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Why General Counsels Are Having to Do More with Less: A UK Perspective

Management of local and overseas legal entities is becoming increasingly complex and time-consuming—just as many in-house legal teams are being streamlined.

The General Counsel Global Barometer 2023 shows that many multinational companies (MNCs) continue to pursue cross-border expansion, despite economic headwinds and growing administrative complexity. That rings true from a UK perspective. At CSC, we’re seeing multinationals with headquarters in London continuing to eye opportunities to expand into new jurisdictions. Similarly, we see a high volume of UK entity incorporations driven by businesses located overseas.

Internal legal teams are having to facilitate this expansion at a time of increased regulatory scrutiny and growing cost sensitivity. In an unpredictable market, companies are hesitant to add headcount to teams responsible for international subsidiary management. Even when they do look to hire, finding talent with technical expertise, appropriate experience, and the right price point is no easy task in the current labor market.

It all adds up to a sector under strain, as our Barometer results suggest. So how do general counsels (GCs) do more with less, and where can efficiencies be found?

Entity management and the Brexit effect

Even during uncertain economic times, we’re continuing to support a high volume of overseas expansion from our UK-headquartered multinational clients. This push for international growth is typically driven by a variety of factors, including capitalizing on commercial growth opportunities, accessing international talent and industry expertise, or taking advantage of cheaper cost of overseas labor.

Increasingly, incorporation of new entities is also driven by regulatory change. A notable recent example is Brexit, which has seen UK companies creating new hubs in the EU, and businesses with a European presence being pushed to create new legal entities in the UK.

This might be driven by trade restrictions, HR, and recruitment challenges, and potentially shifts in licensing requirements. For example, we’ve recently supported a number of pharmaceutical companies focused on international product commercialization. Due to changes in licensing coverage, they’re now required to seek separate product or distribution licenses in both the UK and Europe.

We’re also increasingly seeing North American and Asian clients looking to access Europe for the first time, simultaneously setting up subsidiaries in both the UK and the EU, potentially growing both the cost and complexity of international expansion.

Subsidiary management in an age of transparency

All this is happening in a regulatory environment focused on increasing transparency. MNCs are having to keep on top of a growing regulatory burden everywhere they operate, as well as locations they hope to expand into. This combination of local and global rules creates a complex network of shifting demands.

This operational and compliance burden can be further enhanced in more bureaucratic jurisdictions, or those which commonly see a higher volume of local statutory requirements. These might include countries such as China and India, where local legislation in relation to doing business can be complex.

Inevitably, when organizations expand overseas, administrative requirements and workload increase. Local teams and global functions need to be fully aware of local regulation and corporate requirements, as well as additional aspects of business management, such as accounting standards, business culture, and professional networks.

There are legal, financial, and reputation risks inherent in failing to meet statutory requirements and good corporate governance standards. Without the right support and local technical expertise, potential compliance deficiencies could hamper future exit strategies, whether through a sale, merger, or even public listing. A buyer’s basic due diligence will soon unearth any regulatory missteps or governance shortcomings.

Easing the pressure on general counsels

In these circumstances, how do GCs ease the pressure? As our Barometer shows, many corporates entrust expert third-party providers like CSC with aspects of their entity management responsibilities. This may include time-consuming administrative tasks, or overseas entity management requiring a deep understanding of the local business environment and statutory obligations.

Outsourcing corporate secretary or financial administrative work to CSC can reduce the risk, cost, and burden of ensuring overseas entities remain in good legal standing, with market-leading corporate governance, at all times.

Our end-to-end Corporate Secretary and Administrative services can alleviate pressures increasingly felt by GCs. Our Corporate Administration service is tailored to fit the client. Get in touch with us today to discover how we could suit your specific needs.

Why CSC?

CSC offers a global solution for subsidiary governance, fund strategies, and capital markets transactions, with tools to help fund managers navigate the ever-changing compliance and regulatory environment they face.

With capabilities in more than 140 jurisdictions, we’re able to do business wherever our clients are—and we accomplish that by employing experts in every business we serve. For the complete picture, download the General Counsel Global Barometer 2023.