Doing Business Internationally: United Kingdom

Disclaimer: Please be advised that this recorded webinar has been edited from its original format, which may have included a product demo. To set up a live demo or to request more information, please complete the form to the right. Or if you are currently not on CSC Global, there is a link to the website in the description of this video. Thank you.

Christy: Hello, everyone, and welcome to today's webinar, "Doing Business Internationally: United Kingdom." My name is Christy DeMaio Ziegler, and I will be your moderator. Please join me in welcoming our host, Helena Ledic, an associate general counsel for CSC in the Chicago office. Helena.

Helena: Thank you so much, Christy. It is my pleasure today to introduce to you, our audience our speakers for our Doing Business Internationally series the United Kingdom version. We are joined today by Aline Sternberg, the Director of Global Financial Markets for CSC in our London office, and Wenda Adriaanse, the Head of Corporate Services in our London office.

Aline: Hi, Helena. Thank you. Hi, everyone. This is Aline Sternberg. I'm very glad to be here today.

Wenda: Yeah. Hi, everybody. And so, as Helena said, thanks. My name is Wenda Adriaanse. I'll also be here speaking today. Thanks a lot for having me.

Helena: Let's talk about our agenda today for our United Kingdom webinar. First what we'll do is we'll talk a little bit about CSC, and we'll then get into the why the United Kingdom. We'll then go into what to know about doing business in the United Kingdom, different company structures, and of course how CSC can help you.

For more than 120 years CSC has been the partner of choice for companies around the globe. We've been trusted to handle everything from incorporating a company through maintaining compliance to corporate transaction work, protecting digital assets from the threats of the online world, and everything in between. We offer the solutions and technology that keep businesses running in the background, allowing clients to focus on the important work of growing their business.

CSC has offices and capabilities in more than 140 jurisdictions across Europe, the Americas, Asia-Pacific, and the Middle East. We're a global company capable of doing business wherever our clients are, and we accomplish that by employing local experts, such as Aline and Wenda, in every business we serve.

Now let's talk a little bit about the United Kingdom. The United Kingdom is a political unit, comprising of England, Northern Ireland, Scotland, and Wales, with about 68 million residents. It's a constitutional monarchy with a parliamentary democracy. The largest city, London, is home to London Heathrow Airport, which in 2022 was the second busiest international airport by passenger traffic. London is the world's biggest international banking and foreign exchange market. Since Brexit, in January 2020, the UK can now establish its own tax, financial, and legal regulations and is focused on building unified global trading networks and relationships.

So Wenda, why don't you get us started off and tell us a little bit about the critical reasons for doing business in the UK?

Wenda: Yeah, of course. Yeah. So the UK is one of the preferred jurisdictions internationally to do business. It's very easy. It's got a central time zone. The language is obviously a global one. So it's very easy to start off there. It's got a great infrastructure and highly skilled workers, and it's got a large market. So it's used by a lot of U.S. companies as a launch pad towards Europe. So yeah, that's some of the advantages.

It's also it's got a good visa program. So the government would really like to welcome new businesses and new investments obviously. So there's also a lot of specialized law firms around to help with visa questions and set up. But it is, in general, a generous program. So that is also working towards the advantages of starting off in the UK.

And then it is also, in terms of digitalization and innovation, a very innovative country. So it ranked fifth in the Global Innovation Index in 2019.

So that those are some of the reasons why it's good to start off in the United Kingdom, but there are some other ones. So Aline, do you want to name a couple more?

Aline: Sure. So I think that there's a few more reasons why businesses look to the UK, and one of them is its clear commitment to the transition to sustainable energy. Some of you may know it's home to the world's largest offshore wind farm, and there's been significant investment in energy projects.

And the second one I think, Wenda, you quickly mentioned is a highly, highly skilled workforce. And, of course, the UK is home to some of the world's top universities.

Helena: So Wenda, when we're talking about doing business in the UK, how does a client know what kind of structure to set up?

Wenda: Yeah. So the answer to that question is usually given by a tax advisor that will help any company wanting to come to the UK to choose the right structure for them because every structure is different, right? So in the UK you can choose from a couple of different kind of entities.

The most popular one is a private limited company. About 90% of UK's entities are private limited companies. Then you've got public limited companies, limited liability partnerships or limited partnerships. We can also offer branch office support, and then there are orphan structures.

But we'll talk a little bit later and we'll talk about the specifics of each of these entities. But for now, maybe it's good for Aline if you want to say a couple of words about how you can register a new business in the UK.

Aline: Sure. So the regulatory body in the UK where all new companies have to register and report is called Companies House. And so in order to set up a new company, you would have to prepare the constitutional documents, such as the articles of association. And you will also have to put together the PSU register. That stands for persons with significant control, so who controls the entity. And you'd have to put together the register of members or shareholders and directors, and then kind of put that all together in the company books.

