BREXIT: Will the UK become an offshore haven

One of the charges levelled at Brexit has been the likelihood of the UK becoming an offshore haven for foreign companies, the implication being that overseas investors who establish companies in the UK are motivated simply by a desire to avoid or reduce taxes.

Well on occasion maybe…….. but in our experience there are many perfectly legitimate reasons for non UK residents wanting to set up UK companies. For instance the UK is recognised as being relatively incorruptible compared to certain other nations, hence there are a disproportionately high number of overseas owned companies registering with the UK’s Companies House, compared to other jurisdictions. Potential judicial corruption in some countries can force non-British business owners to register their businesses in the UK simply to guard against “share-raiding” i.e. bribery-induced shifting of ownership on the official records. Registering your company in the UK can significantly reduce this risk.

That said, the benefits of owning a UK business can be just as attractive to the non legitimate as the legitimate businessman. Hence the significant due diligence that has to be undertaken by UK Company Formation Agents every time they establish a new company.

Extensive checks have to be carried out to check the bona fides of individuals who are potential company officers and owners. Depending on the risk assessment these may include:

• Proof of ID
• Proof of address
• Personal references
• Bank statements
• Due diligence on business relationships
• Travel records

Many of these checks are required to be carried out face to face or certified by a competent authority.

Adherence to such processes ensures that the UK legal and regulatory system continues to hold the respect of the rest of the world.

Increasingly however, individuals, whether British citizens or not, choose to form a company using the online formation process offered by Companies House. The excellent service has certain advantages in being quick, cheap and easy to use.

One would anticipate that such a system would conform to all the due diligence that would apply were the company to be formed by a formation agent. But surprisingly that is not the case.

Company Registration Agents are classified as Trust or Company Service Providers, subject to audit and inspection to ensure that they are performing all this necessary due diligence. They have to be registered with HMRC or SRA if they are a legal firm. However, since Companies House is not considered a commercial provider of these services it is not required to subject users of its online registration system to this same due diligence. This applies whether the users, founders of these new companies, are based in the UK or abroad.

Analysis shows that around 20,000 companies a month are formed using Companies House Direct which means some 240,000 per annum are being formed without any due diligence whatsoever. This equates to 40% of the total number of companies formed per annum and the percentage is growing.

Whatever your view of Brexit it is probably a reality that the demand for UK registered companies from those outside of the UK will also continue to increase. But the door has been left open for illegitimate business people in the UK and beyond to swerve all the due diligence required from Company Registration Agents.

This issue has been raised with Companies House by the industry and others. It is now high time for this loophole to be closed.

12 May 2017

By Alistair King, content manager, Bureau van Dijk
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1977 was, like most, a year of mixed fortunes.

While Elizabeth II celebrated her silver jubilee and Star Wars was released, it also saw the deaths of Elvis Presley and Charlie Chaplin.

But for Emmanuel “Manny” Cohen, 1977 is remembered as the year he started in business – making 2017 his ruby jubilee.

“Today I celebrate 40 years as an entrepreneur,” he wrote on his blog on 6th January. “Always interesting, never boring. I wrote out a list of businesses that I have either started and dropped or am still doing. Amazingly it came to 40! From health screening and photography to business information and a law firm. I’m still at it.”

And it’s through business information that Manny is associated with Bureau van Dijk.

His company document retrieval service – built and maintained by aRMadillo, a company he owns and chairs – has been a feature of Orbisfor several years.

But for our latest Orbis release, which went live last month, we’ve reengineered it, making it more prominent, accessible and easier to use, something that Manny sees as a “really exciting development”.

To discuss aRMadillo’s offerings and find out more about the man behind them, I met Manny at our offices a few weeks ago.

The first thing that strikes me is how young he looks for someone with such a long professional backstory. You must have started when you were barely out of school, I suggest.

“Yes, I was 19,” he says. “I worked as a researcher for RM [the company his father started, recently rebranded as aRMadillo]. I’d spend my early days sorting through documents at Companies House – hard files, paper, then microfilm.”

Technology moved on to disks and then online but Manny had long since risen in the company, focusing – among other things – on building a team that would deliver a super-fast and reliable reports-on-demand service.

You can order documents directly from aRMadillo. But users of Orbis, our database of around 220 million private companies across all countries worldwide, can order documents through our platform. This keeps their research processes in one place, making things run more smoothly. Charges apply only for the documents requested.

Reintroducing the Orbis document ordering module

The Document ordering module is available from Orbis’s Tools page.

