The USA has been ranked as one of the cheapest and fastest countries among 170 jurisdictions worldwide for incorporating and managing the USA-based entities of multinationals, according to data compiled by the entity portfolio management (EPM) leader Mercator® by Citco, in its USA Special Report.
The data shows the USA is 22% cheaper on average than other jurisdictions for activities such as Management/Officer changes, Power of Attorney changes, Share Transfers and Board of Directors/Shareholder decisions, among others. This is due to a range of factors including 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 key tasks in the management of the USA-based entities of multinationals 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 multinational's own statutory documents, which are usually straightforward and easy to follow.
In summary, the data ? which is based on approximately $3 trillion in market capital across a broad range of sectors ? found the USA has the following advantages that both reduce the cost and time taken in entity management:
Kariem Abdellatif, Head of Mercator, said: "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. The USA is also considered 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.
"We expect this data-based resource will assist multinationals by serving as a benchmark for their company secretarial expenditure and efficiency within the USA. It may also serve as a useful data-based resource in setting up new USA entities in corporate structures."
To read the full report, please visit: USA EPM: Special Report | Mercator®
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Notes to editors:
It should be noted that the purpose of this report is not to advise multinational companies on where to base entities or subsidiaries ? this is obviously dictated by necessity ? but to set expectation and provide foresight on the relative cost and time it will take to manage entities in the USA.
The statistics that form the basis of this report cover the period between May 2021 and April 2022 and is drawn directly from Mercator's proprietary EPM technology platform ? Enticatm ? which individually records all the activities undertaken for clients. This data includes event-driven services, initiated on an ad-hoc basis, but not activities related to Annual Obligations as the latter are governed by our Global Compliance Calendar and hence are highly predictable. The data relates purely to multinational companies.
About Mercator® by Citco
The pioneer of Entity Portfolio Management (EPM), Mercator creates lasting partnerships with its clients to understand their individual needs and offer ease, efficiency and visibility through a clear layer of oversight. Mercator's unrivalled knowledge of EPM and proprietary technology ? Enticatm ? is evolving the way companies view and manage their portfolio of entities, helping them navigate an increasingly complex regulatory environment.
As a part of the Citco group of companies (Citco), Mercator works closely with our Governance Services team ? a bespoke, centralized service offering BPO accounting, Common Reporting Standard, directorships and payroll services, among others. The transparency offered by Mercator's data insights combined with Governance Services' proactive expertise means Citco can support any multinational corporation on all of your entity management needs.
About the Citco group of companies (Citco)
The Citco group of companies (Citco) is a network of independent companies worldwide. These companies are leading providers of asset-servicing solutions to the global alternative investment industry. With over $1.8 trillion in assets under administration and 8,200 staff deployed across 40 countries, Citco's unique culture of innovation and client-driven solutions have provided Citco's clients with a trusted partner for more than four decades.
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