Global Subsidiary Management: Top Considerations for Expanding into EMEA and APAC

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.

Caitlin: Hello, everyone, and welcome to today's webinar, "Global Subsidiary Management: Top Consideration for Expanding into EMEA and APAC." My name is Caitlin Alaburda, and I will be your moderator. Now I'll pass it over to Rogier to get us started with the presentation and introduce us to the presenters.

Rogier: Thank you, Caitlin. Hello, everyone. My name is Rogier Bronk, and thank you for joining me today. I'm the global subsidiary management leader for the Americas and have 25 years of experience with assisting multinationals with their finance and legal requirements. The last 10 years I specialized in global governance services for large entity portfolios. I've worked and lived in Europe and the Americas and currently reside in Miami, Florida. And I will be your host for this webinar.

Joining me today is my counterpart and regional global subsidiary management leader and subject matter expert for EMEA Robert-Jan Bertina. RJ has over 20 years of international experience in development, sales, and delivery of corporate governance services with a focus on multinationals with a multi-jurisdiction footprint. RJ holds a degree in banking and insurance law and has lived and worked in the Americas and Asia for an extensive period and is currently based in Luxembourg.

RJ: Thanks very much, Rogier. I really look forward to participating in this webinar.

Rogier: Great. Also joining us today is Boie Ho. She is our subject matter expert and global subsidiary management leader for the APAC region. She has over 13 years of experience in the professional service sector, specializing in global subsidiary governance and special purpose vehicles, solutions for multiple jurisdiction corporations and the alternative investment industry. Originally from Hong Kong, she divides her time between Hong Kong and Singapore offices. Thank you for so much for joining us here today, Boie.

Boie: Thank you, Rogier. Good evening, everyone. Delighted to be here sharing my experience bringing clients to Asia region and also helping to bring Asia clients global. Thank you.

Rogier: Great. Well, we can't wait to get started. This will bring us to today's agenda.

In today's webinar, we will tell you about CSC and our global service offering, our position to address the top concerns for global expansion. Our subject matter experts joining me today will discuss the considerations when expanding into EMEA and APAC as well as an overview of the bespoke CSC Global Subsidiary Management solution we can offer to multinational organizations.

At the end of the webinar, we have a poll and some time to ask questions to our panel. We have a lot to cover so let's talk a little bit about CSC as a company.

If you have joined our webinars in the past, you will say that this slide might look a little bit different. So let's talk a little bit about CSC as organization. We are headquartered in Wilmington, Delaware and are privately held. We're able to proudly trace our roots back to 1899. This gives us a long-term view on customer service, technology, and investing in our employees.

With the acquisition of Intertrust and the coming together of organizations last November 2022, we have a combined history of almost 200 years. And we can proudly say that we service 90% of the Fortune 500 companies that use one of our compliance services. Over the years, we have won many awards, such as Best Business Formation Service Provider, awards for entity management and matter management technology by readers of the "New York Law Journal".

What makes CSC truly unique is our people. Following several years in a row, we've been named National Top Workplace, which is based entirely on employee feedback. But also "The News Journal" has named us National Top Workplace, a title we have held for the past 16 consecutive years.

So let's take a look at the most common challenges and top concerns when expanding to EMEA and APAC.

We commissioned a survey through corporate counsel asking general counsels of U.S. multinationals what their main concerns, challenges, and considerations are when expanding internationally. The survey was conducted in November and December of last year and was completed by over 120 respondents, general counsels of U.S. multinationals. Therefore, it should be noted that the outcome of our survey is mostly U.S. outbound focused. I'm happy to announce that we will make this report available to the public in the coming months. So let's have a closer look at some of the highlights of the report.

As we can see, the top three regions that most general counsels contemplate to expand to, which accounts for more than a quarter, are the Middle East, Europe, and some of the Asian jurisdictions. Following the top three regions at some distance are Australia, China, and Africa. And further behind is the UK and Latin American region.

While all regions or jurisdictions have their own specific challenges when it comes to regulations as well as their specific regulatory requirements, today's focus will be on the EMEA and APAC. Together with our subject matter experts on this webinar, we will discuss some of the challenges and considerations when expanding into these regions. But before we do so, let's take a look at some of the topics that most of our general counsels consider challenging and/or might affect the strategy for expansion.

