MERCATOR-BY-CITCO

Europe retained the top spot as the cheapest region for multinationals to operate entities in this year amid greater disparity globally, with the digitalization drive playing out at different speeds around the world.

According to data compiled by Entity Portfolio Management (EPM) leader Mercator^® by Citco (Mercator) in its annual Mercator Entity Management Report 2023, combined global average costs for multinationals to complete entity-related activities reduced by 4% in 2023.

An uptick in the use of digital tools drove greater cost efficiency in some regions, easing the processes of entity management, while the growth of the legal and company secretarial support sector also played a part as a range of providers helped to reduce costs.

For the second year running, Europe ranked as the lowest cost region for multinationals to operate in, driven by the ongoing implementation of the EU Digitalization Directive and a highly competitive legal service market.

In comparison to Europe, the Middle East and Africa (MEA) and Latin America (LATAM) are most expensive, with many jurisdictions within those regions still requiring wet-ink signatures and multiple steps for notarization, translation and legalization of foreign documents.

The data - sourced directly from Mercator's EPM technology platform, Entica^® - also showed North America (NA) is the fastest region, benefiting from widespread adoption of e-signatures and electronic filings, with average time to complete tasks decreasing by 14% in 2023.

However, all other regions saw either an increase or no discernible change in time, with the efficiency gap widening between those jurisdictions embracing digitalization and those jurisdictions still relying on traditional legalization methods, physical filings and in-person meetings. This is most pronounced in Asia-Pacific (APAC), which has some of the most efficient processes for multinationals as well as some of the most complex. This disparity results in global average time increasing by 48%.

Ranked per individual jurisdiction, Malaysia emerges as the most favorable location overall in which to base entities in 2023 – based on the overall cost and time involved in managing entities – followed by Singapore and Australia. In contrast, Taiwan, Vietnam and Norway are the lowest ranked.

Kariem Abdellatif, Head of Mercator comments:

“Overall, we continue to see the digitalization drive revolutionizing how multinationals manage and maintain their global portfolio of entities and 2023 has seen more jurisdictions across the world embrace digital tools to streamline processes and increase efficiency.

“What is becoming increasingly clear, however, is that the gap is widening between Global Financial Centres with streamlined, tech driven solutions - such as Singapore, the United Kingdom and the United States – and those jurisdictions still relying on traditional in-person processes. In those jurisdictions, the added complexity not only creates administrative burdens for in-house teams, but also costs multinationals more time and money.

“Of course, 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 expectations and provide foresight on the relative cost and time it takes to complete key activities to keep entities in compliance around the world.”

To read the full report please visit: https://mercator.net/mem-report-2023/

The Mercator Entity Management Report 2023 is part of Mercator’s Entity Portfolio Management Series, providing direct insight on the cost and time to manage a global portfolio of entities, based on real-life data.

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Notes to editors:

The statistics that form the basis of this report cover the period between October 2022 to November 2023 and are drawn directly from Mercator^® by Citco’s proprietary EPM technology platform – Entica^® – which individually records all the activities undertaken for clients.

The data covers over 180 jurisdictions and 20 different types of corporate secretarial tasks. The data represents $3.41 trillion in market capital across all major business sectors and relates purely to the activities of multinational companies.

About Mercator^® by Citco (Mercator)

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 – Entica^® – 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 9,800 staff deployed across 36 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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