International Business Registers Report 2018
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A presentation on the International Business Registers Report for 2018. The methodology explained along with key highlights from the results.
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International Business Registers Report 2018
- 2. Information you can find in the report Legal & Institutional Settings Processing Time Funding & Fees The Changing Role of Business Registers Use of e- Services Business Dynamics Use of Business Register Information Case Studies Snapshots
- 3. Introduction to the Working Group Stacey-Jo Smith Ciara Willis Gemma Hendy Rolf Koenig Nicolas Moos Snezana Tosic Hayley Clarke Marissa Soto-Ortiz Ljubinka Andonovska Henrik Raiha
- 4. 93 Survey Respondents Developed Transition Developing
- 6. Legal & Institutional Settings
- 7. Legal & Institutional Settings
- 10. Processing Time
- 11. Funding and Fees
- 14. The Changing Role of Business Registers
- 15. The Changing Role of Business Registers
- 16. The Changing Role of Business Registers
- 17. The Changing Role of Business Registers
- 18. The Changing Role of Business Registers
- 29. Use of Business Register Information
- 30. Use of Business Register Information
- 31. Use of Business Register Information
- 32. Case Studies
- 33. The Way Forward Digital report and comparison tool User engagement survey 2019 survey coming soon!
Editor's Notes
- Welcome to this year’s International Business Registers Report! It’s now published on the CRF and ECRF websites and there are some hard copies in the room which you are more than welcome to help yourselves to. My lovely colleague Nico and I are going to take you through some highlights from this year’s report, but you should read it yourself to appreciate how much information is contained in it!, We’ve already heard about the importance of global collaboration and interconnectivity and that really speaks to the core of this initiative. It’s about sharing knowledge and best practice within the community of business registries so we can all learn from each other in our efforts to continually innovate and effectively support the economies of our respective jurisdictions.
- The report contains 7 chapters that you can see on screen, as well as some case studies from respondents that allow us to explore a topic in more detail. Nico will talk to you about those a little later on. There’s also plenty of information about measures taken by different jurisdictions to prevent corporate identity theft and any major changes that have taken place over the last year in the jurisdictions that responded to the survey. Finally, there are some useful snapshots at the back of the survey, containing basic, key information about all the survey respondents.
- As always – a real team effort. Lots of hard work behind the scenes and it wouldn’t be possible without my team back in Companies House who do lots of data analysis and other preparatory work to all us to write the report. Also, we have a team of graphic designers who produced the report. Henrik now left – thanks Ljubinka newest member of the group – welcome Round of applause please for everyone who contributed to the production of this year’s report!
- 93 participating jurisdictions For the first time, we are looking at the data from an economic development status point of view rather than regionally – give reasons UNCTAD – which is the main U.N. body dealing with trade, investment and development issues 59 from developed jurisdictions 8 from transitional jurisdictions 26 from developing jurisdictions
- This chapter focuses on the entity types formed and registered in the different business registers Also, details about the type of information required to form these entities in different registries You’ll also find details about the legal steps required to form a new legal entity (e.g. information required to form legal entities; minimum numbers of founders/ shareholders/board members; minimum share capital). We explore the registration and maintenance of both shareholder and beneficial ownership information, which I’ll go into in a bit more detail in a moment. The chapter concludes with a description of measures taken to prevent corporate identity theft and the prevalence of security interest registries
- Certain types of information are generally maintained across the board regardless of entity type or economic development status. This includes entity name, list of founders, managers (for LLCs), proof of payment and the entity's registration document This graph you see on screen looks at the registration of more specific information around who owns and controls corporate entities. It’s interesting to see year on year how much more common it is for registries to collect beneficial ownership information. For example, last year 33 out of 98 jurisdictions said they register the information, this year 41 out of 93 indicated they register the information
- Tackling corporate identity theft continues to be of importance to business registries globally. The most common methods to prevent corporate identity theft centre around electronic filing. Several jurisdictions indicated that their registry sent email notifications upon the registration of a new business entity. In fact, one jurisdiction delayed the registration for two days and sent an “email to the company to give it a chance to react and stop a false application” (Sweden) Other interesting methods include biometric authentication. To see a full breakdown of the measures taken to address this important issue, you can see the relevant appendix in the report
- It is of fundamental importance for the economy of a country that newly established companies are able to get up and running as quickly as possible. For this reason, many efforts have been made by business registers in recent years to speed up the registration process. This chapter explores a number of different things that may affect the time it takes registries to process information that’s filed with them and provides information about minimum, average and maximum time to do so.
