Mitigants of shell companies in Malta : a legal analysis

Abstract

Shell companies are corporate entities which can be used both for legitimate and illegitimate purposes. When these shell companies indeed pose as vehicles for illegitimate uses, their effects may be felt globally due to the cooperation of a network of shell companies, as seen in the notorious event of the revelation of the Panama Papers. Nonetheless, shell companies ultimately cause damage to the state in which they are resident. The widespread effect of shell companies has led the researcher to question why such corporate entities have not yet been regulated globally, particularly in the local scene. This has consequently set the course of this dissertation to discover whether there exists Maltese legislation which mitigates the abuse of shell companies indirectly. This mitigating law shall not merely diminish the subsistence of shell companies but shall effectively and sufficiently mitigate the damaging effects of shell companies. In furtherance, the objectives shall explore the possibility of amending the law which indirectly mitigates shell companies to further adapt to them, together with the introduction of new Maltese legislation, developed directly to regulate shell companies with the aim of targeting any lacunae uncovered in current indirectly mitigating law. These objectives are pursued through interviews, which acquire practical insight as to the situation of shell companies in Malta, including encounters of shell companies in Malta, and the pinpointing of specific law which affects shell companies. This dissertation shall also provide the reader with a thorough understanding of the dynamics of a shell company, which constitute the foundations of the matters surrounding shell companies requiring mitigation, as well as their subsistence within the Maltese domain. The examination of such matters together with the application of the law shall reveal whether amendments and introduction of the law is necessary to mitigate effectively and sufficiently shell companies in Malta.