Lawyer Monthly - May 2022

33 MAY 2022 | WWW.LAWYER-MONTHLY.COM BRINGING CALM TO THE CONFUSION OF GLOBAL ENTITY MANAGEMENT they conduct a transaction. There are more than 1000 individual municipal sub jurisdictions. - Incorporation in high-tech Taiwan still requires numerous applications, paper documents translated into Mandarin Chinese, in-person appearances to open a bank account, and company chops to stamp official documents. - State bureaucracy is not always the problem. In Malta, Hong Kong and the Netherlands incorporation can be completed within a week, but opening a bank account from abroad will take you more than six months. Never the Same River Twice This is far from a static problem. As normal cross-border business activity adds new entities and new jurisdictions, a constant flow of new legislation extends the reach of regulators and sharpens their teeth. The transnational engines of the OECD and EU generate the models. Individual jurisdictions then implement them into local law, almost always with a twist that compounds the complexity and gives foreign investors something extra to think about. climate-related risks and management plans. There is No Accounting for It Nor is entity management purely a matter of narrow legal compliance. Complex accounting, tax and HR rules take many corporate legal teams (and, I might add, their local advisors) far beyond their comfort zone. Mandatory Disclosure Rules (MDR), requiring companies to prove a legitimate business purpose for their presence in a given jurisdiction, are now widely adopted – as is the automatic sharing of tax data between jurisdictions under Common Reporting Standards (CRS). The three-quarters of jurisdictions which have now adopted UBO/PSC-style ownership registers will shortly include the US, where the Corporate Transparency Act (CTA) contains far-reaching beneficial ownership disclosure rules. More than 60 countries have incorporated the OECD’s digital economy taxation rules into domestic law, but the treatment of coverage, consequences for non-compliance and requirements for registration and tax reporting all vary widely. Regulators will soon catch up with digital assets and cryptocurrencies. New legislation and money laundering rules are expected in the next year or so. The same is true for corporate ESG (environmental, social and governance) activity. A new EU regulation protecting workplace whistleblowers will start to come into force in 2022. The US, meanwhile, is proposing to regulate how businesses report their ‘Are we up to date?’ used to be a perfectly reasonable question in entity management, but it has become unanswerable for most cross-border businesses.

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