- This chart shows the min, max and average time to process incorporations, according to the method of filing. Two thirds of the business registers register new incorporations within 24 hours In paper-format registration takes longest – 49 hours on average. Registration via digital methods considerably speeds up the process Surprisingly, processing time is not influenced by the number of checks a registry performs
- Although it’s common for registries to include mandatory steps that have to be completed prior to incorporation, there is no evidence that this speeds up or slows down the process. If we look at the question of which factors influence the time needed to register a company, we might conclude that the region in which it is located or the country’s economic development status may be the main factors. We find, however, that this is not the case. It seems that the only thing which consistently has an impact on processing time is a change in workflow underpinned by technology and a move away from paper.
- In this chapter we looked at the funding of business registries: Where does the money come from? Either through government or customer fees What is it used for? Should fees only cover costs? Cost covering principle application How much do registers charge for information?
- It is a fairly equal division between these sources, irrespective of the development status. There is no predominant model. The 46 jurisdictions which confirmed that they are funded by customer fees were also asked about the percentage of fees that they retain. 25 of the respondents said they retain all their fees, 18 said they retain some of their fees and interestingly, 3 said they don’t retain any of their fees.
- We looked at average fees for forming any kind of corporate entity and average fee for incorporating a company, according to source of funding. This year the average cost of formation of all entity types for government funded registries is EUR 365 (USD 438). However, if we exclude Abu Dhabi Global Markets the average would be EUR 144 (USD 172). The average cost of formation of all entity types in business registries funded by customer fees was EUR 81 (USD 97).
- This is a brand new topic that you will find in this year's report for the first time. The Changing Role of Business Registers – What does it mean? The world is moving and so does the role of the business registers – at least as far as we could find out. Traditionally, the role of the business register is to register entities and to ensure that they comply with the legislation of the respective jurisdiction. However, for some business registers, this traditional role may have evolved to meet new demands and challenges which can come from different sources.
- So the first question we asked for this new topic is: How has the business registry expanded its authority? And those are the answers we got: - 8 jurisdictions stated that their registers have expanded their authority by the introduction of new legislatives initiatives. For example Australia now has a legislative framework for crowd-sourced funding, or for example Companies House of Gibraltar has been expanded to include the registration of private foundations . - 4 jurisdictions stated their registry’s authorities have been expanded due to the fact that is more collaboration with other public authorities and law enforcement For example in Montenegro, a large volume of data is being provided by the business register to the police, the state prosecution and customs for the purpose of pre-criminal and criminal proceedings. - 3 jurisdictions stated that there have been further registration or online services. For example in South Africa has expanded its one stop shop service by integrating domain name registration. - Another 3 jurisdictions stated that their registry’s authorities have been expanded because of the introduction a beneficial ownership register.
- Then, we wanted to find out, if the responding registries are demanded to take an active role in other functions beyond its current role. So we asked that question and every jurisdiction that answered with ‚yes‘ was asked where those demands come from. There was a variety of responses which could be categorised as follows: ‘State authorities’, ‘Government’, ‘Legislation’, ‘Public’, ‘Ministers’, ‘other organisations around the world’, ‘emloyees’. As you can see in the chart a high volume of the demands comes from state authorities and the lowest volume comes from employees.
- After that we wanted to know: What Challenges does your business register face in trying to meet these demands? Most of the answers given deal with the lack of resources, secondly money issues, after that ‘Technology’, ‘System problems’, ‘time issues’, ‘Legislation’, ‘Sharing data’, ‘Training’ (implementing a training program for new services).
- Our new chapter also focuses on new technologies. One of the challenges faced by business registers is how to use new technology like blockchain and artificial intelligence (AI) to streamline, simplify or automate their processes. While some business registers have already started using such technology, other business registers are exploring the use of the technology and plan to use it in the near future. The majority of respondents currently do not plan to use Blockchain or AI. Five respondents stated that it is already in use. And, interestingly, 24 jurisdictions have responded that they are planning to use new technologies such as blockchain or AI in the future. In the report you will find the text of all replies given on this subject.
