Quick Links
Quick Links
UPSC Exams
Latest Update
UPSSSC Junior Assistant Admit Card 2025 Fastag Annual Pass 2025 UGC NET Exam Analysis 2025 UGC NET Question Paper 2025 AP LAWCET Result 2025 UGC NET City Slip 2025 UPSC DAF 1 2025 Rajasthan PTET Answer Key 2025 UPSC Prelims Result 2025 UPSC IFS Result 2025 8th Pay Commission Salary Hike News UPSC 2024 Prelims Answer Key UPSC 2026 Calendar UPSC Admit Card 2025 UPSC Prelims Result Date 2025 UPSC Prelims Answer Key 2025 UPSC Prelims 2025 Expected Cut Off UPSC Prelims Exam Analysis 2025 UPSC Final Result 2025 UPSC Topper Shakti Dubey UPSC Application Rejected List 2025 UPSC Application Date Re-Extended UPSC Interview Date 2024 UPSC Notification 2025 UPSC Admit Card 2025 for Prelims UPSC CSE Prelims 2025 Question Paper UPSC IFS Notification 2025 Indian Navy MR Result 2025 Indian Navy SSR Result 2025
Coaching
UPSC Current Affairs
Syllabus
UPSC Notes
Previous Year Papers
UPSC Mains Previous Year Question Papers Last 25 Years UPSC Prelims Question Papers Last 10 Years UPSC Question Papers UPSC CSE Prelims 2025 Question Paper UPSC Mains 2024 Model Answers UPSC 2024 Question Papers UPSC 2023 Question Papers UPSC 2022 Question Papers UPSC 2021 Question Papers UPSC 2020 Question Papers UPSC 2019 Question Papers UPSC 2018 Question Papers UPSC 2017 Question Papers UPSC 2016 Question Papers UPSC 2015 Question Papers UPSC 2014 Question Papers UPSC CSAT Question Papers UPSC IFS Previous Year Paper UPSC Assistant Labour Commissioner Previous Question Year Papers UPSC Combined Geo Scientist Previous Year Paper UPSC APFC Previous Year Question Papers UPSC CMS Previous Year Question Paper UPSC EPFO Previous Year Paper UPSC Air Safety Officer Previous Year Papers UPSC SO Steno Previous Year Paper UPSC IES ISS Previous Year Question Papers
Mock Tests
UPSC Editorial
Bilateral Ties
Albania India Relations India Algeria Relations Andorra India Relations India Angola Relations India Antigua Barbuda Relations India Argentina Relations Austria India Relations India Azerbaijan Relations Bahamas India Relations India Bahrain Relations Barbados India Relations India Belarus Relations Belgium India Relations Belize India Relations Benin India Relations Bolivia India Relations India Bosnia Herzegovina Relations India Botswana Relations Brazil India Relations Brunei India Relations Bulgaria India Relations Burundi India Relations Cabo Verde India Relations India Cambodia Relations India Cameroon Relations Canada India Relations India Cayman Islands Relations India Central African Republic Relations India Chad Relations Chile India Relations India Colombia Relations India Comoros Relations India Democratic Republic Of The Congo Relations India Republic Of The Congo Relations India Cook Islands Relations India Costa Rica Relations India Ivory Coast Relations India Croatia Relations India Cyprus Relations India Czech Republic Relations India Djibouti Relations India Dominica Relations India Dominican Republic Relations India Ecuador Relations India El Salvador Relations India Equatorial Guinea Relations India Eritrea Relations Estonia India Relations India Ethiopia Relations India Fiji Relations India Finland Relations India Gabon Relations India Gambia Relations India Georgia Relations Germany India Relations India Ghana Relations India Greece Relations India Grenada Relations India Guatemala Relations India Guinea Relations India Guinea Bissau Relations India Guyana Relations India Haiti Relations India Holy See Relations India Honduras Relations India Hong Kong Relations India Hungary Relations India Iceland Relations India