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USA: A hotspot for multinationals to base legal entities
The USA is ranked as one of the best jurisdictions for multinationals to base entities, according to two reports published this year by Mercator® by Citco (Mercator) as part of the ‘Entity Portfolio Management Report Series’.
Findings from our USA EPM Special report show that, on average, the USA is 22% cheaper than other jurisdictions to complete corporate secretarial activities. This is due to the country’s easily navigable legal system, straight-forward regulatory procedures and the fact that – in most cases – corporate changes can be approved internally without any requirement to file with the authorities.
The time needed to complete these key tasks is also significantly shorter than other jurisdictions – by 50% on average. This is due to flexible e-signature requirements and entity documentation is generally not complicated: on the latter, there are only few mandatory requirements that must be taken into account and most procedures are governed by the statutory documents of USA-based entities, which are usually straightforward and easy to follow.
In addition, many multinationals will view the USA as an attractive market due to the overall easier regulations for non-listed entities; in particular, many entities are incorporated in Delaware, where regulations provide additional flexibility for corporations.
The USA also ranks as the top jurisdiction among 170 worldwide to complete management/officer changes, according to findings from our Management/Officer Changes Special Report.
The data shows that the USA is one of the cheapest jurisdictions for these types of changes due to a highly competitive legal sector, which significantly lowers the cost relative to other jurisdictions due to competitive market pricing. Bilingual documents are also not needed, meaning there are no translation costs.
In addition, it is the fastest jurisdiction for completing management/officer changes – due to the country’s simple legal processes and the lack of need to register changes with authorities, as well as the possibility of online filings and the use of counterparts and e-signatures.
The USA’s combination of low cost levels and relative speed of business, paired with its straightforward legal system and international standing as a global financial center, means it remains a favorable location for many multinationals to base entities.
We hope this data will assist multinationals by serving as a benchmark for their expenditure and efficiency – while supporting in-house counsels on evaluating the management of their entities. It will also provide internal stakeholders with the assurance that each entity is properly managed and compliant.
Kariem Abdellatif
Director of Citco Mercator, UAB, Head of Mercator by Citco
