A spectre is stalking Britain…
This is not an article but an outline for one that makes the case for denying standing in UK courts to companies whose beneficial ownership has not been established.
It needs research to describe:
The lawyers I have consulted about this (one of whom sits on the High Court bench) have been so enthusiastic about the proposal that I advance it now in outline in the hope others will help make the case for it.
Anonymous shell companies are registered in regimes outside the United Kingdom where they are not required, as companies registered here are, to identify their owners. Like British companies, they can own property here, collect rents, evict tenants, have contracts enforced and donate to political parties. But unlike a British company its directors and owners need not be identified. It enjoys a privacy and impunity we rightly consider improper for a corporation. If it fails to file accounts or pay taxes it is no concern of our authorities. An investigator who flew to its registered address, perhaps on a Caribbean island, would find an office building where clerks keep records for tens of thousands of companies, on paper and file cards. A request for company registration details might yield only ‘nominees’ – people paid to act for the beneficial owners, or a web of cross shareholdings between other shell corporations in other jurisdictions.
I had long thought such corporate vehicles a fringe matter; how my dodgier wealthy friends avoided tax. Nicholas Shaxson opened my eyes. Something like a third of the world’s trade flows through such ghost companies.
Slowly and belatedly, European governments are moving to register the beneficial owners of such corporations. Here is a measure to accelerate their registration and limit the present harm to our economy and politics.
Deny them standing in UK courts. Let us no longer permit these ‘ghosts’ to use our courts to enforce property rights unless they conform to the standards of transparency we require from our own companies. If they want to collect rents and debts, evict tenants, have contracts enforced – let them follow our rules.
This would require primary legislation, but no cost to the taxpayer. Any party defending an action in court could move for the case to be dismissed on the grounds that the plaintiff’s beneficial owners had not been identified.
A similar strategy could complete the Land Registry, created in 1862 to register the ownership of land and property in England and Wales. It claims to record “88% of the land mass of England and Wales”. Investigators Guy Shrubsole and Anna Powell-Smith tell a different story, that the ownership of England is “one of the most closely-guarded secrets in the thousand-year-old history of this country.” Denying standing in UK courts to anonymous shell companies would do much to make the Land Registry records useful by identifying the beneficial owners of land. Let the legislation similarly allow courts to dismiss actions concerning unregistered land.
If you can see how to advance this, or corrections to the above, please write to stephentaylorfrsa at gmail.com.