It might not be a huge surprise that cybersecurity and data privacy ranks, with almost 60%, as the top hindrance for international growth. While we can discuss as the second listed challenge the overcoming communications and/or cultural differences applies only to companies who wish to expand to new regions. We can discuss it is also applying to companies who are already operating in these regions as changes in local regulations changed quite a bit over the past two years, some driven by cultural differences. And rounding out the top three, which I'm sure most of our audience agrees with, is the increased workloads in-house legal teams encounter on a day-to-day basis, often caused by a combination of leaner in-house legal teams and the increase regulatory compliance challenges we are all faced with locally.

Our subject matter experts will also touch base on some of the other challenges, such as governance differences as well as other topics. But let's first take a look at the considerations for expanding into EMEA and the APAC regions.

Questions everyone in our audience should ask themselves or already have asked when expanding internationally and beyond, becoming familiar with the challenges and how to navigate the complex regulatory compliance landscape are: Why you should consider using an outsource provider like CSC as opposed to a domestic law firm. What are the benefits? Would this be a better, cost-effective option for my organization? Well, let's find out.

As you can see, we have listed some of the important considerations on the screen. They are market entry, registered agent concept, civil law versus common law, regulatory regimes, taxation, employment and labor law, cultural and language differences. Of course, in the end, the key concern will be to get incorporated and to accommodate business needs.

Market entry is typically challenging even in an easygoing jurisdiction where new entrants are welcomed and accommodated. For instance, the concept of registered agent is often misinterpreted, and it's certainly not the same across all jurisdictions, which I'm sure the audience is aware of. RJ, what's your take on this for the EMEA region?

RJ: Thanks, Rogier, and hello again, everyone. The considerations showed on the screen, as far as I'm concerned, are already quite complex to deal with for a single entity in a single jurisdiction.

Anyway, to come back to your question on the registered agent concept, this is indeed not the same across regions and jurisdictions. In fact, in some jurisdictions, the concept doesn't really exist in a way we're used to it. So it goes by a couple of different names, most notably domiciliation, registered address to name a few, right? To some extent, these differences are also linked to the differences between common law and civil law jurisdictions. In the end, it comes down to the same, and it's very important to decide on the use and the right setup to meet local requirements from the get-go, especially to prevent potential delays this can cause during a setup phase.

So as examples for the two regions that we're discussing today, the EMEA and the APAC regions, there's, for instance, Qatar and China. I'm sure some of our attendees right now are doing business there or are planning to do business there. Both of these jurisdictions do not have the concept of registered agent. You can simply not register a company at a certain address without a physical office lease or an ownership title to an office building so to say.

Rogier: Thank you for explaining this, RJ, and highlighting some of the requirements and challenges. Boie, you know, without trying to assume things, how is this done in or view that for the APAC region?

Boie: Asia is indeed a mixed bag, and in fact, that what you guys just mentioned now on registered office address is really a good example in China and also some other jurisdictions in Asia. And not only that, but going into a new country, a new market, some jurisdictions in Asia also require a local residential director. So as an operating entity, a lot of clients tend to have their own directors, but in the beginning they might not have the right person and they don't know whether the nationality is accepted. In some countries, it might be the local person. So these are the challenges that a company would need to consider.

And not to mention that in Asia it's not like the U.S. that everybody speaks English. So there are challenges on cultural and languages barriers. Some places would be much more friendlier and easier, a more welcoming jurisdictions for a multinational to come in and a lot of automated process on the central registry of things, for example, in Hong Kong will be in English. Singapore also would be in English. However, when you, for example, go to Japan, South Korea, that requires a lot of more patiency. And the internal setup from a company and even wording itself might be completely different.

And there are a lot of not just external factors, but also like internally when multinational legal counsel try to contact a local person. They might even have time zone challenges. And also, when they're talking to a service provider on the ground, there are cultural differences and expectations as well.

Rogier: And it's indeed good to know, Boie, there are very distinct differences between all of the jurisdictions even within a region. When we refer to the importance on deciding on the right setup, RJ, maybe you can elaborate a little bit on this. How would you go about it?

