Many people want to set up a secret company, or think their company is secret, and many use offshore structures to do this. But does it actually work?
When it comes to secrecy there are three questions that matter:
- Whose secrecy?
- From who?
- Under what conditions?
Start researching it and the first thing you’ll likely hear about are secret offshore companies. What does this mean? Does it mean there is no registry of the companies? No. There’s always bitcoin blackjack some sort of a registry to ensure there is actually a company. However, that registry isn’t necessarily easily accessible so not just anyone can easily verify the existence of the company (a fact that has pros and cons later).
There are two common pieces of disclosure (or lack thereof):
It’s pretty common not to have the names of shareholders disclosed, less common but still relatively common not to have the names of directors disclosed.
In both cases if the information is disclosed there are two common ways that can sometimes be used to provide an element of secrecy regardless:
- Nominees – essentially a person who gets paid once a year to put their name on companies instead of having your name on it
- Corporations – instead of having an individual as a shareholder or director there might be a corporation. In many places corporate directors aren’t allowed and regardless this brings us back to the issue of secrecy at the level of the corporation
It’s fairly common to have jurisdictions where the names of shareholders and directors aren’t available in public records, less common for them not to be available in private records but that happens sometimes as well. However, most of the time the registered agent will have this information (frequently a nominee might not as they’ll be sourced by the registered agent). If they don’t have this information they’ll have the information in the vast majority of cases of who set up the company (in theory you could hide this behind a layer of secrecy with cryptocurrencies, rerouted IP addresses and anonymous emails but in practice there’s usually a link from the company to the registered agent to the person who set the company up.
Of course the person who set the company up isn’t necessarily the owner/shareholder/director but this person will lead to whoever that ultimate person is though getting the information at this stage could be extremely challenging and not worthwhile.
But wait, couldn’t you have bearer shares and eliminate even that connection?
Technically yes, there are a number of jurisdictions that still allow bearer shares though in most cases the shares need to be secured somewhere so they are effectively eliminated. That being said it is theoretically possible but it raises the next question and next problem “what can you do with this company?”
Before we answer the above question though let’s note that most information sharing agreements aren’t really directed towards getting information at the corporate level. This is simply too challenging and so maintaining the secrecy here isn’t too terribly challenging.