Home Business Insights & Advice Six legal issues you must consider when expanding your business abroad

Six legal issues you must consider when expanding your business abroad

by John Saunders
23rd Aug 21 10:13 am

Global expansion brings the opportunity for growth in new markets and of enhancing the profitability of a company. However, there are also legal and regulatory implications of such growth that cannot be overlooked. Things like creating new subsidiaries, regional tax laws and hiring employees can all muddy the waters of international development, so you must consider them before establishing your brand in a new location. Here are some of the most critical legal and regulatory issues to plan for during overseas expansion.

Local company laws

One of the first things you will need to consider when establishing your company abroad is to ensure that your business is registered correctly and under the appropriate structure. In practice, this means deciding whether you plan to develop a new branch, a subsidiary, or an entirely separate entity. While the choice is yours on this matter, you will need to bear the relevant company laws in mind when doing this.

Some countries are easier than others when it comes to operating businesses. Therefore, you should enlist the services of local business consultants. These individuals will have better knowledge of local procedures and bureaucracy, which will enable you to plan your expansion more successfully.

Translation of terms and services and other legal documents

Before establishing a business abroad, you will need to enlist a translation service to convert your legal documents into the local language, such as terms of service or contracts.

While this might seem similar to translating marketing copy, there is a difference in that the legal translation service you opt for will need to have experience with both legal systems and the languages.

This is a vital step to ensure that your company doesn’t fall foul of any local legislation or trade regulations when expanding overseas. Simple translations of legal documents are not possible due to their complexity, so choosing a professional service like that offered by Brightlines is advised.

Employment laws

Bringing your goods and services to the global market will undoubtedly require employees in the regions you expand into. However, employment law can differ significantly between regions and will be rigidly enforced by local authorities.

As a result, when expanding your company, you must comply with the local employment regulations. Therefore, you should consider the minimum wage in the jurisdiction, the health and safety requirements for businesses and a host of other legal requirements.

Ultimately, if you want your international company to be successful, you must avoid breaking these regulations. Generally, the local authorities will impose strict penalties for those that do not comply with the letter of the law. In practice, this can mean financial punishments or even forced closure.

Corruption in international business

Corruption remains a significant issue in nearly all countries globally. While you might be aware of the risks and business conventions in your native market, you must know the customs regarding business practices in each region you operate in.

Depending on where you operate, you might be asked for payments or gifts in new regions to foster successful business relationships and development in an area. However, you must be extremely cautious with such practices. They might be considered corrupt in certain jurisdictions, which can lead to significant legal issues.

Tax laws

One of the primary obligations of any business is complying with local tax laws. This includes paying the correct amount of tax on your revenue on time. Additionally, this requires accurate accounting and reporting of financial information.

When you expand your company abroad, you will need to pay taxes in multiple locations. This can be a confusing process for many businesses that are just beginning global development. However, international agreements between certain countries can make the calculation and payment of taxes much more straightforward.

While there might be such provisions in place, sometimes this might not be the case. Additionally, tax laws differ substantially between countries, so seeking professional advice is a good idea. Enlisting the services of a competent tax advisor in each of the jurisdictions your business operates in is the best way you can avoid transgressions.

International intellectual property laws

Generally, intellectual property (IP) rights are only awarded in countries where you have applied for them. In practice, this means that if you have a trademark in a country, IP laws are only enforceable in that region. Therefore, this means you must apply for IP protection in each country you plan on operating in individually.

This can be a prolonged affair, as you will need to apply in all jurisdictions your company operates in, but it will provide protection for your products and services abroad. One exception to this is the European Union, where you might be able to apply for a community trademark or European patent.

Summary

In conclusion, these are some of the leading legal issues you should know when developing your brand internationally. Overseas growth can be an exciting rollercoaster, but you must stay grounded when it comes to complying with regional laws. Failure to do so could be disastrous.

Leave a Commment

CLOSE AD

Sign up to our daily news alerts

[ms-form id=1]