- Next topic: Use of e-Services by Business Registers The use of e-services by business registers is seen as an important tool to improve efficiency, help drive costs down and provide a better service for customers, both in terms of registering and searching information. It also contributes to combatting fraud. In this year’s report we found that Internet is the most widely accepted form of applications for incorporation of sole traders and private limited companies. However, paper still prevails over the internet when it comes to applications for incorporation of general partnerships and LLCs. Paper and Internet are followed by image format, while data format represents the least-accepted form overall.
- This chart shows the average percentage of different types of filings submitted electronically to business registers. These are applications for incorporation, applications for changes and all ‘other’ electronically submitted documents. The different colored columns show the values according to the development status of the responding jurisdictions. When it comes to mandatory e-Services it is interesting to see that - from the given answers - it can be noted that mandatory e-services are most common in developed jurisdictions and least common in transition jurisdictions. Of the 93 respondents that participated, 25 reported that the use of e-services is mandatory for at least one entity type. Among them, 14 respondents are operating in developed jurisdictions (Belgium; British Columbia; Colorado; Denmark; Estonia; Germany; Guernsey; Ireland; Italy; Louisiana; Luxembourg; Montana; New Zealand; Slovenia), 10 in developing jurisdictions (Abu Dhabi; Chile; Malaysia; Mauritius; Pakistan; Philippines; Qatar; Singapore; South Africa; Sri Lanka) and one in a transition jurisdiction (Macedonia, FYR).
- When we talk about e-Services, we also have to consider the security of data transmission. How can we be sure that the person who transmits the data is also the person he or she claims to be? That’s why we asked the question: How does your business registry identify the person filing information electronically? User ID and password is applied in 41 jurisdictions An electronic certificate is used in 27 participating jurisdictions Two-factor authentication in 12 participating jurisdictions. In 7 responding jurisdictions the identification is done by a notary, 6 jurisdictions stated that there is no ID verification method and 13 selected the option ‘other’. The specified answers show that other methods can be for example: A unique identifier (Australia), the interconnection with the civil registry (Kosovo), Registration Agents licensed by central register (Rep. of. North-Macedonia) Credit card authentication (New Brunswick) Biometric Identify verification (South Africa). As you can see on the slide, the results are again presented according to the development status of the responding jurisdictions.
- This chapter ‘Business Dynamics’ explores the number of entities registered and terminated during 2017. We try to draw conclusions from the available date regarding, regarding, whether a jurisdiction can be assessed as more stable or more dynamic. In addition, the existing data is compared to socioeconomic indicators to show a possible correlation between the size of the business registers and e.g. the population density or the surface area of the respective jurisdiction.
- During 2017 a total of 7.2 million entities were registered within all responding jurisdictions. The most common entity type was the private limited company; 34% of all entities created were in this category. The second most common entity type was the sole trader (30%). This chart shows the average number of registered entities in 2017 split by development status. With regard to the responding developed jurisdictions, it is noticeable that by far the highest number of registered entities is the private limited company with an absolute total of 924 000. The lowest number within the group of responding developed jurisdictions is the public limited company (46 050), although it must be noted that not every jurisdiction distinguishes between private limited companies and public limited companies. Within the group of responding transition jurisdictions it is noticeable that the highest number of entity types are sole traders with 784 000. However, these are closely followed by LLCs. The number of registered limited companies (73 943), private limited companies (43 276), general partnerships (1 622) and public limited companies (232) is strikingly low. As far as respondents from developing jurisdictions are concerned, the most common legal form registered in 2017 is sole trader (601 000), followed by private limited companies (494 000). Public limited companies (6 270) are the last in line in this group.
- On the next chart you can see the number of average incorporations and terminations by development status. In all groups of respondents, the number of new registrations is higher than the number of terminations. This is indicating a positive inflow of companies across all respondents. It is immediately noticeable that the responding transition jurisdictions have by far the highest number of new registrations and the highest number of terminations. In comparison, the developed jurisdictions and the developing jurisdictions have on average less than half of new registrations. If we look at the average number of terminations, this picture intensifies even further. Compared to the responding developed jurisdictions, the number of terminations in responding transition jurisdictions is five times higher; compared to the developing jurisdictions, they are 20 times higher. Transition jurisdictions are characterised by the fact that they are undergoing a structural change towards market-oriented mechanisms. Keeping that in mind, it seems understandable that the values in this group stand out so much. These values indicate that these jurisdictions have a high business dynamism.
