The information contained in this document is marketing material and for informational purposes only. The information contained in this document is presented without any warranty or representation as to its accuracy or completeness and all implied representations or warranties of any kind are hereby disclaimed. Recipients of this document, whether clients or otherwise, should not act or refrain from acting on the basis of any information included in this document without seeking appropriate professional advice. The provision of the information contained in this document does not establish any express or implied duty or obligation between Citco and any recipient and neither Citco nor any of its shareholders, members, directors, principals or personnel shall be responsible or liable for results arising from the use or reliance of the information contained in this document including, without limitation, any loss (whether direct, indirect, in contract, tort or otherwise) arising from any decision made or action taken by any party in reliance upon the information contained in this document. © The Citco Group Limited, December 2024.
Navigating Entity Portfolio Management
Entity Portfolio Management (EPM) is the practice of maintaining a healthy governance framework for a company’s global portfolio of entities.
EPM has never been more important as in-house legal and corporate secretarial teams work in a challenging environment where regulations change constantly. Internal stakeholders need to be assured that each entity – no matter the location – is properly managed and compliant. If actions are not completed properly, corporations may suffer regulatory fines and reputational risk.
The Mercator Entity Management Report 2022
The Mercator Entity Management (MEM) 2022 Report provides direct insight into the practice and dynamics of EPM, based on real‑life data, covering more than 170 jurisdictions.
The purpose of the report is not to advise multinational companies on where to base entities or subsidiaries – this is obviously dictated by necessity – but to set expectations and provide foresight on the relative cost and time it takes to complete corporate secretarial activities across an entity portfolio.
The analysis of the report focuses on three key data points:
- Regional and jurisdictional distribution of activities
- The time it takes to complete activities
- The cost to complete activities
Key Findings
- Europe surpasses APAC as the cheapest region in 2022. On average, costs reduced by 5% compared to 2020’s findings. This is due to flexible company regulation following the COVID pandemic and the EU’s commitment to modernizing company processes to fit the digital age, including the ongoing implementation of the EU Digitalization Directive.
- Pre-pandemic adoption of digitized processes means APAC remains the quickest region to complete activities, with average times for completing EPM activities reducing by 21% compared to 2021’s findings. MEA, however, stands out as the most expensive – with costs in the region increasing 12% compared to last year – and with longest timelines for corporate changes.
- Luxembourg is the fastest jurisdiction – jumping up 15 places from last year’s data due to the rapidity with which local legislation allowed for decision-making via remote measures during the COVID pandemic – which is now having a clear effect – combined with a greater reliance on local directors and other local representatives for Corporate Secretarial support during this period in contrast, Nigeria is the slowest.
- Global financial centers – with competitive legal markets and long-established corporate governance processes – these continue to perform strongly. Mauritius, Malaysia and Bermuda all enjoy low cost levels, while Kazakhstan, the People’s Republic of China (PRC) and Qatar are the most expensive per activity.
- Overall, based on the data, Bermuda comes out on top as the most cost- and time-efficient jurisdiction to base entities, followed by Luxembourg and Germany. All three jurisdictions have the ideal combination of low cost levels and competitive timelines, and are well regarded as global financial centers, with competitive legal markets and long established corporate governance processes.
- The People’s Republic of China, South Korea and Taiwan are the lowest ranked. All documents must be translated into local languages and multinationals face complex regulatory environments, with often-detailed local requirements to complete changes. These three jurisdictions also have decentralized local authorities; to complete just one change, this means that companies will have to make several filings to different governmental institutions.
To read the full report visit: https://mercator.net/our-thinking/publications/mercator-entity-management-report-2022/
The MEM 2022 is part of Mercator’s Entity Portfolio Management Series, providing direct insight on the cost and time to manage a global portfolio of entities, based on real-life data.
