Setting up a subsidiary abroad is an important step in the development of a company and marks a lasting transformation in operations, organisation and the way management works.
Setting up a company in the UK has become a new adventure for European companies with Brexit: procedures are now more cumbersome due to immigration constraints and new import-export rules that still remain unclear.
But the challenge of setting up a subsidiary on British soil is not just about local rules or international standards; it is about the effort required to adapt the company and its culture to a new environment that often takes managers from the continent by surprise.
Creating an entity on the other side of the Channel requires an emotional adaptation, a cultural investment and a long-term organisational transformation which, by capillary action, will enrich the corporate culture of the parent company and its employees.
Britain, a land of opportunity for business setup
Setting up a company in Great Britain is very simple and does not require a great deal of knowledge. It can be done in a day and at a distance, depending on the type of structure chosen, without major formalities and at a very moderate cost at Companies House.
The choice of company models is varied, with limited and unlimited liability structures, the two main forms being:
- Public Limited Company (PLC) which is a limited liability company open to the public, whether listed or not. It requires a minimum capital of £50,000.
- Private Limited Company (Co. Ltd) which is the most common, with no capital requirement, limited to 50 shareholders and limited liability. It is not open to the public and requires the agreement of the shareholders to buy and sell shares.
PAC Conseil as an essential partner in setting up a business
It is of course recommended that an accountancy and tax firm be engaged in the UK to facilitate understanding of the rules applicable locally and to work out the legal and accounting arrangements with the parent company on the continent. Often the parent company will choose to be a majority shareholder and it is up to the tax partners to advise on the best short and long-term arrangements.
Since Brexit, the new type of indispensable partner is the specialist immigration firm, which allows a good mastery of the new rules resulting from Brexit. This is a necessary investment at the beginning of the British adventure, in order to build up internal rules for the control and management of visas in the long term.
A company like PAC Conseil can play a crucial role in the success of setting up overseas
Brexit has generated a new need in terms of managing trade in goods, their import-export, customs formalities, rules of origin, VAT rules and certificates and markings. The provision of services requires vigilance, particularly with regard to financial services, air and road transport, not to mention professional qualifications. It is essential to take targeted legal advice depending on the activity of the entity being created and its operations with the continent.
Where a company like PAC Conseil can play a crucial role in the success of setting up overseas is in the preparation of the conceptual stages, the orchestration of the partners involved and the planning of all the phases of development with the new activity.
Such an adventure requires a project management office that integrates all the legal, fiscal, operational and strategic aspects of implementation, but also the choice of the best service providers and their long-term collaboration with the new entity and the group. This is the vital package that we offer at PAC Conseil to ensure a calculated and controlled success.
Beware of the complicated effects of Brexit on the choice of managers and employees
Brexit has a significant effect on UK business formation through its visa limitations. Without imposing similar constraints to countries requiring the creation of joint ventures, it is not easy to send a continental executive to the UK with the mission of creating a subsidiary.
It is necessary to apply for a “representative of an overseas business” visa for a period of 3 years; this allows an employee of the group located outside the UK to set up and run this new subsidiary.
The other managers and employees of the subsidiary will either have to be recruited locally or apply for a skilled worker visa, which is costly and cumbersome for the subsidiary, which will have to take out an immigration licence, also costly.
These complications require preparation and determination of an implementation and financing strategy. Management must analyse needed talent and define their origin for the proper functioning of the UK business. The group’s human resources teams must prepare the necessary tools for managing visas, mobility, recruitment and short and medium-term bridging to provide all the skills required for the implementation and consolidation project.
“Mind the Gap” with culture and management
One of the most important elements in successfully setting up a first UK entity is to develop a subsidiary culture that permanently links the continental culture of the group with that of the host country.
Managing an insurance business in Paris – La Défense or Frankfurt is not the same as managing that business in the City of London. The banking business, too, has demonstrated its differences and intricacies to the many traders and specialists who work on both sides of the Channel.
Professional codes, dress codes, humour, language, hierarchical links, communication, corporate values and knowledge of British culture are all factors to be mastered if the subsidiary is to succeed! The British entity must be able to integrate the necessary knowledge at the time of its creation, but also during the years that follow in the development of its reputation.
At PAC Conseil, our experience in many sectors of activity has taught us to adapt corporate cultures and to make the right transformations that allow a continental DNA to succeed in foreign territory.
Integration of the subsidiary into the group culture is crucial in the long run
The exercise of creating a subsidiary abroad is all the more complex as it must find its place within the continental group, at its birth, but also throughout its activity.
Often, after several years, the subsidiary may find itself in a difficult situation, giving the impression of having become ‘native’ and therefore too British for the group’s taste. This can have a negative effect on the performance of the entity and on talent management.
At PAC Conseil, we believe that the development of a subsidiary in the UK is a long-term project which requires the culture of the group to be taken into account, along with that of the sector of activity across the Channel.
We support our clients with experience in the field, both in France and in the UK. We carry out an upstream analysis of the group’s culture, its pre-project paradigm and help design a target organisation that allows this paradigm to evolve in the cultural and competitive environment of the location.
Our experts and consultants have all the necessary skills and experience to effectively support your UK set-up or development projects.
Do not hesitate to contact our teams to discuss this.