{"id":1959,"date":"2019-12-06T03:55:37","date_gmt":"2019-12-06T03:55:37","guid":{"rendered":"https:\/\/delaneysilva.com\/blog\/?p=1959"},"modified":"2019-12-09T19:04:45","modified_gmt":"2019-12-09T19:04:45","slug":"about-the-panama-papers-a-commentary-on-offshore-companies-and-the-corporate-veil","status":"publish","type":"post","link":"https:\/\/delaneysilva.com\/blog\/about-the-panama-papers-a-commentary-on-offshore-companies-and-the-corporate-veil\/","title":{"rendered":"About the Panama Papers: A Commentary on Offshore Companies and the Corporate Veil"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">In 2009 Dr. Jason Sharman, a professor at Griffith University, \nconducted a study with some of his students in which they intentionally \ntried to legally set-up shell companies in various countries, without \nhaving a real business and without divulging their true identities. They\n tried in 22 countries and found that in 13 of them they were \nsuccessful, including in industrialized countries like the United \nStates, the United Kingdom and Canada. In these countries it was \npossible to legally establish a company with no real operations and \nwithout revealing the true identities of their shareholders. \nFurthermore, in some cases, they were able to open bank accounts and in \nothers the whole process took only one day. Clearly, countries are not \ndoing enough to regulate companies.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In light of the news regarding the Panama Papers, where leaked \ndocuments from a Panamanian law firm revealed that individuals from many\n countries in the world use offshore companies for different activities,\n it is suitable to reflect on the topic. The sensationalism value of the\n report is mainly due to the disclosure of the many famous and \ninfluential people that use this figure to manage their affairs \u2013 which \nbefore were protected under the anonymity offered by the corporate veil \noverseas. But, is this anonymity legal? Is the corporate veil always a \nmeans for unlawful behavior? Are offshore companies always bad?<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\"><p><strong>&#8220;Countries are competing in a globalized market where a good business environment and the reduction of the tax burden become competitive advantages to attract revenue. The fact that an investor chooses to establish his or her company in another country in order to take advantage of these benefits &#8212; provided by the governments themselves &#8212; is not awful.&#8221;<\/strong><\/p><\/blockquote>\n\n\n\n<p class=\"wp-block-paragraph\"> The corporate veil doctrine refers to the limited liability and  anonymity that shield the identity of the true owners of a company. It  is a tool to protect capital investors of a business designed as a wall  to separate their personal liability from the obligations of the company  as an independent legal entity. Its main purpose is to allow a  shareholder to invest in a company without putting his own assets at  risk.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The challenge of the corporate veil doctrine is that this legal  protection to investors also encompasses the protection of their  identities. No doubt that the corporate veil is an important assurance  in the business world. Without it, a majority of capital investors would  not dare invest out of fear of being affected personally. Nevertheless,  this protection could also give rise to situations of abuse from  persons who seek to shield themselves behind the anonymity it provides  to carry out unlawful activities.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">For example, shell companies \u2013 like the ones that Dr. Sharman and his\n students successfully were able to set-up \u2013 are established and exist \nlegally, but do not carry out any commercial activity in practice. Their\n formal appearance is proper and they have all the necessary paperwork \nto support their alleged operations. However, it is all a legal <em>facade<\/em> that allows them to cover up the true objective of hiding marginal or non-existing operations.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Questions on the Panama Papers should focus on the fact that some of  these companies are shell companies; and not on the fact that they are  offshore companies <em>per se<\/em>. Countries are competing in a  globalized market where a good business environment and the reduction of  the tax burden become competitive advantages to attract revenue. The  fact that an investor chooses to establish his or her company in another  country in order to take advantage of these benefits \u2014 provided by the  governments themselves \u2014 is not unlawful. What must be questioned is the  ultimate purpose for which these companies are established, and not  their nature of simply being offshore. Let us not forget that the Panama  Papers investigation was carried out by journalists, and not by  lawyers, with a scandalous focus because of the celebrities it  uncovered.