Clearly, the success of the LISCR Piraeus seminar in October requires closer examination.  The three guest speakers invited to participate were Jacques Leuba, a private banker with Banque Heritage in Geneva, Darlene Hart, Certified Public Accountant with U.S. Tax & Financial Services, of Geneva, Zürich and London, and Erich Baier, an Austrian tax specialist with Bilanz-Data, Vienna, Austria.

Jacques Leuba of Banque Heritage in Geneva, speaking privately as a Swiss banker, started his presentation discussing the banking climate in Switzerland following the signing of a new Protocol to the existing US-Switzerland tax treaty.  Jacques outlined the use of profiling techniques by intermediaries to manage information relating to beneficial ownership, residency and asset locality and types.  He went on to discuss life insurance wrappers and their role in the distribution of earnings to beneficiaries, and ended the presentation by mentioning private investment funds and the role today of the private banker in providing an integrated asset management approach to structuring funds.  Of course, the ability to use Liberian corporations was sprinkled throughout the presentation.

Darlene Hart of US Tax & Financial Services spoke on the consequences of doing business with United States connections. She started by providing an overview of the current US-Greece tax treaty before moving on to the issue of voluntary disclosures and, in particular, the US Voluntary Disclosure Program. Ms. Hart also spoke about the introduction of a new bill to the US Senate, which would require disclosure relating to beneficial ownership when a Delaware Corporation or LLC is formed.

The final speaker was Erich Baier of Bilanz-Data.  Erich focused on the use of Austrian private foundations and their origins. He noted that the use of foundations in Austria has existed for over 1500 years.  Mr. Baier explained what a foundation is, how assets are transferred into a foundation and what tax issues might exist in respect of the entity itself, its beneficiaries and the winding up of the foundation. In addition, he closed by discussing the differences between foundations and trusts. Since Liberia has its own private foundation law modeled on Austrian law, the topic was of keen interest to the participants.

In the next issue of CORPORATE@, the Liberian Foundation Law will be covered in the feature article.

Please contact any LISCR office for copies of any of the presentations.

The law relating to Limited Liability Companies (LLCs) was added to the Liberian Business Corporations Act, as chapter 14, in 2000 and was amended in 2002. Modeled upon the LLC Law of the U.S. State of Delaware, the Liberian LLC is a relatively new type of business entity, designed to provide the limited liability features of a corporation with the operational flexibility and efficiencies of a limited partnership. A typical feature of the LLC form of entity is that any income generated by the LLC does not attach to the entity itself, but flows directly through to its members.

The members are effectively the "owners" of an LLC. Each LLC must have a minimum of one member, and that member can be either an individual person or another business entity. A written Operating Agreement is entered into among the members. The respective interests, roles and rights of members in the LLC would be set-out in the Operating Agreement, as well as statements relating to the intended affairs, conduct and purpose of the entity.  This Agreement would be the principle operating document for a LLC, but unlike a corporation’s Articles of Incorporation, it would not be filed in the Registry and would, therefore, not become a public document and a matter of public record. There is an almost complete discretion given to an LLC's members to determine the terms of the Operating Agreement.

While the members are responsible for the management of a LLC, a management role can be assigned to an independent person, entity or a professional manager. Liberian LLCs have flexible administrative requirements and as such there is no requirement to conduct an annual general meeting of members. 

Following the provisions of the LLC law of the U.S. State of Delaware, a Liberian LLC protects its owners from liability to the same extent that shareholders of a corporation are protected from the corporation's debts and obligations. Moreover, due to its hybrid form, the LLC can be taxed like a partnership, a form of entity that carries the benefit of flow through taxation. The LLC is not a tax paying entity and any profits or losses are reported on the individual member’s tax return. In general, if the members wish to enjoy the tax advantages of a partnership, the Agreement should make clear that there is continuity of life of the Liberian LLC, centralized management, and free transferability of membership interests. 

The liabilities and duties of the members and managers may be expanded, restricted, or eliminated by provisions in the Operating Agreement. Usually, a manager of a Liberian LLC acting in good faith will not be held liable to the LLC, or to any other member or manager, for breach of a fiduciary duty. In general, members are protected from some liability for acts and debts of the LLC, but are still not responsible for any debts beyond the fiscal capacity of the entity. Thus, if the business itself cannot pay a creditor (e.g. a supplier or a lender) the creditor cannot legally come after an LLC member's personal assets. One should, however, be aware that a member could be held personally liable if he or she personally and directly injured someone, or guaranteed a bank loan or a business debt on which the LLC intentionally defaulted. Fraudulent, illegal, or reckless acts that cause harm to the LLC or to someone else, or the treating of the LLC as an extension of his or her personal affairs, might similarly attach personal liabilities.

There is no requirement to file information on the names of members or managers, nor is there a requirement to file an annual return. Information on the members and managers can appear in the Certificate of Formation or can be voluntarily filed. Voluntary filings with either the Registry or Registered Agent are possible.

As with all Liberian entities, formation instructions will only be accepted from professional intermediaries such as established trading businesses, company and trust managers, lawyers, banks and accountancy firms.  An instruction sheet and model form ‘Forming a Limited Liability Company in Liberia’ is available for clients to use. It can be submitted through any LISCR office, and the filing of the Certificate of Formation in the Registry can be done on the same day.