Benefits of Bearer Shares in Corporate Formations

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Bearer shares are shares of stock that are not registered in the name of a specific owner but are instead owned by whoever holds them. A benefit of using bearer shares in corporate formations is that they can be easily transferred from one person to another without the need for any formal registration or documentation. This can make the shares more liquid, meaning that they can be bought and sold more easily.

However, this benefit also creates a risk for money laundering and other illegal activities, as it is difficult to track who actually owns the shares. This can allow individuals to hide their ownership and use the shares to launder money, evade taxes, or engage in other criminal activities.

In some jurisdictions, the use of bearer shares has been restricted or even prohibited in an effort to combat money laundering and other financial crimes. In these cases, companies must use registered shares, which are recorded in a register of owners and can only be transferred with proper documentation and approval.

Therefore, while bearer shares may offer some benefits in terms of ease of transfer and potentially lower costs, they also pose significant risks for financial crimes. In recent years, there has been a global trend towards greater transparency and regulation of corporate ownership to combat money laundering and other illicit activities.