Table of Contents

Research Handbook on International Financial Crime

Research Handbook on International Financial Crime

Research Handbooks in Financial Law series

Edited by Barry Rider

A significant proportion of serious crime is economically motivated. Almost all financial crimes will be either motivated by greed, or the desire to cover up misconduct. This Handbook addresses financial crimes such as fraud, corruption and money laundering, and highlights both the risks presented by these crimes, as well as their impact on the economy. The contributors cover the practical issues on the topic on a transnational level, both in terms of the crimes and the steps taken to control them. They place an emphasis on the prevention, disruption and control of financial crime. They discuss, in eight parts, the nature and characteristics of economic and financial crime, the enterprise of crime, business crime, the financial sector at risk, fraud, corruption, the proceeds of financial and economic crime, and enforcement and control.

Chapter 9: The misuse and abuse of the corporate form

Hans Tjio

Subjects: economics and finance, financial economics and regulation, law - academic, corruption and economic crime, finance and banking law

Extract

Although the corporation is sometimes seen as an unruly horse, it has created enormous wealth and, for various reasons, other types of business vehicles have not been utilised as much. Perhaps one reason is political rent-seeking, favouring the use of the corporate form, but there must be some intrinsic advantages to the corporate structure that other vehicles find difficult to mimic. We see, for example, that UK real estate investment trusts (REITs) have been required to adopt the corporate form and how REIT deeds in Singapore typically attempt to replicate the dual property structure of a company in order to provide artificial entity status to the REIT, in the process creating a form of non-charitable purpose trust, with the following clause: The Trust Deed sets out the rights of the Unitholder. Each Unit represents an undivided interest in the (REIT). A Unitholder has no equitable or proprietary interest in the underlying assets of the (REIT) and is not entitled to the transfer to it of any asset or of any estate or interest in any asset of the (REIT). A Unitholder’s right is limited to the right to require due administration of the (REIT) in accordance with the provisions of the Trust Deed, including by suit against the Trustee or the Manager. Consequently, it is the separate legal status of the corporation, and the ring-fenced fund that it owns, that is crucial and which Commonwealth trusts do not generally have.

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