RJ: Sure thing. Well, we all know that there's a relationship between the various elements and considerations we listed on the screen to play a role in determining a particular company setup. For instance, coming back to the topic of where and how to domicile a new entity, this is in fact influenced by pretty much each of the topics to some extent.

A first important question I think should always be raised is what is the plan and the objective for a particular entity. Are there any legal requirements that need to be adhered to locally? Same applies to tax matters. Do we need to adhere to certain requirements that internal or external tax colleagues have come up with?

Very often related to so-called substance requirements, which can play a role, a very important role in fact in some European jurisdictions, like the Netherlands and Luxembourg, where some of our clients may lack a little bit of infrastructure. Is there any infrastructure available for a newco to benefit from? Is there an existing office location, perhaps an existing team of locally experienced colleagues that might be able to help govern an entity, to act as directors to the newco?

All these matters need to be considered before establishment. Following CSC's recent acquisition of Intertrust, our clients can rely on a wealth of practical solutions focused on ensuring local requirements are met and for CSC, to where possible, help fill certain gaps our client's infrastructure might not yet be able to accommodate. The same can nowadays also include director services.

Rogier: Thank you, RJ. And again, Boie, I think for Asia this might actually be even more interesting when we speak about deciding on the right setup. Is it very similar to EMEA, or are there some examples that you can highlight?

Boie: In APAC, definitely it's really variant, depending on the country. A lot of time clients come to us to ask about the formality and the type of entities that they would like to set up to sort of meet with their business purpose. And depending on the country, again language is certainly a big barrier because a lot of times let's say a U.S. company coming into Asia, their legal counsel, they are probably American and they speak English. Then they would not be able to read some of the local forms. So some of the forms to file an incorporation they can't even understand what has been written and what sort of information they're asking for. So that is already the number one challenge if you don't even know the questions they're asking about.

And some jurisdictions also need to link with employment law and employment requirements so that you immediately need to register an employment ID, just like India. And in China, for the tax requirement, you need monthly filing and also quarterly filing. It is quite different than some of the well-established jurisdictions.

And well, not to mention about cultural differences that some provinces in China say, for example, that would require physical filing, that you need to go apply certain licenses before you are granted, you have a permission to set up an office.

So the issue itself is not just one size fit all. There's no one-size-fit-all solution. I think it's really important to understand what is the purpose of the setup and that comes to the right partner to help general counsel to identify the correct format, the correct entity type so that their business can run smoothly from day one.

Rogier: Thank you, Boie. A lot of things to consider, but it seems that partnering with the right partner in this might really help our audience to move forward on their requirements and their needs to expand globally. And we haven't even touched based on the differences between common law and civil law. And, RJ, for Europe specifically, some of the challenges that you encounter when speaking about civil and common law, how can we assist and how would you go about solving this?

RJ: Thanks, Rogier. Yeah. So there are some distinct differences indeed, and most of the mainland European jurisdictions have a civil law legal framework. The differences aren't dramatic, but it's just to keep in mind that for certain important transactions, for instance the incorporation itself, certain share transfers and some other transactions, they in civil law jurisdictions require the support and assistance and involvement of an external civil law notary. And this is a little bit of a different concept than a notary in common law jurisdictions because typically a civil law notary in a civil law jurisdiction is a very senior partner within a law firm or has a separate similar practice.

CSC, of course, is able to guide through these sort of complexities. I mean that there's no issue. We assist our clients with this, and we liaise on behalf of our clients with these types of required involvements.

I mean, there's a lot of nuances to make across different jurisdictions also within if we look at Europe alone, yes, there are 27 member states, and similar to what Boie referred to earlier for the APAC region, although there is this European Union, there is still this 27 different legislators in play, right? They each have their own nitty-gritty formalities that often need to be adhered to. And dare I say it from time to time some of these formalities change entirely, in their entirety.

