Country Experiences in Identifying Enterprise Groups and Incorporating them into Statistical...
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Transcript of Country Experiences in Identifying Enterprise Groups and Incorporating them into Statistical...
Country Experiences in Identifying
Enterprise Groupsand Incorporating them into
Statistical Business Registers
Workshop on Business Registers and their Role in Business Statistics in the Eastern
UNECE Region - 5 October 2009
Developing Enterprise Groups
Definitions Existing situation Issues
The Context
Businesses are becoming more complex Accounting systems differ from their
operating structures Structures cross national boundaries
Statistical Units (EU Standard)
Enterprise Group – group of legal units or enterprises under common control
Enterprise – smallest group of legal units within an enterprise group with a certain degree of autonomy
Legal Unit – the administrative unit, usually from a system requiring the registration of businesses, usually equating to an enterprise
The Statistical Business Register (BR)
In the past the BR was a list of establishments (local kind of activity units or local units) – e.g. factories, mines, shops
Now most BR have moved to a list of legal units, often showing the relationship between the legal unit and its establishments
In the European Union, countries have developed (or are developing) systems holding relationships between legal units
Main types of legal unit
Incorporated (often called a company or corporation)
Partnership Sole proprietor Government (central, state or local) Non-profit
The Concept of an Enterprise Group
The enterprise group is a cluster of legal units under common control
This is usually through the ownership of shares The owning legal unit may have direct or
indirect control through >50% of the shares or, occasionally, through a controlling interest at board level
A legal unit can be controlled by only one legal unit but other legal units may have a minority interest
Enterprise Groups
All enterprise groups are defined by the relationship between one legal unit and its immediate parent
This generates a complete tree structure The legal units form a cluster of control One legal unit is the group head – this is usually
an incorporated business but may be a government body or non-profit organisation
US
DE
GB
FR GB
AU
Example of a Global Cluster of Control CLUSTER OF CONTROL
Truncated Enterprise Groups
The truncated enterprise group is the cluster of legal units within a country
Legal units can operate only in one enterprise Enterprises based on more than one legal unit
are allowed, provided all of the legal units are in the same truncated enterprise group
US
GB
GB
AU
DE
FR
Truncated Enterprise Group for GB (and DE and FR)
US
DE
GB
FR GB
AU
The Global Group
Truncated Enterprise Group: 4 legal units = 2 enterprises
1
3
2
4
2
1
3
4
Stages of development
1 Maintaining a list of establishments, usually though a census of businesses
2 Using administrative sources for identifying legal units (business registration, tax systems etc)
3 Relating establishments to their legal units
4 Creating enterprises based on legal units, for the more complex businesses
5 Creating ownership relationships to form enterprise groups
Sources for enterprise groups
Administrative sources (e.g. company accounts, National Bank Solvency Centre (Serbia))
Statistical surveys (e.g. annual structural business statistics requesting ownership details)
Private sector databases (e.g. Dun and Bradstreet, Bureau van Dijk, Experian)
Profiling (direct contract with businesses through visit, telephone or mail – feasible only for a few large businesses)
Quality of sources (1)
Not all information on relationships is public Sources are incomplete and not standardised Structures are often complex and include lots of
legal units that are not active
Quality of sources (2)
Businesses change their structures frequently Businesses have operational structures that
differ from their administrative structures Acquisitions and mergers are common but take
time to settle down
Technical issues (1)
Business registers are often large They generally hold list of business units but
not the relationships between them Even when they hold relationships, it is difficult
to manage changes in the relationships
Technical issues (2)
It is expensive to capture information on relationships
Changes to structures may be notified only after a delay or not at all
Changes may be notified out of sequence
Country of Ownership
• The immediate owner is the legal unit with a controlling interest
• The ultimate beneficial owner or global group head controls all legal units in the group
• The country of the owner is the country of registration
• This is difficult where “tax havens” are used or where there is a family group or a natural person runs the group
Sharing Data
As many important enterprise groups operate outside national boundaries, the statistical office may not have the authority to collect information for the whole group
Even within the national boundaries, it may not be possible to share information between authorities
Private data suppliers will usually not have complete access to information
The Role in Statistical Systems
With all of these difficulties, why bother? Statistical data collection could have under or
over coverage, both nationally and globally Foreign Affiliate Trade Statistics require
knowledge of all owners and subsidiaries outside the national boundaries
Foreign Direct Investment Statistics require knowledge of immediate owners and subsidiaries outside the national boundaries
...............
Is it worth it? The European Union (EU) thinks it worthwhile:
Business Registers Regulation EuroGroups Register project
A Business Register with enterprise groups can provide a direct route to substituting survey data by administrative (accounting) data
What steps can be taken?