The bearer shares: advantages and disadvantages
Offshore bearer shares are reliable tools in the hands of an entrepreneur. However, nowadays the role of these tools is being reinterpreted.
Bearer are shares that do not contain any indication of the name and surname of the owner. A shareholder is the the one who has the shares (the document itself).
The certificate indicates the company name, certificate number, amount of share capital, the number of shares owned by the holder of the certificate and the date of its release. The owner is indicated as the Bearer. In other words, the owner of the certificate is actually the person for which the certificate is active at a time.
What are the benefits of using such shares?
The shares offer greater privacy and flexibility than nominal shares, and hence more business opportunities:
1. High confidentiality on possession of an offshore company and all its assets.
2. There are no additional costs to support the policy compared to an equivalent solution – issuing shares in nominee shareholders.
3. Opportunity to prove ownership at a time when it is necessary (when dealing with banks, litigation, etc.).
4. Easy and fast transmission of company and its assets – by simple transmission of share certificates (without transfer of records).
The bearer shares, of course, have its disadvantages. In the case of a loss of stock there will be an irretrievable loss of all rights associated with it. Furthermore, as a result of the fight against money laundering bearer shares have been banned in most offshore jurisdictions. With some reservations, in some jurisdictions it is still available (British Virgin Islands, Panama, Seychelles).
Banks also do not like to deal with bearer shares. When trying to open an account for the companies with bearer shares bankers usually decline the service. This way they insure themselves against uncontrolled change in ownership. It is their obligation to know who owns the company to combat money-laundering.