- We found it interesting to use the data collected to check whether there is a correlation between the size of a business register and other socio-economic indicators. In this chart you can see an overview of the total number of registered entities in some of the responding jurisdictions; you will find all numbers in the report, but in order to make it easier for the presentation I only selected a few. Malaysia (8.1 million) has the most entries, followed by Russia (7.5 million), Belgium - Central Balance Sheet Office (7.2 million) and so on… If we now put the number of registered entries in relation to the population of the respective jurisdictions, the following picture emerges..
- In Malaysia, there are four and a half times as many registered entities as citizens, which leads to the highest entity density with regard to the population of all respondents. This means that for every registered company there are 0.22 citizens. All other respondents have more citizens than registered entities, starting with Belgium - Central Balance Sheet Office (CBSO) with an entity density of 1.57. Belgium is followed by Jersey (1.98) and so on.
- When relating the number of registered entities to the size of a jurisdiction in square kilometres, the following jurisdictions have the highest density of entities per square kilometre. Malaysia has by far the highest density with 33 000 entities per square kilometre, followed by Gibraltar (2 155), Hong Kong (1 240), Singapore (651), Washington DC (565), Jersey (450), Guernsey (303), Belgium Central Balance Sheet Office (238), Mauritius (164) and Isle of Man (60).
- The next topic is about the use of Business register information Business registers hold a wealth of information which can be incredibly useful in many ways. For example, it can be used by law enforcement agencies to tackle financial crime, by government agencies with shared interests and by the general public to find information about those they are doing business with. In this chapter of the report we explore the types of information that business registers make available, how easily they make such information accessible and how it is then re-used by different parties. The chapter will also look at the measures taken by business registers to ensure that their information is accurate and up to date.
- This figure shows whether shareholder and beneficial owner information is made available to the public and/or government authorities, only to specific public authorities, or not at all. The sharing of such information among government authorities can be extremely valuable in the fight against economic crime. This issue has received significant attention in the international media in recent times, with issues such as the ‘Panama Papers’ and the ‘Paradise Papers’ drawing worldwide attention to this issue. From the chart it can be seen that 27 out of 93 respondents make shareholder information available to the public and to specified government authorities.
- In addition to finding out about the type of information that is made available, it’s also important to know how widely the information is used. In the report you will find a table with all responses to the question ‘how many searches, paid or unpaid, does your website receive each year’. In addition to finding out the volume of searches which were submitted via business registers’ websites, we also wanted to find out what kind of information is in demand. This figure shows that the most popular type of searches relate to general information about existing entities. Compared to that, other information such as annual accounts, officers, directors and managers, is not as in demand.
- Making data available in bulk can be incredibly valuable to organisations for the purpose of analysis and to provide value added services which business registers themselves may not be able to provide. The number of respondents providing information in bulk and whether or not the information is provided free of charge is set out in this chart. As you can see it is common among respondents to provide information in bulk to the public as well as private sector. It is more common to make bulk information available free of charge to the public sector but a fee is charged when such information is requested from the private sector.
- As every year, we have again taken a closer look at some jurisdictions. This year that was Australia, British Columbia, Ecuador, Estonia and Mexico. Unlike in the past, this year's case studies will give jurisdictions the opportunity to comment in detail on our new topic “The Changing Role of Business Registers” and to describe their situation. I will only highlight a few aspects. Australia has stated that The Australian Government makes efforts to move registers from outdated technology to modern platforms. A detailed business case and options for streamlining registry functions and upgrading technology systems are expected to be considered by the Australian Government this year. Moreover, Implementation options for a Director Identification Number (DIN) are being considered. British Columbia: British Columbia Registries and Online Services has the vision is to create a common technical platform based on Service Families. The “First Service Family” will ensure a service that supports all legal entities. The “Second Service Family” will support the securitization of assets while the “Third Service Family” will leverage a common platform to streamline services to businesses. British Columbia is launching a new service called the OrgBook, a new, online service that will make it simpler, faster and more secure for companies to share information such as permits and licences in the digital world. The OrgBook is the first service of-its-kind in the world using blockchain technology, which allows data to be verified, shared and accessed in a more secure way. British Columbia makes efforts to adopt Beneficial Ownership Information. And to reduce barriers to Inter-Provincial Trade. Several initiatives are in progress, including the building of a Multiple Registry Access Service that will reduce the burden on businesses as they seek to do business (and register) in other jurisdictions. British Columbia also wants to create more opportunities for Socially Conscious Corporate Structures. Submissions to create another type of corporate structure called Benefit Companies is in progress. Ecuador: Among other things, four projects are presented: The