S’pore tops in regulatory ranking for MNCs

LONDON, Sept 11, (Agencies): Singapore is ranked the top jurisdiction for multinational companies to base subsidiaries or ‘entities’ from a governance and regulatory standpoint, according to an inaugural report ranking over 160 jurisdictions globally on both the cost and speed of doing business.

The Mercator Entity Management (MEM) Report 2021 outlines the challenges that business leaders, General Counsels and corporate secretarial teams face in countries where multinationals with global portfolios have their entities. It includes the busiest regions in terms of regulatory activity, the average cost of regulating entities in each jurisdiction and the overall time taken to complete activities . The rankings are based on data from Mercator ® ’s proprietary Global Entity Portfolio Management (GEPM) platform, Entica™, which holds data on thousands of entities globally - down to the number of hours it takes for regulatory filings.

Singapore was followed closely by Australia and the United Kingdom as the most favourable jurisdictions. The report highlights that all three have the ideal combination of low cost levels and shorter timeframes for completing a range of regulatory activities such as Board of Director/ shareholder decisions, officer changes and Power of Attorney activities. Kazakhstan had the lowest ranking, with South Korea as the next lowest, followed by Indonesia; all have a combination of relatively higher cost levels, and less competitive timeframes or ‘duration’.

Kariem Abdellatif, Head of Mercator, said : “It should be noted that the purpose of this inaugural report is not to advise multinationals on where to base entities or subsidiaries - this is obviously dictated by necessity - but to set expectation and provide foresight on the relative cost and time it will take to manage entities in each jurisdiction.

“Singapore, Australia and the United Kingdom are all global financial centres with a long-established history of managing international trade, and this translates into the ease with which multinationals can manage entities in these locations. Interestingly, Singapore is often cited for its government’s efforts in working with businesses and industry partners to step up their resilience during the COVID-19 pandemic and this is no doubt reflected in its ranking.

“We hope this data will assist multinational companies in serving as a benchmark for their company secretarial expenditure and efficiency in operating globally; it may also serve as a useful practical guide when setting up new overseas entities in their structure.”

The report shows that while Europe has the highest number of entities overall - based on client portfolios featured on Entica™ - activity per entity is comparable to the Middle East and North America. Europe is followed by APAC, which has half as many entities based there - but these have an overall activity rate of almost two-thirds that of European levels. APAC was also the top region overall on cost and duration.

The cost of operating in different regions is affected by factors including the complexity of local legislation and the language requirements for filings; for example, relatively high prices in the LATAM region are influenced by higher local professional costs due to complex procedures and requirements for documents to be in the local language. Subsequently, translations and legalizations for bilingual documents need to be arranged.

The statistics in the MEM Report cover all GEPM activities for 2020 and the first half of 2021 as recorded on Mercator’s Entica™ platform. This data includes event-driven services, initiated on an ad-hoc basis, but not activities related to Annual Obligations as the latter occur at regular intervals and can be planned for well in advance. The data relates purely to multinational companies. All data in the report is proprietary and, therefore, some figures are represented in relative rather than absolute terms; for example, the cost of each jurisdiction is shown relative to the cheapest and most expensive. Clients of Mercator are provided with full, absolute data on the performance of their entity portfolio, including how it relates to jurisdictional and regional averages.

A pioneer in Global Entity Portfolio Management (GEPM), Mercator creates lasting partnerships with its clients to understand their individual needs and offer ease, efficiency and visibility through a clear layer of oversight. Mercator’s unrivalled knowledge of GEPM and proprietary technology, is evolving the way companies view and manage their portfolio of entities, helping them navigate an increasingly complex regulatory environment.

The Citco group of companies (Citco) is a network of independent companies worldwide. These companies are leading providers of asset servicing solutions to the global alternative investment industry. With over $1.5 trillion in assets under administration and 8,200 staff deployed across 40 countries, Citco’s unique culture of innovation and client-driven solutions have provided Citco’s clients with a trusted partner for more than four decades. Having grown organically into one of the largest asset servicers in the industry, Citco’s Fund Services companies offer a full suite of middle office and back office services including, treasury and loan handling, daily NAV calculations and investor services, corporate and legal services, regulatory and risk reporting as well as tax and financial reporting services. Investing heavily in innovation and technology whilst further developing its current suite of client friendly solutions, Citco will continue into the future as a flagbearer for the asset servicing industry.