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Evidently, Dr. Sharman\u2019s study indicates that countries can do more  to ensure that new companies that are born truly are going to carry out a  legitimate social and commercial purpose, and that they will not only  serve as empty shell companies. However, they have to act responsibly.  We cannot demonize legal figures or institutions such as offshore  companies or the corporate veil to accomplish this, simply because they  may be subject to abuse. Regulations must be strengthened to limit the  possibilities of these abuses, but without losing sight of the role that  offshore companies and the corporate veil play as facilitators of  international business and investment.<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-full\"><img data-recalc-dims=\"1\" loading=\"lazy\" decoding=\"async\" width=\"400\" height=\"286\" loading=\"lazy\" src=\"https:\/\/i0.wp.com\/delaneysilva.com\/blog\/wp-content\/uploads\/2019\/12\/Panama-Papers-3.jpg?resize=400%2C286&#038;ssl=1\" alt=\"\" class=\"wp-image-1960\" srcset=\"https:\/\/i0.wp.com\/delaneysilva.com\/blog\/wp-content\/uploads\/2019\/12\/Panama-Papers-3.jpg?w=400&amp;ssl=1 400w, https:\/\/i0.wp.com\/delaneysilva.com\/blog\/wp-content\/uploads\/2019\/12\/Panama-Papers-3.jpg?resize=300%2C215&amp;ssl=1 300w\" sizes=\"auto, (max-width: 400px) 100vw, 400px\" \/><\/figure><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Countries are competing in a globalized market where a good business environment and the reduction of the tax burden become competitive advantages to attract revenue. The fact that an investor chooses to establish his or her company in another country in order to take advantage of these benefits &#8212; provided by the governments themselves &#8212; is not awful.<\/p>\n","protected":false},"author":1,"featured_media":1961,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","om_disable_all_campaigns":false,"_uag_custom_page_level_css":"","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"site-sidebar-layout":"default","site-content-layout":"default","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"default","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[13,8,14],"tags":[],"class_list":["post-1959","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","category-companies","category-investment"],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/delaneysilva.com\/blog\/wp-content\/uploads\/2019\/12\/Panama-Papers-2.jpg?fit=762%2C428&ssl=1","uagb_featured_image_src":{"full":["https:\/\/i0.wp.com\/delaneysilva.com\/blog\/wp-content\/uploads\/2019\/12\/Panama-Papers-2.jpg?fit=762%2C428&ssl=1",762,428,false],"thumbnail":["https:\/\/i0.wp.com\/delaneysilva.com\/blog\/wp-content\/uploads\/2019\/12\/Panama-Papers-2.jpg?resize=150%2C150&ssl=1",150,150,true],"medium":["https:\/\/i0.wp.com\/delaneysilva.com\/blog\/wp-content\/uploads\/2019\/12\/Panama-Papers-2.jpg?fit=300%2C169&ssl=1",300,169,true],"medium_large":["https:\/\/i0.wp.com\/delaneysilva.com\/blog\/wp-content\/uploads\/2019\/12\/Panama-Papers-2.jpg?fit=762%2C428&ssl=1",762,428,true],"large":["https:\/\/i0.wp.com\/delaneysilva.com\/blog\/wp-content\/uploads\/2019\/12\/Panama-Papers-2.jpg?fit=762%2C428&ssl=1",762,428,true],"1536x1536":["https:\/\/i0.wp.com\/delaneysilva.com\/blog\/wp-content\/uploads\/2019\/12\/Panama-Papers-2.jpg?fit=762%2C428&ssl=1",762,428,true],"2048x2048":["https:\/\/i0.wp.com\/delaneysilva.com\/blog\/wp-content\/uploads\/2019\/12\/Panama-Papers-2.jpg?fit=762%2C428&ssl=1",762,428,true]},"uagb_author_info":{"display_name":"tdelaney74","author_link":"https:\/\/delaneysilva.com\/blog\/author\/tdelaney74\/"},"uagb_comment_info":0,"uagb_excerpt":"Countries are competing in a globalized market where a good business environment and the reduction of the tax burden become competitive advantages to attract revenue. The fact that an investor chooses to establish his or her company in another country in order to take advantage of these benefits -- provided by the governments themselves --&hellip;","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/delaneysilva.com\/blog\/wp-json\/wp\/v2\/posts\/1959","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/delaneysilva.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/delaneysilva.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/delaneysilva.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/delaneysilva.com\/blog\/wp-json\/wp\/v2\/comments?post=1959"}],"version-history":[{"count":4,"href":"https:\/\/delaneysilva.com\/blog\/wp-json\/wp\/v2\/posts\/1959\/revisions"}],"predecessor-version":[{"id":2058,"href":"https:\/\/delaneysilva.com\/blog\/wp-json\/wp\/v2\/posts\/1959\/revisions\/2058"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/delaneysilva.com\/blog\/wp-json\/wp\/v2\/media\/1961"}],"wp:attachment":[{"href":"https:\/\/delaneysilva.com\/blog\/wp-json\/wp\/v2\/media?parent=1959"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/delaneysilva.com\/blog\/wp-json\/wp\/v2\/categories?post=1959"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/delaneysilva.com\/blog\/wp-json\/wp\/v2\/tags?post=1959"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}