first one deals with the efficient and effective use of Big Data, The second project is about the construction of digital territories and smart cities, through the use of the Internet of things, The third project deals with the use of Blockchain Technology And the fourth is about the use and support for the training of professionals in emerging technologies. Estonia: provides an overview of what progress has been made in the field of e-government since the beginning of the current century. Currently, there is research done on how the business registry could benefit from different artificial intelligence (AI) solutions. The focus is currently set on three tools: virtual support by AI; a tool for the registrar to simplify the business name check; a translation tool to simplify the understanding of court rulings (already in progress). Estonia is also working on a future vision of a single point of access portal for the legal entities regarding all the services necessary for legal persons. The focus of this project is on user-centred development of services and greater integration between different services. This portal should not only include government services but also provide the private sector the ability to develop and share their services. This would mean that companies would have a chance to access all the necessary data, information and services from one portal with a single-sign-on functionality. In the portal, companies can create personalized dashboard for themselves where they can assemble all the services they want to use. Mexico undertook a technological transformation with the use of new computer tools. The proposed solution was the redesign of the architecture of the registry system, which would allow the Federation to take back control of the information generated as part of the operation of the registry offices. For this, it was necessary to carry out the analysis and design of a new data model that would allow centralized management of information and that it be stored in a centralized database, thereby guaranteeing access to information. But a new data model by itself was not enough if we did not have the right technological platform to exploit the stored data and provide the information that users required. To deal with this and after carrying out the analysis of the needs regarding a new information management platform, version 2.0 of the SIGER was developed, whose administration falls entirely to the Ministry of Economy, ensuring that the digital registration processes are homogeneous in the 269 registry offices. However, carrying out these modifications not only posed a technological challenge, but also had a political component in view of the need to rethink the collaboration agreements through which the Public Registry of Commerce operates, this process being that it took longer to be finalized. From the implementation of the new version of the SIGER it was expected that the number of consultations by the authorities and citizens would be increased, thus achieving compliance with one of the maxims of the Public Registry, which is to publicize the information in the registry. In the case of the authorities, the number of formal requests for information was diminished, as thanks to the collaboration agreements that exist between agencies, access to the system was granted with specific profiles, which allow them to consult the information without any restriction. One of the additional benefits implied by the implementation of SIGER 2.0 was the possibility that the notaries carry out the immediate registration of acts which does not require any registration qualification, thereby achieving reduce the administrative burden of the registry offices. This has as a consequence a more efficient operation of the offices and better response times for citizens. With the new implementation a new challenge was presented according to what was established within the National Digital Strategy defined by the Presidency of the Republic, in which the dependencies were urged to establish interoperability schemes that allow the generation of transversal information schemes through of which can be carried out a real administrative simplification for the benefit of citizens. For this purpose, an analysis of the information that could be shared in an automated way was carried out, based on the experience acquired with respect to the requests for information previously received from the authorities. Defined the information and elements that should be made available, we proceeded to the development and implementation of web services that allow to comply with the indicated interoperability schemes, thus locating the Public Registry as a source of trust for Public Administration entities. In addition to the above mentioned benefits, taking the Public Registry to the technological status with which it currently counts has allowed the collaboration between authorities to increase, allowing to establish the first advances in the generation of risk models to prevent and combat organized crime.
- I just wanted to tell you a little bit about our exciting plans for the next stage of our journey. We’re actively exploring a move from a paper based product and a PDF report to a digital report, hosted on our own website. Also, we are exploring the possibility of making the data from the survey available for users to perform their own analysis and make comparisons according their needs and interests. We’re very excited about this and think it’s the right direction to be moving in to ensure the wealth of information contained in the report can be accessed as easily as possible We’re also going to run a user engagement survey to gain some valuable insight into who uses the report, what they use it for and how often they access it. We’re also going to ask about the information our users find most useful and the information they find least useful. We’ll use the output from this to inform the content of the survey and report in future. Finally – a plea! Your jurisdictions should be receiving an email in the next couple of weeks with a link to this year’s survey. I urge you to please make sure you fill it out! If you don’t currently receive the survey but would like to, please see me or anyone else in the group and we can make sure you do. Also, if you think the contact details we have for your jurisdiction may be out of date, please do let us know. Thanks for listening and enjoy the rest of the conference!