Indonesia Relations India Iran Relations India Iraq Relations India Ireland Relations India Jamaica Relations India Kazakhstan Relations India Kenya Relations India Kingdom Of Eswatini Relations India Kiribati Relations India Kuwait Relations India Kyrgyzstan Relations India Laos Relations Latvia India Relations India Lebanon Relations India Lesotho Relations India Liberia Relations Libya India Relations Liechtenstein India Relations India Lithuania Relations India Luxembourg Relations India Macao Relations Madagascar India Relations India Malawi Relations India Mali Relations India Malta Relations India Marshall Islands Relations India Mauritania Relations India Micronesia Relations India Moldova Relations Monaco India Relations India Montenegro Relations India Montserrat Relations India Morocco Relations Mozambique India Relations India Namibia Relations India Nauru Relations Netherlands India Relations India Nicaragua Relations India Niger Relations India Nigeria Relations India Niue Relations India North Macedonia Relations Norway India Relations India Palau Relations India Panama Relations India Papua New Guinea Relations India Paraguay Relations Peru India Relations India Philippines Relations Qatar India Relations India Romania Relations Rwanda India Relations India Saint Kitts And Nevis Relations India Saint Lucia Relations India Saint Vincent And Grenadines Relations India Samoa Relations India Sao Tome And Principe Relations Saudi Arabia India Relations India Senegal Relations Serbia India Relations India Sierra Leone Relations India Singapore Relations India Slovak Republic Relations India Slovenia Relations India Solomon Islands Relations Somalia India Relations India South Sudan Relations India Spain Relations India Sudan Relations Suriname India Relations India Sweden Relations India Syria Relations India Tajikistan Relations Tanzania India Relations India Togo Relations India Tonga Islands Relations India Trinidad And Tobago Relations India Tunisia Relations India Turkmenistan Relations India Turks And Caicos Islands Relations India Tuvalu Relations India Uganda Relations India Ukraine Relations India Uae Relations India Uruguay Relations India Uzbekistan Relations India Vanuatu Relations India Venezuela Relations India British Virgin Islands Relations Yemen India Relations India Zambia Relations India Zimbabwe Relations
Books
Government Schemes
Production Linked Incentive Scheme Integrated Processing Development Scheme Rodtep Scheme Amended Technology Upgradation Fund Scheme Saathi Scheme Uday Scheme Hriday Scheme Samagra Shiksha Scheme India Nishta Scheme Stand Up India Scheme Sahakar Mitra Scheme Mdms Mid Day Meal Scheme Integrated Child Protection Scheme Vatsalya Scheme Operation Green Scheme Nai Roshni Scheme Nutrient Based Subsidy Scheme Kalia Scheme Ayushman Sahakar Scheme Nirvik Scheme Fame India Scheme Kusum Scheme Pm Svanidhi Scheme Pmvvy Scheme Pm Aasha Scheme Pradhan Mantri Mahila Shakti Kendra Scheme Pradhan Mantri Lpg Panjayat Scheme Mplads Scheme Svamitva Scheme Pat Scheme Udan Scheme Ek Bharat Shresth Bharat Scheme National Pension Scheme Ujala Scheme Operation Greens Scheme Gold Monetisation Scheme Family Planning Insurance Scheme Target Olympic Podium Scheme
Topics
NASA Space Missions
