Let’s face it, the UK is a great place to do business. Most
global businesses will have a presence in the UK as part of their international
strategy.
There are plenty of benefits to having a UK presence as part
of your international footprint, including amongst other benefits: the broad
network for business support, tech expertise and innovation, robust legislation
for business governance, expertise in the professional services sector and tax
benefits for UK based R&D. UK based employees, no matter where their place
of birth, tend to be well educated, accustomed to working in an international
environment and accustomed to working hard. Let’s not forget, the country also
sits geographically between Asia and the US in terms of time zones and has
English as the home language.
However, other benefits for having a full presence in the UK
are changing. No longer will it be a member gateway into the EU, if Brexit is
finalised. With rapid development of tech solutions, workforces are often no
longer based in a static office space, increasingly utilising technology to
support remote working options across locations and between countries.
Reducing your UK footprint
Hence, if your international strategy is changing or your
client base is migrating to new time zones, you may want to reduce your
footprint in the UK without closing the doors forever. Keeping your options open to continuing to
have a small UK presence that can be ramped up in the future as further changes
impact your business. In this case, what
are your options?
You could keep a full UK legal entity presence with a full
work-force but deliver more of the infrastructure and support from your head
office, whichever country that may be in.
Alternatively, you could reduce your presence and leave a
smaller representative office, subsidiary or branch. Keeping core roles that
are successful or necessary in the UK but enhancing this with non-UK
colleagues.
As part of all these options, you may want to have a more
remote work-force encouraging your UK, and other, employees to work from home,
reducing the requirements and resultant costs of a large infrastructure in
terms of office space. Remote working is a growing trend and can enhance employee
engagement as well as delivering more efficient client services, depending on
which sector you’re in.
If you’re considering any of the above as part of the
strategy for your UK presence, what about oversight and governance? This is a
hot topic in the UK as much as it is everywhere else in the business
community. Good governance done well can
mean that your UK presence works smoothly, meets all legal requirements, aligns
to your global goals and becomes your favourite, rather than your problem,
location.
What does good governance look like for a subsidiary?
It needs to meet all the legislative requirements of having
a board of directors holding the legal responsibility for the entity. But this
board doesn’t have to be UK resident, so could be composed of representatives
from the parent company.
Equally, it doesn’t have to have local executive
responsibilities. Again this could be
supported by having board members from the parent company, with local
management not having to have the additional legal responsibilities of being a
director.
Benefits and downsides of a non-UK board?
Having a non-resident board for your UK entity aligns it
well to the overall global strategy of the business. Senior executives can hold
multi-jurisdictional director responsibilities, maintaining your director level
appointments within a consistent group. By doing this, the board will
consistent represent the culture, aims and goals of the wider business. There
will be no issue with sharing the global strategy as board members can
contribute to discussions and decision making across borders.
What a purely non-UK located board doesn’t bring is
knowledge of the UK marketplace, in terms of director responsibilities,
governance requirements and local nuances. It also doesn’t build up a rapport
with any local service providers or advisers which may draw out the time taken
for actions to be completed, wit the knock-on effect of increasing time spent
costs.
Options
There are options for your residual UK business, including the
appointment of a UK resident director to sit alongside your internal directors.
This then brings the local expertise, contacts and time zone availability without
detracting from the core purpose of the UK company. Appointing an independent
director enables you to continue with your plans to migrate without creating
excessive board room cost in the UK. It also facilitates transfer of business
more effectively by having a legal representative in the UK working on your behalf.
Despite the current uncertainty, keeping your future options
open by keeping a UK presence makes sense … Brexit is short term (hopefully!). The
long term success of your business across multiple jurisdictions requires a
robust organisational model that can adapt to legislative and geographical
changes no matter when or what they may be.
Sue Lawrence is the
founder of S3L Consultants providing independent director as well as strategy
and governance consulting in the UK. This is backed by her passion for the
benefits of effective governance, a diverse corporate career and her training
as a Chartered Director. She brings a holistic overview to businesses, coupled
with proven implementation skills as well as drawing on a broad network of
professional contacts.
www.s3lconsultants.co.uk
