Defining and capturing information on the beneficial ownership of listed companies

  • Publication date: 28 March 2024
  • Authors: Ramandeep Kaur Chhina, Tymon Kiepe

Misuse of listed companies for financial crime

The risk of misuse of PLCs for ML and other financial crime purposes is considered to be low due to various checks and balances built into the securities system, including the application of AML requirements by various intermediaries and actors in the financial market. However, there are cases emerging that demonstrate that listed companies may very well be involved in corruption, ML, tax evasion, and fraud, some of which may involve senior management. [30] The misuse of PLCs by their owners or executives, for instance, can take various forms, and it often involves manipulating financial statements, deceiving investors and stakeholders, and diverting company funds for personal gain – corporate corruption or fraud. For example, owners with a significant ownership stake in a PLC may engage in coordinated buying or selling of shares or use shell companies to create artificial demand or supply pressure, leading to price movements that benefit them.

The following are some common ways PLCs are misused for financial crime, adding layers of complexity and anonymity to the ownership structure to conceal ownership and control, and using illegitimate funds in legitimate PLCs or otherwise to subvert regulations:

  • Use of pooled investment funds: Pooled investment funds, such as mutual funds, hedge funds, and private equity funds, aggregate investments from multiple investors. Investors in these funds may indirectly hold shares in PLCs. However, their identity can be hidden behind the fund’s name.
  • Nominee shareholders: Nominee shareholders are individuals or entities who hold shares on behalf of another person or entity. This may be done for a number of reasons, such as to ease the administration of buying or selling securities in the market – for example, brokerage firms acting as nominees for their clients. This can also be exploited to hide a PLC’s beneficial owner’s identity. [31]
  • Intermediaries and offshore structures: Intermediaries, shell companies, and trusts in multiple jurisdictions can obscure the true ownership of the shares in a PLC.
  • Complex transactions: Transactions involving pooled investment funds, nominee shareholders, intermediaries, and multiple jurisdictions can be designed to further obscure beneficial ownership. These may include stock swaps, buybacks, and convoluted financing arrangements.

All these typologies make it difficult for authorities to identify individuals who ultimately own, control, and benefit from PLCs. A number of these appear in the example in Box 6.

Box 6. Potential share price manipulation through opaque ownership [32]

A recent report by the Organized Crime and Corruption Reporting Project (OCCRP) alleged that companies and investment funds based in Bermuda and Mauritius have been misused to acquire and trade large positions in shares of PLCs that are part of a large Indian conglomerate. The report alleged that a fund in Bermuda was used by two of the conglomerate’s associates and the founder’s sibling to bypass rules for Indian companies that prevent share price manipulation. According to Indian stock market rules, promoters (also known as corporate insiders in India) are prohibited from owning more than 75% of shares in PLCs in order to prevent artificial share price inflation. Indirect control of the fund in Bermuda via the two associates would therefore constitute a violation of stock market regulations.

The investment funds in question were used exclusively to trade shares of the conglomerate’s PLCs. Through two funds in Mauritius, the two associates secretly controlled between 8% to 14% of the free float in three of four of the conglomerate’s PLCs in January 2017. All three funds have been alleged to be indirectly controlled by the conglomerate and misused to manipulate or artificially inflate the share pricing.


[30] Regarding corruption, a number of cases have emerged in the past few years (such as Siemens AG (Germany), Enron Corporation (USA), Petrobas (Brazil), Odebrecht (Brazil), and Eurasian Natural Resources Corporation (ENRC) (UK)) where PLCs have been either alleged or found guilty of their involvement in corruption through various means, including bribery and kickbacks. Regarding money laundering, see, for example: Goldenberg Scandal (Israel) and 1MDB Scandal (Malaysia). On the Goldenberg Scandal, see: Office of Public Affairs, U.S. Department of Justice, “Israel’s Largest Bank, Bank Hapoalim, Admits to Conspiring with U.S. Taxpayers to Hide Assets and Income in Offshore Accounts”, Press Release, 30 April 2020, On the 1MDB Scandal, see: Bradley Hope, Tom Wright, and Patrick Barta, “How a Malaysian Scandal Spread Across the World”, Wall Street Journal, 21 December 2016,; “The 1MDB Money Laundering Scandal and Corrupt Politicians”, Financial Crime Academy, 19 February 2024, Finally, PLCs can be misused for tax evasion through various tactics that exploit gaps in tax regulations, transfer pricing manipulation, and offshore structures. To avoid taxes, subsidiaries may be created solely for the purpose of moving profits and reducing tax liabilities. See Apple Inc. (Ireland) case: European Commission, “State aid: Ireland gave illegal tax benefits to Apple worth up to €13 billion”, Press Release, 30 August 2016, See also: Michael Forsythe, “Paradise Papers Shine Light on Where the Elite Keep Their Money”, The New York Times, 5 November 2017, The article states that “the use of complex offshore structures has helped keep much of Apple’s more than $128 billion in profit abroad free from taxation”. For general discussion on PLCs and tax evasion, see: Richard Phillips, Hannah Petersen, and Ronen Palan,“Group Subsidiaries, Tax Minimization and Offshore Financial Centres: Mapping Organizational Structures to Establish the ‘In-Betweener’ Advantage”, Journal of International Business Policy 4, (2021): 286–307,

[31] See: Daniel Nielson and Jason Sharman, Signatures for Sale: How Nominee Services for Shell Companies are abused to Conceal Beneficial Owners (Washington DC: The World Bank, 2022),

[32] Anand Mangnale, Ravi Nair, and NBR Arcadio, “Documents Provide Fresh Insight Into Allegations of Stock Manipulation That Rocked India’s Powerful Adani Group”, OCCRP, 31 August 2023, See also: HT Correspondent, “Financial Times cites secret paper trail, says it reveals hidden Adani investors”, Hindustan Times, 31 August 2023,

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