Structure is most simply defined as the description of what a system is made of. It is also termed a collection of inter-related components and relationships between entities. So if we think of entities as companies, and relationships influenced by legal and fiscal boundaries, we can begin to understand the complexities.
However even more needs to be considered. Little surprise then that to describe a business, and how it operates sometimes requires assistance from a diagram – to simply illustrate what is termed a “corporate structure.”
A corporate structure for a single company dictates how operations will be separated in the company. Owners, boards of directors and executive managers have the main responsibilities, with other levels of management responsible for specific divisions or locations. The emphasis is on internal matters.
However where a company is joined with others operating in different countries and jurisdictions, the emphasis changes to relationships that are external to a single company. The way operating responsibilities are defined can be influenced by many factors. The key nature of the business, operations across time zones and language changes, taxation and legal issues, can determine how operations are “structured”.
Another important dimension for some is that international business operations may need to be linked to family wealth and investment activities. Having no primary residence and having interests in several countries, requires an international solution to arrangements.
In our experience any mention of structures, to describe companies interacting with others, leads to an attempt to illustrate with a diagram. This desire for graphic illustration is due to difficulty in explaining the concepts involved. When in conversation with international clients it becomes a visible device to aid translation and understanding. It is much easier to draw the boxes to describe what is involved.
Why do I need one?
Most clients will consider that they have survived in business without any need of a device termed a structure. In truth they will already be operating some form of structured approach to their business.
That business and the environment in which it operates are constantly changing. Within that process of change are events that can be so profound as to justify a total review of way the parts of a business operate with others. International events, particularly a new company in a new location, are in this category.
Most business interests start from a home base. As they develop they can become more international to a point where their home base ceases to be the primary market for products or services. As an alternative to this evolutionary process business interests operating internationally can also actively seek to operate from another country.
Some of the reasons for this are discussed at Using another location for business.
Often privacy, taxation, security and related issues lead towards off-shore locations and the use of offshore companies.
The more complex business arrangements become, particularly as they take on a more international character, the greater becomes the need to identify a structure than best suits many factors. In that case the diagram itself becomes a valuable tool to understand the business.
So adding boxes, drawing country boundaries, relationship links, profit trails and many more illustrations of an international business leads you to an international corporate structure.
What are the components of an International Corporate Structure?
Structures inevitably lead to diagrams, with diagram boxes representing each part of an overall business structure. In that case the components of a corporate structure are what is shown in each box.
Plans to operate in another country naturally leads to consideration of buying a company in that location. However there is much to be considered before buying a UK company. Details of the requirements for UK companies illustrate this.
Many think that moving a business to another country not only requires the purchase of a company but also investment in operating infrastructure in that country. This may not be the case as agency arrangements can often be used to better effect.
Agencies form the basis for some of our services to clients especially where the operation and responsibility for specific business services are contracted to a third party. Similarly a a few specialist services can support a client’s development efforts.
Partnerships or LLPs can be considered by those who simply want an alternative corporate business vehicle. Like a company an LLP gives the benefits of limited liability. For that reason a LLP can be considered as part of a corporate structure.
When family wealth is concerned, Trusts may be considered.
We can introduce the usefulness of a foundation which, although having much in common with companies and trusts, possesses its own unique features.
How do I consider my structure ?
If you are here to buy a UK company you can start by considering why you think you need it.