Panama Papers-Another Chapter/

In law, a company is regarded as a union or association established to carry on a commercial or industrial enterprise. It can operate under such models as partnerships, corporations, associations and joint stock companies. In Nigeria, like many other jurisdictions across the globe, any two or more persons may form and incorporate a company by complying with the registration requirements prescribed in the law regulating the registration of companies. Any foreign company incorporated outside Nigeria which intends to carry on business in Nigeria is expected to obtain incorporation as a separate entity in Nigeria for that purpose – except where it is exempted under the conditions stated in that law. But until so incorporated, the foreign company cannot carry on business in Nigeria or exercise any of the powers of a registered company, and cannot have a place of business or an address for service of documents or processes in Nigeria for any purpose other than the receipt of notices and other documents as matters preliminary to incorporation in Nigeria.

Virtually every country has an entity that administers the Statute or Law concerning companies and matters relating to other associations other than political associations. In Nigeria, the entity is called the Corporate Affairs Commission (CAC). Its functions include the regulation and supervision of the formation, incorporation, registration, management, and winding-up of companies; and investigation into the affairs of any company where the interests of the shareholders and the public so demand.

With headquarters situated in Nigeria’s Federal Capital Territory, Abuja, the Commission maintains an integrated registry of companies and offices in all the States of the Federation.In registering a company, promoters are required to file a Memorandum of Association which must contain, among other details, the name of the company;the names and addresses of the shareholders and Directors of the Company; the address of the company in Nigeria; the nature of the business(es) which the company is authorised to carry on, or, if the company is not formed for the purpose of carrying on business, the nature of the object(s) for which it is established;and the restriction, if any, on the powers of the company.The memorandum must be signed by each subscriber in the presence of at least one witness who shall attest the signature.

Having a Commission to regulate the registration of companies and maintain a public registry accessible to the public promotes transparency and enables the public to have reality checks on companies and their shareholders.Also, the requirement that every corporation or individual carrying on business under a registered business name must, not later than June 30, each year – except the calendar year in which the business name is registered, deliver to the Commission a return showing the particulars of the corporation or individual, the nature of the business carried on and the state of the financial affairs of the business carried on by the entity in the business name during the preceding period of January 1 to December 31 also provides a platform for the public to assess the company’s financial health, and the relationship between the company’s business(es) and its  finances.

As stated in the introductory chapter of this discourse, some jurisdictions or countries allow persons to register or float shell companies-non-trading companies used for various financial maneuvers or kept dormant for future use in some other capacity. In addressing shell companies in relation to the Panama Papers, it must be stressed that shell companies are not necessarily illegal or unlawful. They can be established for lawful purposes, such as to avoid the burden and rigours of oppressive tax regimes, forum shopping for safe tax havens and in pursuit of prudent financial considerations. However, the issue,to Governments world over and most people,is their relationship with the underground economy. Shell companies are effective tools in the promotion of illegal, unreported and unrecorded economies. Many analysts and profilers have connected shell companies to what they term subterranean, hidden, grey, shadow, informal, clandestine, illegal, unobserved, unreported, unrecorded,parallel and black economies.

There are records and data that link shell companies to the funding and promotion of the looting and siphoning of public treasuries, and hiding from regulatory authorities and the public eye filthy lucre. There are global concerns and efforts to trace and contain the foundations and roots of the following economies:money laundering; sexual exploitation and forced labor; prostitution; Illegal drugs and narcotics trade; tobacco; warmongering and illegal weapons trade; terrorism; smuggling; illegal biological organs trade; racketeering and exploitation of third world countries; racketeering in petrol and diesel trade; organized crime and gangs; currency counterfeiting; and fake medicine production and trade.

Also analysed in the introductory chapter of this discourse was offshore investment, whereby persons keep their money and carry on businesses in jurisdictions other than their countries of residence through offshore companies. Offshore investment and offshore companies are legal where they are established solely to engage in offshoring manufacturing or business services. The Panama Papers are about offshore shell companies, not offshore companies.

The next chapter will focus on the legal issues in the offshore shell companies, described by the Economist thus:

Unlike a regular company, which will have employees, assets, and operations, a shell company is a hollow structure set up for the purposes of performing financial manoeuvres rather than selling goods or services. The uses of such vehicles range from the benign to the nefarious. Those looking to do something dodgy with their shell companies prize anonymity above all. The level of secrecy on offer varies from country to country. The legal frameworks of certain offshore centres make ownership devilishly difficult to penetrate. Among these is Panama, the focus of the latest scandal over leaked documents. But the strongest secrecy is, arguably, to be found onshore, in the United States, where the agents who incorporate firms aren't even required to collect information on the identity of the ultimate "beneficial" owner (the person to whom the company really belongs, as opposed to the registered holder, who can be a nominee or even another company).