Ensuring the Confidentiality of Offshore Company Owners
One of the most significant advantages of offshore companies is the ability to conceal the identities of the true owners of the business – the beneficial owners. This is achieved through the mechanism of “Nominee Shareholders,” who are typically citizens of offshore jurisdictions and hold shares for the benefit of the beneficial owner in exchange for a fee.
To protect the interests of the beneficial owners of a business, nominees sign a special document called a “Declaration of Trust”. This document states that the nominee holds the shares in the company for a beneficiary, who may not be named in the document and whose signature is not required. The date and the name of the new owner are also left blank. This document is held by the beneficiary, who can at any time enter their name or the name of a new nominee, and the date, thereby transferring ownership of the company to themselves or another party.
Nominee Shareholder and Confidentiality in Offshore Jurisdictions
In addition to the nominee shareholder mechanism, some offshore jurisdictions do not require the maintenance of shareholder registers at all. This means there is no central location or document where the names of shareholders or business owners are publicly available.
In offshore jurisdictions where shareholder registers do exist, access by external parties is typically very difficult. Legislation often requires a company to be found guilty of a serious offence by a local court before the register can be disclosed. Since it is challenging for a company prohibited from conducting business within the offshore jurisdiction to commit an offence there, the level of confidentiality remains very high.
Obstacle to Anonymity in Offshore Business
A significant obstacle to achieving complete anonymity when conducting business offshore is the necessity of opening bank accounts. Banks, adhering to the “Know Your Customer” (KYC) regulations, are always mandated to ascertain the ultimate beneficial owner (UBO) of the funds.
Potential Solutions and Challenges
A potential solution to this challenge involves establishing structures of legal entities, each incorporated in different jurisdictions, with ownership cascading down through the structure.
However, implementing such schemes requires:
- Knowledge or at least a reasonable assumption of the operational model of the financial institution in question.
- Ideally, an established working relationship with the financial institution.
This is because, in most cases, banks view such complex structures with a high degree of suspicion. Furthermore, as nominee shareholders and nominee directors are ordinary people with their own flaws and weaknesses, their reliability can never be guaranteed. However, it is possible to minimise risks by working only with reputable registered agents who guarantee the integrity of their counterparties.
In order to ensure your security, we recommend that you consult with our specialists before ordering services.
