Rising to the Challenge of Global Expansion Trends

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Annie: Hello, everyone, and welcome to today's webinar, "Rising to the Challenge of Global Expansion Trends." My name is Annie Triboletti. I will be kicking things off as your moderator for today.

So joining us today are Rogier Bronk, Myrna Reijnders, and RJ Bertina. Rogier has worked across many different disciplines and with a wide variety of clients, ranging from large multinationals to private clients. With more than 25 years of experience, Rogier has a broad understanding of client requirements that have been instrumental in helping them find the right solution to add value to their organizations. Myrna is the head of Corporate Solutions Americas. She helps private capital and multinationals with their global business administration and compliance needs. Myrna has been with CSC since 2014, and she guides clients through the incorporation and ongoing maintenance of their global legal entities. RJ is head of Corporate Solutions at CSC and brings over 23 years of international experience in development, sales, and delivery of corporate governance services, with a focus on multinationals and fund managers with multi-jurisdiction footprints.

So with that, I would like to welcome RJ, Rogier, and Myrna.

Rogier: Thank you, Annie. It's going to be an interesting and insightful webinar. Three native Dutch speakers on this call with a wide variety in backgrounds but also in covering, when you look at a holistic global approach for these types of services. But before we dive into ourselves or extend that a little bit, let's look at who we are today.

So CSC, privately held, third generation. We celebrated our 125th anniversary last year. It's a true global provider, meaning having service capabilities in over 140 jurisdictions, including the United States. So it's not only U.S. outbound, but we're truly global. This is also supported by our award-winning Entity Management software that has been in the making for over 20 years almost. CSC is proud to service 90% of the Fortune 500, but also 90% of the 100 Best Global Brands and 70% of the private equity firms, and services for corporate services domestically or internationally to about 10,000 law firms.

But like I said, let's dive into what we really came here to discuss, which are some of the trends that we're following throughout our General Counsel Report, because for the third year running, CSC has commissioned independent research among general counsels and senior in-house legal professionals across the Americas, Europe, the UK, and Asia Pacific. Now for those who are not familiar with this report, it addresses the trends in corporate governance, drivers for expansion, including its top regions for expansion, reasons why, as well as the challenges and the solutions for international expansion and much more. I always say it's a must-read, especially if you are going to expand globally, which our report actually revealed that 98% is expanding domestically or internationally. So together with Myrna and RJ, we're going to discuss some of these key findings.

Now we noticed some big changes compared to 2024. One that really stood out was the increase in expansion plans. Ninety-eight percent is quite high compared to 62% of last year. But what really, really struck me was the decline actually in international expansion, from 64% to almost half, of like 46% today.

So Myrna, maybe I can address this question to you best. It's quite a significant drop. I have my own opinion. But it would be great if you can highlight some of the reasons for that.

Myrna: Yeah. Thanks, Rogier. Well, it has been quite an interesting year, to say the least.

Rogier: To say the least.

Myrna: Driven by high interest rates, of course, and widespread macroeconomic uncertainty. But particularly this year markets prove to be unpredictable, quite largely because of the geopolitical tensions we've seen across the U.S. and internationally, where actually in last April, there was really a downfall in M&A activity in the North America region, where we only had 555 M&A deals closing, representing actually the lowest M&A number since May of 2009 in the financial crisis. But luckily, dealmaking revamped once the UK and the U.S. struck a deal on tariffs, and that was in May '25, so this year.

And typically what we have seen is now these national barriers are coming more into play. Corporates active in retail, for example, they're trying to redevelop and looking to efficiently restructure their entire supply chain. So, for example, what we have seen is that UK retail companies, with the UK-US D1 tariffs, have created their new structure, whereby they actually entered into the U.S. So they did a U.S. market entry. They formed their U.S. entities, and they undertook site location research to see, "Hey, where can we actually create our warehousing and production facility to serve our end customer in the U.S.?"

Rogier: Yeah, yeah. And it goes right in hand with the change in regulatory landscape was ranked at the top, while last year it was actually putting the infrastructure in place. Now these two are always fighting for first place, right? But RJ, how does it compare to Europe or APAC, from where you're sitting? You're located in Luxembourg, so it's a different area that you're in, with different requirements. So how does it work for that region?

RJ: Yeah. Thanks, Rogier. Yeah, so I work across mostly the EMEA and the APAC regions. And overall, I'm not super surprised by these numbers, particularly given the uncertainty in the markets that we've all experienced on various fronts. But at the same time, there's this almost everyone within our panel of respondents have indicated that they want to expand, right, 98%. That is an optic. And to Myrna's earlier point, what I've seen on a couple of occasions and we'll touch upon one very concrete example in a moment, but this vertical sort of within the production or food chain or whatever one calls that, this vertical sort of interest of certain groups to step into supporting fields within their business is something we've seen going on quite a bit.