NASA Mercury-Redstone 3 (Freedom 7) Mission NASA Mercury-Redstone 4 (Liberty Bell 7) Mission NASA Mercury-Atlas 6 (Friendship 7) Mission NASA Mercury-Atlas 7 (Aurora 7) Mission NASA Mercury-Atlas 8 (Sigma 7) Mission NASA Mercury-Atlas 9 (Faith 7) Mission NASA Gemini 3 Mission NASA Gemini 4 Mission NASA Gemini 5 Mission NASA Gemini 7 Mission NASA Gemini 8 Mission NASA Gemini 9 Mission NASA Gemini 10 Mission NASA Gemini 11 Mission NASA Gemini 12 Mission NASA Apollo 1 (AS‑204) Mission NASA Apollo 7 Mission NASA Apollo 8 Mission NASA Apollo 9 Mission NASA Apollo 10 Mission NASA Apollo 11 Mission NASA Apollo 12 Mission NASA Apollo 13 Mission NASA Apollo 14 Mission NASA Apollo 15 Mission NASA Apollo 16 Mission NASA Apollo 17 Mission NASA Skylab Orbital Workshop Mission NASA Skylab 2 Mission NASA Skylab 3 Mission NASA Skylab 4 Mission NASA Apollo–Soyuz Test Project Mission NASA STS‑1 Columbia Mission NASA STS‑3 Columbia Mission NASA STS‑7 Challenger Mission NASA STS‑8 Challenger Mission NASA STS‑41B Challenger Mission NASA STS‑41G Discovery (1st female EVA) Mission NASA STS‑51L Challenger (accident) Mission NASA STS‑26 Discovery (Return‑to‑Flight) Mission NASA STS‑31 Discovery (Hubble Launch) Mission NASA STS‑49 Endeavour (first capture EVA) Mission NASA STS‑61 Endeavour (Hubble Servicing 1) Mission NASA STS‑73 Columbia (microgravity) Mission NASA STS‑95 Discovery (John Glenn returns) Mission NASA STS‑107 Columbia (accident) Mission NASA STS‑114 Discovery (RTF‑2) Mission NASA STS‑120 Discovery (Node 2) Mission NASA STS‑125 Atlantis (Final Hubble Service) Mission NASA STS‑132 Atlantis Mission NASA STS‑135 Atlantis (Final Shuttle flight) Mission NASA Artemis I (Orion/ SLS‑1) Mission NASA Artemis II (Planned) Mission NASA Artemis III (Planned lunar landing) Mission NASA Mariner 4 Mission NASA Mariner 6 Mission NASA Mariner 7 Mission NASA Mariner 9 Mission NASA Viking 1 Orbiter/Lander Mission NASA Viking 2 Orbiter/Lander Mission NASA Mars Pathfinder & Sojourner Mission NASA Mars Global Surveyor Mission NASA 2001 Mars Odyssey Mission NASA Mars Exploration Rover – Spirit Mission NASA Mars Exploration Rover – Opportunity Mission NASA Mars Reconnaissance Orbiter Mission NASA Phoenix Mars Lander Mission NASA InSight Mars Lander Mission NASA Mars 2020 (Perseverance & Ingenuity) Mission NASA Mars Sample Return – SRL (planned) Mission NASA Pioneer 10 Mission NASA Pioneer 11 Mission NASA Voyager 1 Mission NASA Voyager 2 Mission NASA Galileo Jupiter Orbiter/Probe Mission NASA Cassini–Huygens Mission NASA New Horizons (Pluto & KBO) Mission NASA Juno Mission NASA Europa Clipper (planned) Mission NASA Parker Solar Probe Mission NASA Solar Orbiter (ESA/NASA) Mission NASA Surveyor 1 Mission NASA Lunar Orbiter 1 Mission NASA Lunar Prospector Mission NASA LCROSS Mission NASA LADEE Mission NASA Lunar Reconnaissance Orbiter (LRO) Mission NASA CAPSTONE Mission NASA VIPER Rover (planned) Mission NASA NEAR Shoemaker Mission NASA Deep Space 1 Mission NASA Stardust Mission NASA Genesis Mission NASA Deep Impact Mission NASA Dawn (Vesta/Ceres) Mission NASA OSIRIS‑REx Mission NASA Lucy Mission NASA DART Mission NASA Landsat‑1 (ERTS‑1) Mission NASA Landsat‑5 Mission NASA Landsat‑9 Mission NASA Terra Mission NASA Aqua Mission NASA Aura Mission NASA Suomi NPP Mission NASA Sentinel‑6 Michael Freilich Mission NASA ICESat‑2 Mission NASA GRACE‑FO Mission NASA SMAP Mission NASA GPM Core Observatory Mission NASA CALIPSO Mission NASA CloudSat Mission NASA NISAR (NASA‑ISRO) Mission NASA Explorer 1 Mission NASA COBE Mission NASA Compton Gamma Ray Observatory Mission NASA Hubble Space Telescope Mission NASA Chandra X‑ray Observatory Mission NASA Spitzer Space Telescope Mission NASA WISE Mission NASA Kepler Mission NASA TESS Mission NASA Fermi Gamma‑ray Space Telescope Mission NASA NICER Mission NASA IXPE Mission NASA Roman Space Telescope (planned) Mission NASA NuSTAR Mission NASA GALEX Mission NASA Swift Mission