More flexible company regulations introduced to fit Working From Home arrangements during the pandemic took effect over the past year as multinationals used digitized processes to work faster and reduce the costs of managing their legal entities – according to data by Mercator® by Citco (Mercator), in its Mercator Entity Management Report 2022.
What were the findings of Mercator’s survey?
Europe is now the cheapest region for multinationals to base entities due to the permitting of new digital filing processes, and the ongoing implementation of the EU Digitalization Directive. APAC remains the quickest region to operate as it had already implemented many of these digital processes prior to the COVID pandemic – and refined them further since last year.
Multinationals were able to reduce the time spent on managing their entities over the past year by almost a fifth (17%). Ranked per individual jurisdiction, Bermuda emerges as the most favorable location in which to base entities in 2022 – based on the overall cost and time involved in managing entities – followed by Luxembourg and Germany. In contrast, the People’s Republic of China, South Korea and Taiwan are the lowest ranked in this comparison.
Overall, the data – which is sourced directly from Mercator’s EPM technology platform, Entica™ – showed Bermuda takes pole position due to the following advantages:
- An ideal combination of cost levels and time to complete tasks;
- Availability of electronic filings for all corporate-related actions;
- Service providers can act as a company secretary – which streamlines activity;
- E-signatures are widely acceptable – both internally and by authorities;
- Only a limited, prescribed list of corporate changes require registration with authorities, allowing many changes to be implemented by internal decisions;
- Companies are allowed to waive preparation and approval of financial statements.
What were the executive’s thoughts on the findings?
Commenting on the study, Kariem Abdellatif, Head of Mercator said: “The management of a multinational’s entities has never been more important as in-house legal and corporate secretarial teams work in a challenging environment where regulations change constantly.”
“Out of the turmoil of the pandemic, it is heartening to see that regulators and businesses have responded rapidly to the challenges of working in a new, remote working world. It is impressive to see how the EU and APAC regions have committed to modernizing company processes to fit this new digital age, with Bermuda winning overall from its digitization drive.”
“The purpose of this report is not to advise multinational firms on where to base entities or subsidiaries – this is dictated by necessity – but to set expectations and provide foresight on the relative cost and time it takes to complete activities supporting their entity portfolio.”