In-house legal teams face more complexity
and risk to stay on top of global entity management
- Almost all (96%) of multinationals plan to maintain or grow
their geographic footprint
- North America leads the way as the most popular overseas
growth market
- South America attracts most first timers
- In-house legal teams cite building local infrastructure
(61%) and understanding local legal systems (33%) as the biggest
cross-border challenges
Corporations across North America, Europe, and APAC are
committed to expanding beyond their domestic markets in the pursuit
of growth in 2024. But in doing so, they’re creating a formidable
challenge for their in-house legal teams faced with navigating an
increasingly complex web of evolving laws and regulations to manage
a lengthening list of global entities. This is according to new
research conducted among 300 general counsels and legal compliance
officers commissioned by CSC, the world’s leading provider of
global business administration and compliance solutions.
CSC’s study1—General Counsel Barometer 2024—found that nearly
two thirds (62%) of multinational companies aim to grow their
presence in a similar number of markets as they did in 2023, with a
third (35%) planning to expand into additional territories over
this year.
North America tops the list as the most popular destination,
with over half (56%) of respondents looking to build out an
existing presence or set up for the first time, tapping into a vast
consumer market, strong reputation for innovation, ready access to
capital and a skilled workforce, while benefiting from low barriers
for entry. This was followed by Asia Pacific (46%) and Europe,
excluding the U.K. (44%).
The study revealed South America as attracting the largest
portion (46%) of multinationals seeking entry into a new market for
the first time, driven by abundant natural resources, a growing
number of English-speaking professionals, and its proximity to the
U.S. market. Of these, six in 10 (61%) North American-headquartered
multinationals said they had plans to enter South America for the
first time, compared to 37% of those based in APAC and 40% in
Europe and the U.K.
Among corporations based in Europe and the U.K., North America
expansion topped the list (54%), while in Asia Pacific, the most
popular region was the U.K., named by 55% of respondents, given its
ongoing reputation for access to investment funds, skills, and
resources.
“Multinationals are setting up and managing a growing number of
entities in both existing and new markets, and this is increasing
the pressure on their in-house legal teams to rapidly deliver local
market know-how and operational readiness,” says Thijs van Ingen,
global market leader, CSC’s Corporate and Legal Solutions. “Yet the
process of opening and managing subsidiaries in multiple
jurisdictions has become highly complex as firms contend with a
patchwork quilt of global regulatory structures and different legal
frameworks, and supervising those operations in an effective way
can be really challenging.”
Nearly two-thirds (61%) of respondents said they faced
challenges when putting new infrastructure in place quickly, while
a third found it difficult to understand the local legal system.
Meanwhile, 31% admitted to experiencing issues with local privacy
laws and jurisdictions, and a quarter (26%) said they were not
confident in their ability to verify data across jurisdictions.
The impact on expansion elsewhere is most concerning for those
surveyed when it comes to the potential consequences of inadvertent
non-compliance, followed by fines, a postponed or suspended ability
to trade in that jurisdiction, and reputation damage. To mitigate
these risks and challenges, general counsels and legal compliance
officers are investing in solutions for additional support,
including technology optimization and engaging third-party
organizations.
“Partnering with an experienced global services provider with
boots on the ground across multiple jurisdictions enables companies
to focus on their core competencies and strategic growth plans,
while resting assured that their entity management needs are being
taken care of by industry experts,” van Ingen adds.
The vast majority (87%) of respondents are using generative AI
for legal operations, and 58% stated they are making a concerted
effort to accelerate their digital transformation strategies. Half
(49%) are outsourcing to third parties to manage their legal
operations.
A key benefit of appointing external providers is that
multinationals can move towards a centralized, standard set of
processes more quickly and efficiently, and remain on top of an
ever-evolving global regulatory landscape. In terms of the specific
services legal teams prioritize when selecting an external
corporate services provider, corporate secretarial services,
regulatory and compliance services, and accounting services top the
list.
To receive a copy of CSC’s General Counsel Barometer 2024
report, please contact Camilla Wyatt or Saffron Wainwright at
cscteam@citigatedewerogerson.com.
Notes to editors 1CSC, in partnership with Pure Profile,
surveyed 300 general counsels and legal compliance officers in
North America, Central America, South America, Asia Pacific, Europe
(excluding the U.K.), and the U.K., in January 2024. Survey
respondents were drawn from a range of industry sectors including
communications, banking and financial services, healthcare,
insurance, law, and real estate.
About CSC CSC is the trusted partner of choice for more
than 90% of the Fortune 500®, more than 90% of the 100 Best Global
Brands (Interbrand®), and more than 70% of the PEI 300. We are the
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compliance solutions, specialized administration services to
alternative asset managers across a range of fund strategies,
transactions involving capital markets participants in both public
and private markets, domain name system management and digital
brand and fraud protection, and corporate tax software solutions.
Founded in 1899 and headquartered in Wilmington, Delaware, USA, CSC
prides itself on being privately held and professionally managed
for more than 125 years. CSC has office locations and capabilities
in more than 140 jurisdictions across Europe, the Americas, Asia
Pacific, and the Middle East. We are a global company capable of
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version on businesswire.com: https://www.businesswire.com/news/home/20240508342972/en/
Citigate Dewe Rogerson Camilla Wyatt or Saffron
Wainwright cscteam@citigatedewerogerson.com
CSC Brandy Chieffi Vice President of Marketing
brandy.chieffi@cscglobal.com CSC News Room