The International Consortium of Investigative Journalists (ICIJ) includes a reference in its Panama Papers report to bearer shares, describing them as one way to protect the anonymity of companies' owners, making it harder to ascertain the exact ownership of the companies.
But what are bearer shares? And does the decline in the number shown in the ICIJ numbers mean that this alleged level of secrecy will no longer be an issue?
What is a bearer share?
When shares are bought and sold, a registered shareholder name is included on share certificate details. Bearer shares bypass this by not including the name of the holder on a physical share certificate.
What is the point of them?
Because there is no name is attached to them, the details of who owns a shareholding in a company is concealed. In addition, the certificates can be transferred from one party to another without further documentation. According to the ICIJ report, bearer shares help to conceal ultimate beneficial ownership by “providing a deep level secrecy”.
Can UK companies issue bearer shares?
No. Since 26 May 2015, under the Small Business, Enterprise and Employment Act, UK companies can no longer issue them. By 26 May this year, UK companies that previously issued bearer shares must have converted them into registered shareholdings.
Are bearer shares legal in the rest of the world?
Yes, but following pressure for greater transparency from the Organisation for Economic Co-operation and Development (OECD), they are in steady decline. British Virgin Island companies were banned from issuing them in 2005 and a similar system was introduced in Panama in 2013.
Does that mean this is no longer an issue?
Not according to the Mossack Fonseca website. A custody system was introduced following the change in laws in the British Virgin Islands and Panama. "In practice, Panama will continue to issue bearer shares," wrote Edison Teano in 2013.