For foreign investors doing business in a new territory, the local compliance obligation is generally forming a new local corporate entity through which it can engage with local customers and suppliers, and report activities to the local governmental compliance and tax authorities. Whilst every country around the world has varying requirements and procedures for establishing a new company, the principles are broadly similar.
Below are some of the major steps to doing this, and the pitfalls to watch out for.
Our role at TMF Group is to help guide your through this process, and ensure you are set-up with the best structure, with the minimum of on-going compliance requirements, to suit your business objectives.
The steps in the process of establishing a new company in a foreign country include:
Determine the best corporate structure for your needs
Most countries offer a variety of business formations, such as branches, representative offices through to full corporate entities. The limits on types of trading and contracts they can enter into, as well matching complexity of reporting obligations, give foreign companies flexibility to chose the best option for their plans. We can help explain the differences between the different options so that you can ensure you make the best choice for your future plans.
Incorporating the new entity
Generally companies can either form a new company or buy an off-the-shelf company. There are advantages to either route, and you need to understand the details to avoid delays in you being able to trade. Once you have dedicated upon the best alternative, TMF Group can manage the whole process, co-ordinating with the local authorities to ensure the new company is fully compliant and ready to trade.
Appointment of local shareholders
This can be a complex area as many countries still have onerous requirements for in-bound investors to follow. A common restriction is the requirement to have a local resident as a shareholder. Aside from organising the registration of shareholders with the authorities, TMF Group is also able to provide our local management as nominee shareholders if this is a local requirement. These staff will be able to act on your behalf, under tightly restricted Powers of Attorney agreements, and so enable you to commence business without appointing local employees. All our staff are covered by fully Professional Indemnity insurance, meaning you are completely protected.
Set-up of statutory records
With the new company formed and shareholders appointed, you are now required to maintain statutory records which should be available for inspection at short notice by the authorities. These include:
• Statutory records
• Company shareholder register
• Employee register
• Special trade licences
Our staff will be able to properly open these registers, and maintain them going forward if required. This includes following the local proscribed formats to ensure any inspection by the local authorities passes off smoothly.
Registrations of new entities
Once formed, your new entities will have to be registered with the various governmental and tax authorities. These bodies can be numerous. Our local teams are completely familiar with all the rules and procedures for these registrations, and can ensure that they are taken care of in full and that you are completely compliant.
Appointment of local representatives
Any new foreign entity will have to nominate official representatives who can commit the company to commercial contracts, as well as represent the new business in front of the local authorities. Again, if you wish to initial avoid the commitment or risk of hiring a local official representative, TMF Group can offer one or more of its local staff. They can be appointed as the nominees or proxy statutory representatives, company secretary or managing director.
Registration of company offices
In addition to representatives for the new company, foreign investors will have to provide the authorities with a local company address and office details. This is a location where the authorities can contact the business at, and serve official correspondence to. Other business contacts – banks, lawyers and trade partners – will also require a physical office to deal with the company. TMF Group’s offices around the world can provide this domiciliation service, and ensure that any correspondence is dealt with appropriately, and that you are consulted on as appropriate.
Set up and managing bank accounts
With the ever increasing complexity of anti-money laundering regulations, opening and running your local bank account has become one of the most onerous tasks of operating in a new country. One of our roles in helping you set-up in a new country is to manage this whole process, and ensure you are ready to do business and process payments as soon as possible. We can work with our own local banking contacts, or with your preferred partner, to quickly open up an account and establish payment and settlement processes. We can also act as the local bank signatory to contain your local admin costs.
If you would like to discuss the above requirements for any country, and learn about specific local rules and customs, then please contact one for our Account Managers, below.
TMF Group can generally offer a complete, fixed fee service for the full establishment of a new entity. Once all the above set-up procedures are taken care of, you will need to maintain the records, as well as maintain full accounting and payroll records and procedures to ensure the efficient running of the business. Click here to read about these on going functions, and how TMF Group can help.
At TMF Group we have assisted thousands of companies successfully expand and operate seamlessly across borders. We look forward to helping you too.