The Liberian Government has enacted an Amendment to the Business Corporation Act, Chapter 1, Title 5, Liberian Code of Laws Revised, relating to bearer shares. The text of the Amendment is available on the Corporate Registry’s website (PDF link). Recognizing the new international standards for maintaining beneficial ownership information for domestic and foreign entities, striving to ensure compliance with these standards and eliminate risks for tax evasion, illicit flow of capital, money laundering and terrorist financing, the Amendment introduces the following changes to existing bearer shares regulation.
- Bearer shares cannot be issued for new Liberian non-resident corporations incorporated after May 31, 2018, meaning that no new corporations are allowed to have bearer shares.
- All existing corporations, which are authorized by their Articles of Incorporation to issue bearer shares must, on and after the first anniversary of incorporation subsequent to December 31, 2018, do one of the following:
(a) File Articles of Amendment to Articles of Incorporation to authorize issuance of registered shares only, and cause each holder to convert bearer shares to registered form;
(b) Maintain the option of having bearer shares and have the holders of already issued bearer shares place such bearer shares into custody under a custodial agreement with an approved Custodian; or
(c) If no bearer shares have yet been issued, but the Corporation prefers to retain the authority to issue bearer shares, the Corporation must inform the Registrar accordingly.
- If the Corporation does not do anything of the above, then with the effect on the first anniversary date of its incorporation subsequent to December 31, 2018, its Articles of Incorporation shall be automatically amended to authorize issuance of registered shares only. As a result, all issued and outstanding bearer shares shall be disabled, and the Corporation shall be subject to a fine and possible revocation or cancellation of its corporate documents.
- Holders of bearer shares who decide to maintain their bearer shares are required to sign a custodial agreement with an approved Custodian and place their shares in custody. Information provided to the Custodian shall include name and contact details of the bearer share holder and the beneficial owner, but such information shall remain confidential, subject to the custodial agreement.
- Once bearer shares are placed in custody, the Custodian will inform the Corporation accordingly.
- Corporations shall be required to inform Registrar that bearer shares have been placed in custody, or that no bearer shares have been issued. The Registrar will provide the corporation with an Affidavit form to submit such information. Failure to file the Affidavit with the Registrar will result in penalties imposed on the corporation, possible revocation and involuntary dissolution in due course.
- The Amendment designates the LISCR Trust Company to be the authorized Custodian for bearer shares of Liberian non-resident corporations, and allows other entities, willing to act as a Custodian, to apply for a corresponding approval from the Ministry of Foreign Affairs. More information on the LISCR Trust Company custodial services available from the Registrar upon request.
For further information, please refer to Frequently Asked Question on the Corporate Registry’s website (PDF link).