Shell game: Britain makes a bold move on making firms say who owns them
November 5, 2013 Leave a comment
Shell game: Britain makes a bold move on making firms say who owns them
Nov 2nd 2013 |From the print edition
CONCEALING a company’s ownership is legal in most countries. So long as you stay away from the stock exchange, you can register the owner as another firm or list a nominee (such as a friendly lawyer). Even using false or flimsy documents is often, in effect, risk-free. Checks are scanty: registrars record what they are told but often fail to check it. The result is a corporate vehicle that can prudently preserve privacy—or wreak mayhem. Global Witness, a London-based anti-corruption campaign, calls such anonymous shell companies the “global getaway cars for crime, corruption and tax evasion”.The British government said last year that it was planning to make companies identify their real owners. Now it has given details—and says that the registry will be public. Campaigners are exuberant. Supporters of corporate secrecy (they call it privacy), including lawyers’ and accountants’ groups, had lobbied hard against publishing ownership details, fearing it would increase the bureaucratic burden on firms, blunt Britain’s competitive edge and expose shareholders to harassment by cranks. But David Cameron spoke of a “need to shine a spotlight on who owns what and where money is really flowing”.
Business opinion has shifted sharply. The Confederation of British Industry and the Institute of Directors have both backed the move. Companies like knowing who they are dealing with. They think more transparency could improve Britain’s business environment. The proposal will affect 2.5m companies and partnerships. Most of these have simple arrangements, where the legal and beneficial owners are the same. But about 400,000 will need to come up with more information.
Campaigners have welcomed Mr Cameron’s announcement. But they want more details. How much data will be collected; how will it be checked, with what penalties for evaders; and will it be made available in user-friendly format?
Mr Cameron hopes other countries will follow his lead. Many like the idea of collecting better ownership information for law-enforcement, but most are wary of making the data public. Attention will focus on offshore financial centres with British links, some of which are notorious for the secrecy that they offer their corporate citizens. Most have offered to hold consultations, but show little enthusiasm for Mr Cameron’s sunlight.
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