Helena: So now that we know that, what kind of services does CSC offer in the UK, Wenda?

Wenda: Yeah. So every entity needs directors, an address. A private limited company doesn't have to have a named secretary, but a publicly limited company does. So we can offer that. We can offer accounting and all sorts of administrative and registration services. And then there are also more specialized services, like depositary services, which are for alternative investment funds, and also, as per the third quarter of this year, we can also offer depositary services.

Helena: So Wenda, why don't you walk us through a little bit now the different company structures in the UK? I know that you mentioned the private limited companies, the public limited companies, the limited liability partnerships, and the partnerships, but take us through a little bit more now.

Wenda: Yeah, of course. So what I said earlier indeed is that the private limited company is good for like 90% of all registered companies in the UK. So it's definitely the most popular entity to use in a structure, and the reason for it is also that it's got very low requirements. What you need to have an incorporated limited company is one director, one shareholder, and one share. And there's not even a minimum value on the share. So it's easy to set up, and CSC can set up a company within the same day after we've done all compliance checks. So it's quick as well.

So we can offer all sorts of services for that, that we mentioned earlier, like directorships we can offer. We can offer the address for a company like that. And we can also look after all the registrations that are necessary, for example with the tax authorities, His Majesty's Revenue and Customs. So that's the most popular company.

Another company that is popular with our clients is the public limited company. It's slightly different, and one of the reasons is that this entity does require an appointed company secretary. Within CSC, we can offer that in terms of one of our legal entities can be a company secretary on a PLC. So we can offer that service.

The PLC will have to have a minimum of 50,000 issued shares, and at least a quarter of those shares will have to be paid up. So some more capital investment is required for this kind of a company. We can also with the limited company look after all the registrations that are required to maintain a PLC. Then there is strict maintenance on the financial statement is required, so they cannot be filed late, and actually the same is true for a private limited company. Those deadlines are being maintained quite strictly by Companies House.

Then there are the partnerships. So we've got two kinds of partnerships — the limited liability partnerships and the limited partnerships. And these kind of entities or registered partnerships are most popular with funds. And again, the why you would choose an LLP or an LP would be down to your tax advice obtained. Which form is the most suited to your structure will be answered by the by the tax advisor.

An LLP needs to have at least two members, and each member pays tax on their share of the profits instead of the LLP itself, so it's a look-through setup. And obviously, there is an agreement that decides what obligations and duties each member has with regard to the LLP. And again, also with this entity CSC can look after all the registration requirements for the LLP.

And then for the limited partnership, that also needs to have at least two members. There can be many more. Some of them have hundreds. A formal agreement underlying the agreements between the members is necessary. We see usually that the law firm involved in the UK will help with drafting a limited partnership agreement. Then in this agreement, there are rules and regulations on the split of earnings and losses and liabilities and ownerships between the members. And again, lastly CSC can look after all the requirements of an LP in the UK.

Helena: So now let's get into the SPVs, the special purpose vehicle structures and let's talk about them with the capital markets transactions. So Aline, why don't you dig a little bit deeper into that in terms of capital markets?

Aline: Sure. So there are various ways our clients can tap into the capital markets to raise funds basically, and that kind of ties in a little bit into the previous slide and what Wenda was talking about. So we also have kind of the choice between different company structures.

And so the first one I'm going to talk about is private limited companies, and that's usually for private structures with private investors. And as Wenda mentioned, it's quite quick to set up. It's quite easy, quite cheap, and you only need to issue one share of £1. So there's no capital expenditure requirements in relation to that structure. So that's a pretty popular one in the capital markets.

With private limited companies, you can also have notes that are listed on a stock exchange. So that's a little bit different and will obviously have more regulations that it needs to comply with. And so typically, the stock exchanges were not issued by private limited companies are listed on would be the International Stock Exchange or the Vienna Stock Exchange. There will still be kind of orphan structures, where the share capital is held on a trust for the benefit of charities, but it's kind of the same structure as the private limited company that I mentioned a little bit earlier.

Some of our clients want to tap into public investors, and so the way to do that is to use and set up a public limited company. And that would allow the notes to be listed on a regulated stock exchange, such as the London Stock Exchange or the Irish Stock Exchange. But the requirements for those companies are a little bit more stringent and take a little bit more time. So you need to have the 50,000 shares issued. Not all of them have to be fully paid off, only a quarter, but that's still kind of a capital commitment that needs to be considered.

And then finally, which is not used as much as the previous entities that I listed, are the LLPs or limited liability partnerships. And those are mainly used for the issuance by banks of covered bonds, where we can also help set up the liquidation member and so on for these types of structures.