Through this module, you can obtain documents such as annual reports, shareholders’ details, certificates of incorporation, and so on, for any company you are researching.

A crucial point to note is that in certain types of compliance and third-party due diligence, researchers must obtain copies of original documents.

This is one of the main things that this module delivers – and, according to Manny, it safeguards against risks such as document forgery by going through an official source.

What’s more, if you enter a company name into the quick search or the name search of Orbis and your chosen company cannot be found, you’re prompted to use the Document ordering tool as an option.

Given the many millions of companies already on Orbis, catering for that pool – not to mention extending beyond it – must mean that Manny has had to develop a huge and intricate network, as aRMadillo doesn’t hold these documents or scans of them itself.

So, is that at the heart of Manny’s operation?

Global network and broad expertise

In a word, yes.

Manny tells me that aRMadillo can source and supply company documents from anywhere in the world, accessing up to 1,000 registries in more than 200 countries. They can reach most jurisdictions in less than an hour, he says, assisted in part by a network of “more than 50 associated offices, a multilingual team and inhouse solicitors,” both those working in document retrieval and as part of RM Group’s own law firm.

“All of our documents are sourced directly from official sources – where they physically scan the original documents – so you can be sure of their provenance,” Manny adds.

It’s a tough process, as Bureau van Dijk’s own network of information providers will attest from their dealings with the many registries around the world.

Manny points out that “while there’s one central registry of companies in the UK, there are 50 in the US, 28 in Brazil and 32 in Mexico,” for example. “People assume that because it’s so simple here [in the UK], it must be as easy elsewhere,” says Manny. “It isn’t.” But the company has been building this network since 1973, so it knows how to navigate the variable terrain.

Of course, it might be (relatively) simple in the UK for a reason – or reasons.

One of them – cultural – we discuss in our white paper, Untangling the world of private company information.

But it’s also a question of necessity. And here we slip into another area of Manny’s expertise.

Global company formation services

On top of company document retrieval, aRMadillo helps new companies register themselves.

It’s quite an involved process, and through his dealings Manny has made a couple of related observations: the UK is perceived to be relatively incorruptible, hence a disproportionately high number of companies registering with the UK’s Companies House; and, so he suggests, judicial corruption in many countries that he’s reluctant to name can force non-British business owners to register their businesses in the UK simply to guard against “share-raiding”.

This dark practice involves the bribery-induced shifting of ownership on the official records. Registering elsewhere can significantly reduce this risk.

I decide to round off with a more innocent question: why the strange typographical style in “aRMadillo”?

“Well, it just looks more like an armadillo that way,” says Manny.

It’s hard to argue with that. If only everything were as simple.

Here’s to your next 40 years in business, Manny. Let’s catch up in 2057.

Emmanuel Cohen – Chief Executive:
2017 is a special year for me. On January 6th, I celebrated 40 years in the industry. It has certainly been a roller coaster of a time. Always interesting, never boring. And guess what folks, I’m still at it. Am I successful? Well, life has taught me that the most important thing is family followed by friends. So if success is measured by that, then yes, I have been very lucky. I have an amazing family, great friends and many fun and interesting acquaintances. Business is always a challenge and it is coping with the unforeseen and overcoming the challenges that is the secret of success. It is a bit like bobsleigh driving, don’t worry about the last corner, prepare for the next. Bring it on!!

I was at an event a few weeks ago, chatting to one of our largest and longest standing business information customers, a top six accounting firm. We were discussing the fact that they had stuck with us for nearly 20 years and they said to me, “You know what Manny, you always deliver.”

That was great to hear since it is our 20th year as an online web company data base. At aRMadillo we devote ourselves to delivering to our clients, striving to be their leading supplier of business and financial information. To find out how we can help you to source UK or international company documents and reports please contact us.

Also this month I am pleased to welcome our new Sales Director to aRMadillo. Nigel Dickinson has been in the company information industry since 1984, with 30 years experience at Dun & Bradstreet in a variety of operational, marketing, sales and senior management positions. Since leaving D&B he has broadened his experience in the industry with consultancy and interim positions at Context4, Key Note and Caterlyst. I am sure Nigel will be a valuable addition to the aRMadillo team. You can contact him at nigel.dickinson@armadillo.co.uk or 07595 779 651.

Happy New Year to you from all at aRMadillo Business Information. We wish you a successful and prosperous 2017 and look forward to supporting you in your success wherever possible.

Why not start the New Year with a review of your corporate document requirements. Contact us now for a free consultation.

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