NASA SOHO (ESA/NASA) Mission NASA Cluster II (ESA/NASA) Mission NASA TIMED Mission NASA STEREO‑A/B Mission NASA MMS Mission NASA IRIS Mission NASA Solar Dynamics Observatory Mission NASA X‑37B OTV‑1 (USAF/NASA liaison) Mission NASA X‑59 QueSST Mission NASA Mars Helicopter Ingenuity Mission NASA Valkyrie R5 Robot Mission NASA Low‑Boom Flight Demo Mission NASA CRS‑1 Dragon Mission NASA CRS‑1 Cygnus Mission NASA Crew Dragon Demo‑2 Mission NASA Starliner OFT‑2 Mission NASA STS-2 (Shuttle flight) Mission NASA STS-4 (Shuttle flight) Mission NASA STS-5 (Shuttle flight) Mission NASA STS-6 (Shuttle flight) Mission NASA STS-41C (Shuttle flight) Mission NASA STS-41D (Shuttle flight) Mission NASA STS-51A (Shuttle flight) Mission NASA STS-61C (Shuttle flight) Mission NASA STS-26 (Shuttle flight) Mission NASA STS-27 (Shuttle flight) Mission NASA STS-29 (Shuttle flight) Mission NASA STS-30 (Shuttle flight) Mission NASA STS-32 (Shuttle flight) Mission NASA STS-34 (Shuttle flight) Mission NASA STS-38 (Shuttle flight) Mission NASA STS-45 (Shuttle flight) Mission NASA STS-60 (Shuttle flight) Mission NASA STS-70 (Shuttle flight) Mission NASA STS-71 (Shuttle flight) Mission NASA STS-73 (Shuttle flight) Mission NASA STS-88 (Shuttle flight) Mission NASA STS-92 (Shuttle flight) Mission NASA STS-97 (Shuttle flight) Mission NASA STS-99 (Shuttle flight) Mission NASA STS-100 (Shuttle flight) Mission NASA STS-104 (Shuttle flight) Mission NASA STS-106 (Shuttle flight) Mission NASA STS-110 (Shuttle flight) Mission NASA STS-112 (Shuttle flight) Mission NASA STS-115 (Shuttle flight) Mission NASA STS-116 (Shuttle flight) Mission NASA STS-117 (Shuttle flight) Mission NASA STS-118 (Shuttle flight) Mission NASA STS-120 (Shuttle flight) Mission NASA STS-122 (Shuttle flight) Mission NASA STS-123 (Shuttle flight) Mission NASA STS-126 (Shuttle flight) Mission NASA STS-130 (Shuttle flight) Mission NASA Vanguard 1 Mission NASA Transit 1B Mission NASA Echo 1 Mission NASA Telstar 1 Mission NASA Syncom 3 Mission NASA ATS‑6 Mission NASA Skynet Mission NASA Nimbus‑1 Mission NASA Nimbus‑7 Mission NASA ERS-1 Mission NASA SeaSat Mission NASA QuikSCAT Mission NASA Jason‑1 Mission NASA Jason‑3 Mission NASA ICESat Mission NASA Earth Observing‑1 Mission NASA Orbiting Carbon Observatory‑2 Mission NASA CYGNSS Mission NASA PACE Mission NASA TRMM Mission NASA Terrestrial Planet Finder (cxl) Mission NASA Laser Interferometer Space Antenna (LISA) Mission NASA Explorer 33 Mission NASA Voyager Interstellar Mission Mission NASA Helios‑A Mission NASA Helios‑B Mission NASA ISEE‑3 (ICE) Mission NASA ACE Mission NASA DSCOVR Mission NASA IBEX Mission NASA Solar Orbiter Heliospheric Imager Mission NASA SAGE‑III ISS Mission NASA SPACE Telescope Imaging Spectrograph Mission NASA ARIEL (ESA/NASA) Mission NASA OSAM‑1 (Restore‑L) Mission NASA Dragonfly (Titan rotorcraft) Mission NASA VERITAS (Venus orbiter) Mission NASA DAVINCI (Venus probe) Mission NASA SPHEREx Mission NASA MAGGIE (Mars Geophysical) Mission NASA CLPS – Peregrine Mission NASA CLPS – VIPER Delivery Mission NASA CAPSTONE Mission NASA Gateway (HALO / PPE) Mission NASA Mars Telecommunication Orbiter (cxl) Mission NASA Mars Polar Lander (MPL) Mission NASA Mars Climate Orbiter Mission NASA Pathfinder Mission Mission NASA SLS Block 1B (Exploration Upper Stage) Mission NASA Orion Crew Module Mission NASA Commercial LEO Destinations – Axiom Station Mission NASA ISS Expedition 1 Mission NASA ISS Expedition 70 Mission NASA CRS‑11 (Dragon) Mission NASA CRS‑21 (Dragon 2) Mission NASA Snoopy CubeSat Mission
Home / IAS Preparation / What are shell companies

