Compelling Offshore Nominee Directors to Produce Financial Records in Arbitral Proceedings
Compel corporate parties to exercise legal control over offshore nominee directors under threat of decisive adverse inferences and curial court subpoenas.
Legal Custody
Meaning
Legal right and responsibility to manage the affairs and physical possession of property or a minor as determined by a court order or statute. Holding legal custody allows an entity to possess and control specific assets, even if the beneficial ownership resides elsewhere. It establishes who has the power to make binding decisions regarding the maintenance and disposition of the subject matter.
Fiduciary Duty
A party holding legal custody must act in accordance with the governing documents or the specific instructions of a trust. This obligation ensures that the assets are protected from waste or unauthorized use while they are under the control of the custodian. Professional firms often charge fees based on the value of the assets held in their care.
Ownership Distinction
There is a clear boundary between the right to manage an asset and the right to enjoy the financial benefits it produces. While legal custody permits the holder to sign contracts or defend the property in court, the underlying value remains the property of the beneficiary. This separation is common in investment funds and escrow arrangements used during corporate acquisitions.
Regulatory Oversight
Financial institutions are subject to strict audits to ensure they have the systems in place to track the assets in their possession. Compliance prevents the misappropriation of client funds.