Helena: Now that we've learned about the different company structures, especially with those SPVs with capital markets, now let's talk about how CSC can help you. So now that we're in the UK with CSC, how can we help? So Wenda, why don't you get us started with this?

Wenda: Yeah, of course. So as I mentioned earlier today, we can help with the incorporation and setup of legal entities, SPVs, QAHCs, all sorts of entities necessary. We can also help with setting up a bank account for those entities and the implementation of structure. So we analyze the legal agreement, and we put everything into place that has been agreed with regard to the structure.

We can also offer accounting services to the entities in the UK, such as management, reporting, annual accounting, but also audit coordination, so all sorts of accounting services.

Then for funds, we can offer depositary services, which is very specialized and also licensed activity in the UK.

And then the largest heap of our services are corporate secretary and legal services. So we can offer health checks, so analyze the filing history of any entity that has already been incorporated and see if everything is in order. We can offer domiciliation services or registered office address in the UK. We can also maintain and safe keep statutory records of the entity. We can also obviously look after the fact that the entities remain in good standing by making the required annual findings with Companies House. We can offer risk assessment and transaction monitoring services, and all sorts of legal support coordination. We can organize general annual meetings, obviously board meetings, and make minutes of those meetings for the statutory record. We can also for holding companies offer directorships. And we can also at the end of the life of a company offer winding up services or dissolution services.

That's but a few of the things that we do at CSC in the UK. But there's more. Aline, would you like to give a couple more examples?

Aline: Sure. So I think we also can help with a lot of different administration bits and pieces, so tax filings, LEI filings, so LEI standing for Legal Entity Identifier. We can help completing ONS questionnaires for the companies that we set up. We can help obtaining data protection licenses and so on.

And then we can, of course, I think that goes alongside the accounting services, also help with tax compliance. So we can help with VAT registrations and returns, iXBRL tagging, corporation tax filings and calculations, as well as EMIR and FATCA reporting on derivative transactions that our companies are a party to.

And then finally, we can also provide transactional support. So we can provide trustee services, facility agents, loan agent services as well as cash management and escrow services. So that's kind of relevant more on the capital market side. But we can we can help with all of that as well.

Helena: So Aline, can you let us know now what kind of services does CSC offer to SPVs?

Aline: Sure. They're quite similar to the services that we discussed a little earlier, but obviously it's more I guess in the context of capital markets. And so CSC is very experienced in establishing and setting up special purpose vehicles and reviewing the documentation from the perspective of the issuer or the borrower and making comments on behalf of the corporate services provider. We also have a lot of experience on different structures and with different asset classes.

And very often we use orphan SPVs. So that means that it doesn't have a parent, and the shared capital isn't really owned by anyone and is for the benefit of charities that will be determined at some point in the future. However, sometimes we do set up SPVs that sit within a wider corporate group, and that's mainly in the context of real estate transactions, where big funds look to invest into real estate in the UK and want to set up a special purpose vehicle for tax reasons in the UK.

So we also provide directors, as we mentioned earlier, but obviously in the context of capital markets transactions the directors have different sort of experiences. And we provide independent directors as well. And we've done that on many different structures throughout the full credit cycle. So we also have some experience working on defaulting receivables and things like that.

We offer the general governance services, such as company secretary, registered office, agent services, share trust as I mentioned, as well as managing bespoke transactions. So everyone in the Capital Markets team has a lot of experience, so we can really support our clients on very bespoke and different transactions.

And we also provide accounting services for the SPVs. Depending on the requirements in each transaction, they can be different. Sometimes we need management accounts. Sometimes we only need yearly financial statement production. So it depends. But our teams again are really experienced in providing that for SPVs that are set up. In the Capital Markets team, they can also help with tax compliance and CBI reporting if necessary.

Helena: So Wenda, why don't you speak to us now about CSC's global coverage?

Wenda: Yeah. So there's a specialized services department called the Global Subsidiary Management, where all services from the 140 jurisdictions where CSC conducts business, all the services can be combined into that single point of contact for any U.S. client. So you don't have to talk to 140 different specialists. You can have one specialist in your own time zone delivering those services back to you as a client, which is streamlining and time saving for our clients who appreciate that kind of service tremendously.

Helena: As we've learned from Aline and Wenda, we offer solutions throughout the United Kingdom, but we also offer them throughout the world. And you can see some of these solutions listed here. We're the business behind business. We're the partner of choice for global companies needing expertise in business administration and compliance, fund solutions, transactions and lending, capital markets, and domain security and brand protection. Whatever your company needs to stay in compliance, transact business, and become secure against threats of the online world, CSC can help.