I mean, there's this concept, for instance, of UBO registers that has been introduced. I'm sure the audience, to some extent, is familiar with same, whether they like it or not. And there's ongoing changes, and there's differences of interpretation and differences in terms of filing deadlines and filing procedures within each of the European member states, let alone if we look at, well, other locations within the region, right? It keeps us and our clients busy, but yeah, we stay on top of these types of details to ensure clients are kept in compliance.

We made also some mention of employment and labor law in the overview on the screen. Needless to mention that there are some very distinct differences and specific nuances between jurisdictions. Although we're not counsels specialized in labor law, we are very well connected within the local legal communities that we assist our clients in, and if need be we can help our clients by navigating through that landscape. In fact, we also have a global payroll solution, which might be of interest to some of you. But I think this is for another time.

Rogier: Well, thank you, RJ. And do you see the same happening in the APAC region, Boie, or is there a different route to take?

Boie: Well, I definitely agree with RJ. In Asia, a lot of countries and thousands of languages are being spoken in different places and different provinces. So I can't comment too much on their civil law and common law differences. Like RJ is a lawyer by background, so for sure he can say a bit more.

But in terms of the trend in Asia is certainly very similar. There are all different complexity. And say, for example, Japan is a very good example. There are four quarterly board meeting requirements in Japan to guide a good governance of a company. And some other jurisdictions in contrary is super straightforward, including Hong Kong, Singapore, and Australia. And even though a company might have a physical presence in some of the jurisdictions, but however some sort of filing has to be done by an external agent. So for example, here, we can help. A company might have their legal team on the ground, but as I said, they need to go through an external agent, like ourselves, to help.

So these are these are different factors influencing the way of working. And for example, Thailand, Indonesia, they also have their quite unique way of protecting local business, but then also trying to encourage foreign business to come in to help to grow the economy.

It is in fact our duty and sort of our goal to help clients to navigate different business scenes in different jurisdictions to achieve their business purpose.

Rogier: Well, thank you, Boie, and of course, RJ, as well for your detailed insights with examples. It's very helpful.

But let's take a look at the most common questions when considering expanding into EMEA. This slide has some topics that we already have discussed by the previous slides, but are definitely some questions which each general counsel should ask and raise when expanding internationally.

Understanding the objective of a newco is important as this will set the scene for further choices to be made. RJ, the audience might not be aware that CSC GSM can also provide some of these services in country and keep their existing advisors in place as well.

RJ: Yeah, you're right, Rogier. In the typical Global Subsidiary Management scenario, we will, as a basis, make an effort to consolidate all company secretarial work globally. And very often whilst doing so, we'll continue to work with the clients' in-house legal department of course. But where required, we will also continue to work with clients' external legal counsel.

We can, to a large extent, act as an extension to your legal and company secretarial teams to ensure a consistent approach across different jurisdictions of subsidiaries, but of course whilst meeting the local nuances and requirements. It's because of our in-depth knowledge and our experience on numerous standard transaction types that we can, in fact, help with a lot of what we call legal light work, where we typically work if needed together with external counsel, but where we can handle a lot of, yeah, standard transactions ourselves. For a number of our clients, it's proved to be worthwhile to also consider a similar approach for the selection of external counsel and other external support services, such as external auditors.

Boie: Yeah. What you're saying is that we also see the same in Asia, that often the client will streamline their process on auditing coordination across jurisdictions in APAC. And on occasions, we also definitely see legal and tax firms are involved helping out in APAC regions and also extend to the global locations.

RJ: Yeah, and again thanks, Boie. That's to consolidate certain efforts to make it more streamlined, to make it more connected. In our experience for tax providers, there's certainly a certain need of corporations for auditors. It almost goes without saying nowadays with larger portfolios.

For legal matters, it depends a little bit, in my experience at least, on whether a client is looking to rapidly expand across a number of jurisdictions where they engage one lead counsel, or whether we're dealing with an historically built-up portfolio where historical relationships set the tone really and where there's on some occasions quite a number of different counsels involved.

In any case and in both scenarios, we'll gladly work with existing legal counsels. Some of the services, yeah, are each disciplines in their own right, and it's not always suitable to combine everything under one wall. So we keep that in mind at all times.