And at the same time, yeah, there are still these expansion plans. So the 98% of expansion as an objective combined with maybe a bit of a reduced plan to expand internationally, I think we need to take that with a little bit of a nuance because of the fact that almost everyone intends to expand and at the same time, depending on who you ask and where they're located, if they're in my region or yours . . .

Rogier: Exactly.

RJ: . . . they might say we're going to stick to Europe right now. But it might be less considered to be international, if you know what I mean.

Rogier: Yeah. No, I fully agree. And the almost 100% of expansion plans might also what Myrna was initially mentioning, if the majority of respondents was U.S.-based, they might decide to expand here in the U.S. Well, from your perspective in Europe, international is already going to Belgium, if you're located in Luxembourg. So it's a different approach.

RJ: Yeah.

Rogier: But it's very interesting to see that. Yeah, go ahead.

RJ: But whilst some would argue that if they're in the northwest part of Europe and they're moving into a nearby country, they're not going to really refer to that as an international expansion is what I was trying to highlight.

Rogier: Yeah, yeah.

RJ: Yeah.

Rogier: Yeah, totally agree on that one. Okay.

Now one of the items that we saw as well is the more than two-fifths said their primary method to manage legal operations involving global subsidiaries is via in-house legal teams. Interesting fact is that most in-house legal teams do use outside counsels and providers to support them locally. We hear so often, when we speak to organizations that want to engage CSC globally, that like initially their response is like, "We do everything in-house." "Where is your team situated?" It's like, "Oh, it's here in the U.S." Or maybe a counterpart in the UK for the EMEA region. And then you ask like, "Okay, so how about your Asia Pacific?" It's like, "Oh, we'll use a local law firm or a local provider there."

So it seems that only 28% is prepared. That seems like a very low percentage. Myrna, what do you see in the market? You addressed already the geopolitical part of things. But how do you see that working in the market? Twenty-eight percent seems to be very low. But how can we support that?

Myrna: Yeah. Thanks, Rogier. Well, especially on the beneficial ownership regulations, it was very interesting to see that there has been a very high increase in markets. So, for example, as of 2022, about 97 jurisdictions worldwide included laws requiring those beneficial ownership registration with governmental authorities, which is a significant increase from 81 jurisdictions in 2020 and just 34 that required beneficial ownership regulatory filings in 2018. Moreover, about 129 jurisdictions nowadays commit to publicly sharing any type of beneficial ownership information for at least some of their registered entities.

And I think that large increase in number of jurisdictions requiring this reporting, that might clarify why those legal teams are actually struggling with staying on top of these regulations.

Rogier: Yeah.

Myrna: And, of course, if you have such a large compliance and publication burden, so to speak, it is very efficient and helpful to have a law firm or a corporate service provider helping out. And in that respect, of course, the differentiator is if such a firm can help you on a global scale, and even moreover, of course, supporting by technology or some kind of automation.

Rogier: Yeah. UBO has been a very moving target mostly in Europe but also in other parts of the globe. As you mentioned, it has expanded quite a bit. How do we make sure that we stay on top of that and that the entities that we have under administration for our clients remain compliant?

Myrna: A good question, Rogier. Of course, with our Global Subsidiary Management solution, we would have a streamlined, centralized contract in place, in which the ultimate beneficial ownership filings are part of our annual compliance scope. So by involving and engaging CSC, we, of course, would make sure that we stay on top of it, that we include all the filings in our Entity Management system, and that we would have that global scope and efficiency in relation to leveraging that KYC on the beneficial owners regardless of the jurisdiction and where we need to file.

Rogier: Okay. Now also here in the U.S. things have changed quite a bit, right? For example, the CTA filings, which are typical U.S. related, not really a moving target like the UBO. But compared to this ETA here in the U.S., RJ, the UBO seems to be well under control, even though the jurisdictions have expanded quite a bit, like Myrna mentioned. But what is specifically a challenge for the European market, if they look outbound?

RJ: I'd say, so just coming back first to the points on the screen here, the 28% of respondents indicating they feel very prepared, whereas this was 42% the year before, right? I mean that's a significant decline actually in being well prepared, so to say.

So I think, and the three of us have a little bit of insight here and there, some of our clients have indicated concerns because of the simple fact that they not always felt secure on some of their current setups. And this is one of the questions why they come to us and say, "Help us, please, to be better prepared," because yes, for instance in Europe, there's a single piece of legislation, a European directive, which is then meant to be implemented across the 27 member states, and this does also in Europe lead to some confusion. There are different filing deadlines. There are different forms, and then there are changes. And then a little bit similar to what recently occurred in the U.S., there's postponing taking place. There's reactivation taking place. There are requests from regulators coming in left, right, middle, and center.

