Unsurprisingly one of the biggest challenges facing international investors is keeping on the right side of the law.
Recent research commissioned by TMF Group and conducted by IDC found working with and understanding the legal processes and regulations in a new location are a significant issue for international investors when establishing their new operation.
This is especially prevalent when investors are trying to ensure they fit in with the rest of the way their business operates.
Without in-depth knowledge of local legislation and regulations, staying abreast of everything can easily turn in to a headache that no investor wants.
Some of the main areas that companies need to focus on when establishing the legal essentials of their business are:
- Determining the best corporate structure for their needs
- Incorporating the new entity
- Appointment of shareholders
- Setting up statutory records
- Registrations of new entities
- Appointment of local representatives
- Registration of company offices
- Knowledge of local rules and regulations
- Certificates of good standing
In particular, the importance of getting accounting processes and procedures correct, including payroll, seems a greater challenge than corporate governance.
Accounting processes and procedures can be seen as time consuming, expensive and difficult to change later on if it was initially done incorrectly.
From the outset it is important to identify the challenges and put systems and processes in place to address them.
When creating an offshore venture it is essential that it is compliant. The best way to ensure this is by engaging a third party with external expertise in the country of the business.
By engaging external expertise you can overcome the issue of not being compliant. With their ear to the ground and in depth knowledge of local legislation and regulations an on the ground expert can make all the difference when it comes to remaining compliant.
Unsurprisingly payroll related services are the most common area where a third party provider would be used.
Third party providers with a strong local presence are able to ensure that new subsidiaries are properly constituted and remain compliant with local legal and working requirements.
It can be also beneficial to select a third party provider that operates across more than one location, to smooth the transition to further markets should that be your long term goal.
A company offering multiple services under a single agreement is likely to be more cost effective while delivering a higher quality and more integrated service.
It all comes down to companies ensuring they remain abreast of and compliant with local regulations and legislation to ensure their business is keeping on the right side of the law.
Read our report for more information about keeping compliance on the right side of the law