Rogier: Thank you, RJ, and of course, Boie, as well to highlight some of the most common questions when you consider expanding into EMEA and APAC. Now let's talk a little bit about the best practices for expansion because it's a whole different topic, but it's seamless to what we just discussed.

So summarizing some of the best practices for expansion are considering existing infrastructure. What can we make use of? Is it an office address, the resources that we have on the ground, staff involved? What are the must-haves in a particular jurisdiction? Boie?

Boie: Say for example, headquarter can always leverage their banking relationship from their home country. A lot of these banks would have overseas offices and branches in the new jurisdiction. So the new company in Asia, say for example, then can leverage this relationship and open a bank account locally. And that would be very helpful to get an overall customer relationship I would say.

Rogier: It's actually a really good point to mention, Boie, because many of our clients struggle with opening a bank account and entering a new territory. RJ, you also suggested that we should include considering board composition. Can you elaborate on that a little bit?

RJ: For sure. Yeah, it's sometimes a little bit of an overlooked topic, but the board composition comes in a couple of pieces, right? One is that we will need to ensure that the company meets the statutory requirements. In some jurisdictions, it's a must-have, Singapore is a good example, Boie, to have at least one ordinarily resident director in place, just because local statute dictates for this.

But in addition to that, it's good to consider what type of governance you want to achieve, whether this is for general governance purposes, whether this is for meeting certain let's say tax elements to ensure that there's a certain decision-making power at a certain level within certain entities. It's good to take a good a good look and see how you want to compose the board. Should it mirror as much as possible what you do in a region? Are there certain stakeholders that insist on taking a seat or that are forced to take a seat on the board? All these elements should be carefully considered when we set up an entity. If we tie it back to what we just discussed on bank accounts, some of the directors or managers of entities need to also be considered as signatories to bank accounts for instance.

But there's all these little pieces that we need to try and map out before we actually get started. I guess one point I touched upon then, which is also mentioned on the slide, to try and apply consistency. And this is the easiest advice, but it's the most hardest to implement really because of all the local nuances and because of, yeah, the challenges that one will face dealing and juggling in between jurisdictions.

How do you achieve a certain consistency? Well, dare I say, it's potentially to engage a firm like CSC to help you gain control over your international portfolio of entities in as much as possible a consistent manner. And with that, one needs to seriously consider the use of a proper entity management system. Boie, maybe you want to elaborate on that a little bit.

Boie: Yeah, certainly. Thank you, RJ. And I really like the word "consistency," and I think that it is something that most companies would like to achieve, to get consistency. And because of consistency, entity management system is becoming a very hot topic I think worldwide, not just in Asia. And obviously, an entity management system is particularly useful when a company has a multi-jurisdictional presence.

When it's come to complex portfolio management, having an entity management system is definitely providing, number one, transparency of the corporate information. It is the last point on this slide, but I definitely think that it's not the least that we should overlook.

With the complexity of the languages barrier, time zone requirement, on legislations, as well as business demand, an entity management system becoming a point that providing legal counsel sitting in different locations to look at the same accurate data. And the data is reflecting the most of the information at the time zone that you want to. So for example, you're sitting in the U.S. You don't have to wait for the Asia colleagues to get up to provide you information in Asia. So you can get into the entity management system, directly look at the information 24/7 as you need.

An entity management system, if you're managing it correctly, it provides you transparency. With the transparency, it provides you consistency. If we were recording information in the same manner, we will be able to compare apple to apple, data to data correctly rather than having data input incorrectly and in a different sort of juggled wordings, and that would help with the day-to-day management. And the case handler, they're dealing with multiple jurisdictions at the same time, maybe reflecting just one director information on each of the entities that this director is sitting on. So with the entity management system, it will help the day-to-day management.

And our CSC proprietary system, that we're referring to now, definitely covers all the features. And I must say in APAC often that there are two headquarters for Asia operations. So for North Asia, then a lot of time that the legal counsel are sitting in Hong Kong or Greater China region covering the Chinese languages. And often the case there will be counsel or another legal team sitting in Singapore covering Southeast Asia. But when they are coming in together, having regular catch-up, then they can look at the information on the entity management system and comparing to the same data, talking to each other with the same languages.

