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23 Colum. J. Eur. L. 401 (2016-2017)
The Use of Offshore Companies in Emerging Market Economies: A Case Study

handle is hein.journals/coljeul23 and id is 413 raw text is: 





THE   USE   OF  OFFSHORE COMPANIES IN EMERGING MARKET
                    ECONOMIES: A CASE STUDY

                            Delphine Nougayride

                                   Abstract

        Companies  registered in offshore jurisdictions play a persistent role
        in the intermediation of financial flows in and out of emerging
        market economies. There are competing explanations for the use of
        these structures; narratives include, at one end of the spectrum, the
        role of tax evasion and the laundering of criminal activity, and at
        the other, the legitimate quest for better institutions to reduce
        transaction costs  and protect  assets from  predatory  home
        governments.  Drawing   on  publicly available English  court
        proceedings, this Article examines how offshore companies were
        used in the specific case ofBTA Bank ofKazakhstan versus Mukhtar
        Ablyazov. The  case involved hundreds  of offshore companies,
        extended  corporate services supply chains, multiple nominee
        directors, and successive ostensible ultimate beneficial owners. 
        Beyond the particular outcome of the proceedings, it examines how
        the offshore structures were administered, how concealment of
        beneficial ownership was achieved, and the type of transactions that
        were performed through them. On a wider level, the Article argues
        that the  offshore corporate  law  model  creates information
        asymmetry that is difficult to regulate ex post. It suggests that ifthe
        persistence of offshore company use is indeed a consequence of
        weak governance  and institutions in emerging market economies,
        private law reform to reduce information asymmetry may have to be
        considered in addition to public law measures such as registries of
        beneficial owners. This would  include reforming  the role of
        registered agents for them to gain greater knowledge about the
        activities of the companies, reinvigorating the individual office of
        the company director, restricting corporate entity directorship and
        conferring greater fiduciary and private law accountability to local
        natural person participants. The Article concludes by identifying
        other axes ofresearch in this field, which should include questioning
        the quasi-unconditional recognition at present offoreign companies
        in conflicts of laws, and gaining a better understanding of the place
        of political risk mitigation in the quest for anonymity.

INTRODUCTION              .................................................402
I.  REVIEW   OF  LITERATURE ON OFFSHORE COMPANY USE IN
    EMERGING MARKETS              ...............................   .........405


401

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