office address within the jurisdiction, and that agent is the statutory conduit for the records.
Although the books themselves can sit offshore, the company must produce its accounting records or information on the demand of the registered agent or under a valid governmental request. No filing portal exists for routine accounting records; they stay private with the entity or its service provider.
| Element | Position under the law |
|---|---|
| Where records may be held | Anywhere in the world |
| Minimum retention | Five years from the transaction date |
| Public filing of accounts | None |
| Production on request | To registered agent or government |
Preparing Annual Financial Statements: Practice Versus Requirement
There is no duty to file annual financial statements, audit reports, or income tax returns with the government. No public filing requirement comparable to the UK's Companies House or the US SEC exists for a non-resident company here.
The principal recurring obligation is payment of the government renewal fee to International Registries and maintenance of the registered agent relationship. Beyond that, the only report many entities must submit annually is the economic substance report, where it applies, which is the subject of a separate article.
What the law does not demand, the market does. Banks, lenders, investors, and controlled-foreign-company regulators in the owner's home country routinely require financial statements, so non-preparation is a practical exposure even though it breaches no local rule. Preparing accounts annually is the sensible default for any entity that intends to bank or raise money.
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Audit Requirements and Thresholds in the Marshall Islands
No statutory audit applies. There is no mandatory audit and no threshold by revenue, assets, or headcount for a standard non-resident corporation or LLC.
The single exception is regulated activity. An entity engaged in banking, insurance, or investment fund management requires a specific licence and falls under separate prudential frameworks, which carry their own audit duties; the general principle that licensed financial-sector firms face audit obligations under their licensing statutes holds here as elsewhere.
Audits do sometimes happen on a voluntary or externally-driven basis. Owners arrange audited statements for controlled-foreign-company purposes or to satisfy a bank or counterparty, but these are home-country or commercial requirements, not obligations of the jurisdiction.
Why Sound Bookkeeping Still Matters for Banking, Substance, and Good Standing
The light statutory regime can mislead. Several pressures make disciplined bookkeeping necessary in practice, even where the law stays silent.
Banking is the first. The jurisdiction appears on the EU list of non-cooperative jurisdictions for tax purposes, banking options are narrow, and the institutions that do open accounts run a long and demanding due diligence process that turns on credible financial records.
Economic substance is the second. Substance legislation took effect on 1 January 2019, and an in-scope entity must file an annual report confirming it meets the substance test, including information on the financial results of its activity, through the RMI's online portal within 12 months of its anniversary date; the substance regime itself is covered separately. Good standing is the third pressure, because a Certificate of Good Standing can only issue where annual reports are filed and fees are paid.
Finally, the absence of local filing does not switch off your home-country duties. Controlled-foreign-company rules, FBAR obligations, foreign income reporting, and CRS or FATCA exchange all operate on the basis of your tax residency, not the rules of the jurisdiction where the company is registered.
For most foreign owners, the binding accounting pressure comes from CFC and home-country tax rules and from banks, not from the Marshall Islands itself.
Bookkeeping in Practice: Setting Up and Maintaining Your Records
A workable setup follows directly from the rules. Keep adequate accounting records, retain them for the five-year minimum, and ensure they can be produced when asked.
- Decide where the books live: the director's office, a professional accounting firm, or a cloud system in any country.
- Capture the full documentary trail, from ledgers and invoices to bank statements and contracts.
- Maintain the list of directors and officers and the beneficial ownership register alongside the financial records.
- Be ready to hand records to the registered agent or government on demand.
- Where substance reporting applies, prepare the financial results data the report needs, filed through the economic substance portal within 12 months of the reporting period's end.
Each year, an attestation to the Registrar confirms whether accounting records and underlying documentation are being maintained. No specific form name for that attestation has been published; it is made through the registered agent as part of the ordinary annual compliance cycle.
For owners who expect to bank or raise finance, keeping internal records to a recognised standard and being able to produce reports on request is the prudent baseline.
