See - pdf 
Entity law is not only incapable of regulating AEs, it is incapable of regulating much of anything.
The entity system is grounded in three principles: - First, an entity can incorporate anywhere, regardless of the location of its operations. - Second, an entity chartered in one jurisdiction can do business in virtually any other jurisdiction. - Third, while operating in those other jurisdictions, the entity continues to be governed by the entity law under which it was formed.
Together, those principles implicitly define a regulatory competition through the sale of entity charters. Each government competes for a share in billions of dollars of revenues annually by promoting and selling its entities a
nd the regulation that accompanies them. To regulate is to restrict. A competition to sell restrictions will, of course, be won by the jurisdiction that provides the fewest. Thus, the natural culmination of charter competition is a system that does not restrict at all.
That result is not unintended. It is essentially what Romano touted as the “genius of American corporate law.”328 By embracing the charter competition, the United States has become the world’s largest supplier of anonymous entities and enabled its corporate service providers to achieve the world’s lowest rate of compliance with the international standards designed to prevent terrorist financing and money-laundering.
Because they believed that government should not regulate the relationship among the corporation and its officers, directors, and shareholders, charter competition advocates have perpetuated a system that hardly regulates at all. What the advocates apparently failed to realize is that entity law applies to much more than the entities’ internal affairs. AEs have no internal affairs, yet entity law will govern the key issues that determine their viability.
Chartering governments decide who - or what - can have the rights of a person by acting through an entity.
Chartering governments also decide what information about the human actors will be available to the public, what information will be available to police and prosecutors, how quickly that information will be made available and at what expense, how quickly and easily an entity can flee a jurisdiction to avoid the jurisdiction’s current or proposed regulations, and even whether a tort creditor can recover against an entity’s owner.
Chartering governments decide these issues even when the effects are felt entirely outside the chartering jurisdiction.
The AE threat dramatically illustrates the fundamental weakness of regulatory competition as a policy tool.
Once the charter competition was up and running, the economic, political, and legal systems adjusted. Ending the competition now would be so disruptive it is almost impossible.
The entity system is not merely a system that will not regulate when regulation is not needed, it is a system that cannot regulate even when regulation is needed.
The assertion that charter competition is harmless because entity law governs only entities’ internal affairs is no longer plausible. As the example of AEs illustrates, entity law governs far more than the internal affairs of a corporation. It determines the very nature of the corporate personality. The survival of the human race may depend on recognition of that fact.