So on that note, I would say it is definitely something to consider if you don't have an EMS in place. And I also have to say that managing an entity management system, it also requires extra resources. And if you use our CSC portal, we will do all the uploading for our clients, meaning that you don't have to require extra head count to help with data management. So that is also one of the features that I would say that I have seen a lot demand coming from the clients.

Rogier: All right. Thank you, Boie. I fully agree with you. While this might be the last bullet points, the entity management system, it's certainly not something to overlook. Ensuring to create a single source of truth with the help of an entity management system is definitely something that should make the top three or in this case the top four.

So let's take a look at the CSC solution. So we have spoken about some of the challenges and considerations on how to expand or what to expect when expanding to EMEA and APAC. But we also would like to provide you with a high-level overview of our Global Subsidiary Management service offering.

Based on the many conversations we have with multinational organizations and their challenges when administering global entity portfolios, we've listed the most common challenges. And some of these, actually probably most of these were covered by Boie and RJ. It's obviously navigating the complex regulatory landscape that is difficult for when expanding into new jurisdictions.

A multitude of service providers can also be extremely challenging, especially if you really try to connect your entity portfolio. The cultural differences and languages, we have touched base upon. Of course, security and data privacy issues, one of the main challenges when expanding. And of course, having difficulty in accessing local expertise, where to go, what are the right questions. Can I partner with CSC Global and still have a local partner on the ground, etc.?

So how do we solve this? We solve it by providing you with a single point of contact that sits in your preferred time zone. That could be your APAC region. It could be your EMEA region, or here in the Americas. One global customer service agreement that covers all jurisdictions.

This also assists if you need to scale up your organization. Having to go through numerous times of renegotiating local contracts is something of the past. So one global consolidated invoice, with a breakdown per entity is something that we can offer. And unfortunately, this is the last full point as well, while it is definitely not the case because this really brings everything together, and it's supported by our award-winning technology, our CSC Entity Management system.

Let's look at some of the services that we provide. Well, I will not go over all the specific details on this slide. As we now know, managing an international entity portfolio presents several challenges. Global Subsidiary government services from CSC can offer you a bespoke service solution that can meet your exact needs and requirements.

We have divided it in three different categories. Your annual compliance services are actually divided into little buckets. You have those services that are required from a local regulatory perspective, but you also have in there your facilitating services, that is your dedicated client servicing team, your single point of contact that can sit in your preferred time, as Boie mentioned earlier. It could be APAC, EMEA, or here in the Americas. We also have, of course, our award-winning proprietary software, CSC Entity Management system.

Now the additional services, if you do need a local resident director or a registered office, we can provide these to you. All the other services that we provide in the life cycle of an of an entity, we can provide as well.

Now we have specialized services that we are able to offer through the acquisition of Intertrust, which are accounting and reporting services, our tax compliance service, our global payroll services, as mentioned by RJ before.

Now, there is a full array of services that CSC Global can provide. I highly encourage you all to take a look at our website because there are many more services that go beyond our Global Subsidiary Management service offering.

So when we look at this particular slide, it's our Global Subsidiary Management global coverage. We render services in over 140 jurisdictions worldwide. As mentioned, this is done through a single point of contact and a dedicated client servicing team. Whether you are a U.S. multinational listening to this webinar or an European or APAC multinational, we have different hubs set up throughout the globe. In this particular case, it's our Wilmington, Delaware office in the Americas that coordinates through regional and local subject matter experts all the services globally that you need on a global scale.

RJ and Boie, feel free to chip in on to see how it is from the APAC region and for the EMEA region.

RJ: Yeah, it's a very similar concept, right? Our EMEA GSM hub, as we refer to it, is situated in beautiful London, from where we fulfill an exactly similar role. We'll have a dedicated team looking after our clients' interests, and where need be they'll liaise with the various local jurisdictions and, of course, with our clients.

Rogier: Yeah. Thank you so much, RJ. Boie has already touched base on our Entity Management system, which we feel is of great use to our clients. Proprietary, it's award-winning, and it has unlimited user accounts. If you're interested in learning more about our system and how you can utilize the system for your own organization, we highly encourage you to reach out to us and schedule a demo of our Entity Management system.