Consequences of Failing to Keep Proper Books and Records
The penalties are real despite the absence of routine filing. Knowingly or recklessly failing to keep, retain, maintain, produce, or attest to records of directors and officers, beneficial owners, or managers, or refusing to make a required attestation, exposes the entity to a fine and to loss of its corporate existence. The same exposure attaches to wilfully producing false or misleading records or making false attestations.
| Failure | Consequence |
|---|---|
| Records or attestation failure (Division 8) | Fine up to $50,000 and/or revocation of formation documents and dissolution |
| Beneficial ownership non-compliance | May invalidate share issuance and transfers; automatic cancellation of bearer share certificates |
| Economic substance test failed, one period | Fine up to $50,000, dissolution, or both |
| Economic substance test failed, two consecutive periods | Fine up to $100,000, dissolution, or both |
| Late economic substance filing | Penalty or strike-off from the register |
| Unpaid annual fee or no registered agent (§104) | Dissolution |
Persistent non-compliance can also trigger a cascade beyond the islands. Escalating financial penalties, notification to the tax authority in the owner's country of residence, and strike-off from the register are all possible outcomes for an entity that lets its records and fees lapse.
Conclusion
The recordkeeping regime here is among the lightest a foreign owner will encounter: keep adequate books, hold them five years, produce them on request, and file nothing routine with the government. The trap is reading "no filing" as "no records," because the duty under the Act carries a $50,000 fine and dissolution, and your bank and home-country tax authority will demand statements the local law never asks for.
The practical step is to set up proper bookkeeping from day one, to a standard your bank and your home jurisdiction's CFC rules will accept, rather than to the minimum the islands require.
How Expanship Can Help Your Business in the Marshall Islands
Expanship maintains accounting and bookkeeping for non-resident entities, keeping the books to a standard that satisfies banks and home-country reporting while meeting the five-year retention and production duties; the same team manages the wider compliance cycle for a foreign-owned company.
- Company formation for non-resident corporations, partnerships, and LLCs
- Registered agent and registered office services
- Ongoing compliance and annual filing management
- Accounting, bookkeeping, and preparation of financial statements
- Economic substance and beneficial ownership support
- Banking introductions and due diligence preparation
To discuss setting up or maintaining your entity, contact Expanship Marshall Islands.
Frequently Asked Questions
No. A non-resident company is not required to file financial statements, audit reports, or income tax returns with the authorities, and there is no public accounts register. The duty is to keep adequate records internally, not to lodge them.
At least five years from the date of the relevant transaction. Records may be stored anywhere in the world, but they must be retrievable and produced to the registered agent or government on request.
There is no mandatory audit and no statutory threshold based on revenue, assets, or employees. The exception is regulated activity such as banking, insurance, or fund management, where the relevant licence imposes its own audit obligations.
None is mandated. The law requires records sufficient to determine the company's financial position but designates no framework; entities that need banking or financing commonly keep their books under IFRS or their home-country standard as a market expectation.
Knowingly or recklessly failing to keep, produce, or attest to required records, or making false attestations, can bring a fine of up to $50,000 and the revocation of formation documents and dissolution. The same penalties apply to maintaining or producing false or misleading records.
No. Controlled-foreign-company rules, FBAR, foreign income reporting, and CRS or FATCA exchange operate on your tax residency, so you may still owe filings and statements in your own country regardless of what the islands require.
Legal Disclaimer
The information provided in this article is for general informational purposes only and does not constitute legal, tax, or professional advice. While we strive to ensure the accuracy and timeliness of the content, laws and regulations are subject to change, and the application of laws can vary widely based on specific facts and circumstances.
Readers should not act upon this information without seeking professional counsel tailored to their individual situation. Expanship and its authors disclaim any liability for actions taken or not taken based on the content of this article.
For specific advice regarding your business setup, compliance requirements, or any legal matters, please consult with qualified legal and tax professionals in the relevant jurisdiction.