Shell Companies: Regulations, Examples, Issues, Effects & More | UPSC Notes

Last Updated on Oct 11, 2024
Also Read What are shell companies in Hindi
Download As PDF
IMPORTANT LINKS
Agriculture Notes For UPSC Public Administration UPSC Notes Modern History Books For UPSC Overseas Citizen Of India Caste System & Panchayati Raj Godavari River Federalism Indira Point New Development Bank Battle Of Sinhagad Sankalp And Strive Schemes Digital India High Yielding Varieties Economic Growth Development League Of Nations Ease Of Doing Business Mid Day Meal Scheme Wildlife Protection Act 1972 UPSC Notes International Union Conservation Nature

Shell companies are very prevalent in tax havens like the Cayman Islands, Bermuda, and Panama. International institutions are as actively engaged in shell companies by eliminating malpractices through processes like the Base Erosion and Profit Shifting (BEPS) project and the Common Reporting Standard (CRS).

Syllabus

General Studies - III

Topic for Prelims

Indian Economy, Macroeconomics, GDP, Tax Evasion

Topics for Mains

Indian Economic Development, Taxation, Internal Security

What are shell companies?

A shell company is a non-active entity without any sort of operational business or value assets. Such companies exist primarily on paper, generally incorporated in jurisdictions with lenient regulatory frameworks. Shell companies usually have a low or no physical presence, employees, or running business activities.

Know more about Difference Between Macroeconomics and Microeconomics!

Characteristics of Shell Companies

These are the following characteristics of shell companies:

  • Not Engaged in Active Business Operations: Shell companies are not involved in meaningful business activities.
  • Few Assets and Employees: They possess few or no assets and normally have no employees.
  • Registered Address: They tend to be registered in tax havens or countries that have well-articulated corporate laws.
  • Use of Nominee Directors and Shareholders: They employ the use of nominee directors and shareholders as a way of concealing who owns the company.
  • Easy Registration: In some countries, registration is easy and takes a very short period of time.

Use of Shell Companies

Shell companies can be employed for a variety of purposes, including both legal and illicit. These are the following ways in which shell companies are used:

  • Asset Holding: The holding of intellectual property, a piece of real estate, or other assets out of one's tax jurisdiction, for protection.
  • Streaming Mergers and Acquisitions: The intermediary roles can make transactions much easier.
  • Tax Planning: Exploiting the best tax regimes for reducing tax liabilities.
  • Capital Raising: They can be investment funds or private equity vehicles.
  • Money Laundering: It is the process of concealing the origin of the money obtained through illegal means.
  • Tax Evasion: It refers to the evasion of taxes by withholding one's income or profits from being taxed.
  • Terror Funding: This illegal activity provides secret funding channels for terrorist activities.
  • Fraudulent Activities: This includes aiding and abetting scams, Ponzi schemes, or other kinds of financial frauds.
  • Begging of Identity of Beneficial Ownership: This involves hiding the owner's identity so that no legal investigation can be carried out.
FREEMentorship Program by
Ravi Kapoor, Ex-IRS
UPSC Exam-Hacker, Author, Super Mentor, MA
100+ Success Stories
Key Highlights
Achieve your Goal with our mentorship program, offering regular guidance and effective exam strategies.
Cultivate a focused mindset for exam success through our mentorship program.
2 Lakh+ Students Mentored Get
Get Free Mentorship Now
UPSC Beginners Program

Get UPSC Beginners Program SuperCoaching @ just

₹50000

Claim for free
Want to know more about this pass ?
Explore SuperCoaching

Effects of Shell Companies

These are the following economic effects of shell companies:

  • Tax Revenue Loss: Frugal tax bases since the gains are siphoned off to low-tax countries.
  • Distortion of Financial Systems: Corporate health and financial stability are misrepresented.
  • Undermining Trust: Erosion of investor confidence that arises from lack of transparency.

These are the following social and political Effect of shell companies:

  • Promotion of Corruption: Helping politicians and government officials launder their dirty money.
  • Threat to National Security: Funding illegal activities such as terrorism and organized crime.
  • Inequality: Perpetuating inequality in the economy by letting the rich exploit loopholes.

