63(4): 1153 - 1186 (August 2008)This Article explains the different meanings of backdating, explores the reasons why it is difficult to distinguish legitimate backdating from improper backdating, examines the impact of disclosure on the propriety of backdating, and develops an analytical approach to assisting business lawyers in wrestling with the difficult situations most will confront in their daily practices.By illuminating the subject, it is hoped that this Article will being a much needed dialogue about backdating.
Mossack Fonseca is one of the world’s leading providers of shell companies, the corporate structures that can be used to hide ownership of assets by designating “a natural person nominee” or straw man, who pretends on paper to own assets the actual owners want to hide.
Backdating allowed executives to choose a past date when the market price was particularly low, thereby inflating the value of the options.
The process was illegal in many cases because documents were forged, the options were not properly accounted for, and the backdating was not clearly communicated to the company’s shareholders.
The Mossack Fonseca law firm, at the center of the Panama Papers storm, says its document backdating for high net worth clients setting up offshore shells is not intended “to cover up or hide unlawful acts.” Backdating is back.
The “Panama Papers”, published Sunday by a coordinated group of international media outlets, tell stories off offshore tax avoidance and potential official corruption based on thousands of internal documents from Panamanian law firm Mossack Fonseca.