Shell Companies in Indian Scenario

Shell companies have gained considerable mileage in India, and this has gone hand-in-glove with high-profile corruption cases and financial scams. These entities are commonly deployed for siphoning public funds, tax evasion, and money laundering, among others. Some of the notable ones include:

  • 2G Spectrum Scam: Shell companies were manipulated while granting telecom licenses.
  • Coal Allocation Scam: Front companies catered to the dubious allocation of coal blocks.
  • Scam Commonwealth Games: Guilty Shell companies blamed for alleged money laundering.

Know more about Corruption in India!

Regulations Related to Shell Companies in India

The Indian government has attempted to deal with the abuse of shell companies by implementing a number of measures:

  • Companies Act, 2013: Streamlined reporting about beneficial ownership

Income Tax Act: Strengthened and more severe provisions against tax evasion and money laundering.

  • Prevention of Money Laundering Act (PMLA), 2002: An act to prevent money laundering with corporate arrangements
  • Ministry of Corporate Affairs (MCA): Promoting corporate governance and transparency.
  • Financial Intelligence Unit-India (FIU-IND): Detecting Suspicious Transactions and Reporting.
  • Blacklisting and Penalties: Blacklisting entities that fail to comply with the set rules, thus are penalized. Blacklist a non-compliant jurisdiction as well.

International Cooperation Related to Shell Companies

Shell companies are not a cause of onccern for India only but for the whole world and that’s why many nations are taking active measures so that they cannot be misused. These are some of the ways in which international organisations are cooperating on the issue of shell companies:

  • Sharing of Information: Cooperation with international agencies with regard to mutual exchange of financial information.
  • FATF Guidelines: Adherence to recommendations that help shell companies not being misused.
  • Jurisdictional Issues: Leveraging lenient jurisdictions complicates enforcement. 
  • Resource Constraints: Low capacity of the regulatory bodies to undertake adequate monitoring and enforcement processes.

Conclusion

Shell companies have wholesome uses, but they pose the greatest threat when they are used in illegal business. In fact for India, fighting the adverse effects of shell companies becomes even more crucial to protect Indian economy integrity, prevent corruption and build national security. As the overall governance and regulations regarding finances are changing, efforts need to be made vigilantly to combat the challenges thrown up by shell companies. 

Key Takeaways for UPSC Aspirants

  • Erosion of National Tax Bases Tax Revenues: The revenues flow into the low-tax jurisdictions thus eroding national bases net.
  • Money Laundering: It facilitates the movement and concealment of illicit funds, therefore weakening any financial system
  • Corruption: It enables politicians and officials to hide illicit wealth. Corruption thrives because of it.
  • Obscures True Ownership: It prevents the tracing of the illicit activities involved by the authorities due to obscuring true ownership.
  • Economic Distortion: The end users enjoy unfair competitive advantages as it will intensify economic inequalities.
  • Potential Threats: Used to fund acts of terrorism and other illegal activities. National security is, therefore, direct ramifications.

Testbook provides a set of comprehensive notes for different competitive exams. Testbook is always on the top of the list because of its best quality assured products like live tests, mocks, Content pages, GK and current affairs videos, and much more. You can check out our UPSC Online Coaching, and download the Testbook App now to check out various other topics relevant to the UPSC IAS Exam.

More Articles for IAS Preparation

Shell Companies UPSC FAQs

Beneficial ownership is the actual owner of the company's assets, even if they are not listed as a legal owner; this is clear in many shell companies that obscure this fact further by raising layers of intermediaries to hide real beneficiaries.

Shell Company has no actual business activity but it is usually created for tax evasion, money laundering, or asset hiding. On the other hand, Holding Companies own shares or assets in other companies and are established to manage and control those investments, but may not hold on to engage in direct business operations. Holding companies are usually legal and legitimate.

FIU in India monitors and analyzes financial transactions to identify suspicious activities, including those made by shell companies. FIU-IND coordinates with other enforcement agencies to prevent money laundering and terrorist financing.

Identification of beneficial owners is very essential since it gives one insight about persons exercising or benefiting from a company's assets. Without transparency of the said nature, shell companies can easily hide illegal activities such as tax evasion, corruption, or money laundering. Laws on disclosure of beneficial ownership become pillars for authorities to investigate and prosecute those involved in financial crimes.

The use of nominee directors and shareholders hides the ownership because this is a means used by the company to mask the identity of its owners. Otherwise, it denies regulatory authorities traceability of the owner; thus, the company uses this anonymity for operations.
Report An Error
Exams Tests Super Practice