So yeah, I haven't heard or seen, but that's amongst our clients, any significant finds as yet. But we certainly know that the landscape is still very much on the move, and it's not always, yeah, easy for clients with a variety of items to keep track of to feel secure apparently.

Rogier: Yeah.

RJ: So yeah, we're there to help with tackling that and with carefully monitoring deadlines, of course.

Rogier: Yeah. I'm actually very happy that you highlight the drop in percentage, because I remember from my webinar last year is that I called the 42% in 2024 a false positive because normally what we hear is like, "No, we're very well prepared. We have it under control." And then we onboard these multinationals, whether they have 25 or 125 entities, and the majority of those entities are non-compliant. So having a false sense of security seems to be more now in line than last year. Twenty-eight percent seems to be an okay percentage if you're well-positioned with a global provider like CSC. So the drop is significant, but I think a lot of folks came back from the false positive, that there's actually more to it than just realizing.

Now on the next slide, which I thought was extremely interesting, but, Myrna, you might think of that differently. From this slide, I actually see that 25% of the respondents think that the costs for legal and compliance services remain flat. We all know that most of these services are being provided by local outside counsel and local providers. They take the majority of the sector for themselves. But it's odd that still one-fourth thinks that it remains flat. What could that be, Myrna?

Myrna: Yeah, it's definitely an interesting point, Rogier. And well, typically, we hear this quite often when our clients and prospects want to provide a comparison and check, "Hey, where does your total corporate secretarial services fee stand in relation to law firms or other providers, corporate service providers, Big Four, for example?"

But I think it's very important and crucial there to focus on the fact that you need to compare apples with apples because oftentimes other providers are able to provide those fixed, relatively low fees because of their transactional work being covered by a different department, by the advisory side, for example, of the same firm. And, of course, we all know that there is no such thing as a free lunch.

Rogier: Exactly. Yeah, that is very true. And if you look at it too, right, do you really want to have those transactional services included in your annual package? What if you have no requirements for that thing? You'll still pay for it. So yeah, you're right. There is no such free lunch. Your cost is absorbed elsewhere. So how do we tackle this, right, RJ?

RJ: Yeah, I think the 72% expected increase, in part, perhaps has to do with the expected workload, for lack of a better word. But at the same time, I do feel that because of the simple fact that a lot of parties that we speak to for historical reasons, for a variety of reasons make use of a fragmented set of resources, and same include very often different law firms handling not only CoSec work, but also focused on entirely different projects, which may also come at additional expenses.

So the 72% expected increase, I think also there's a little bit of nuance. And overall, to both your earlier points, I think, yeah, with the setup that we offer our clients through Global Subsidiary Management, we provide for fixed fees. We want to, as much as possible, make sure that clients can rely on a budget. And even for transactional work, we provide for fixed fee proposals and seek approval from clients, right? So we want to avoid surprises. And in part, because we want to ideally send an invoice that the client is expecting to receive, and then without much hassle, get settlement of same, right, if I can be so honest.

Rogier: Yeah, absolutely. It works on both sides, right?

RJ: Absolutely.

Rogier: If you have clarity on what the cost will be, like you said, we're discussing a project with a client based on a fixed-fee service, so not only the annual compliance services, but indeed the transactional services. We don't want to have a lengthy discussion after the services have been delivered on an invoice. It should be a one-on-one what we provide prior to tackling the service, as well as the invoice, there should be no surprises there. Now what I do think is interesting, from this particular slide, is that there is a 3% drop in expected cost overall.

It's an assumption, I don't think I'm very far from the truth, but a lot of folks are using AI these days, right? It's also the intro to our next slide. Ninety-seven percent of general counsels reported that they're now using AI. So yes, the 3% is somewhat justified because we, like especially CSC Global Security Management services, are there to provide efficiencies. Time is money. If you can shave off even a few hours a week on not spending on these types of administrative challenges, you will definitely see a decrease in spend.

But it might be a double-edged sword, right, Myrna, of how secure is the information that you receive from AI in your organization and how you deal with that. So double-edged sword, Myrna?

Myrna: Yeah, absolutely, Rogier. Well, of course, in the previous years, we have seen general counsels focusing more and more on AI and technology because, of course, efficiencies are to be gained, right? For example, when you're doing contract reviews, or if you have support for due diligence or compliance automation, they're all reducing reliance on those manual processes, which are so time consuming and sometimes burdensome.

But I think we're also somewhat forgetting the fact that nowadays we need to make sure that our data quality and our data verification are on top of par. And we're seeing a trend that actually multinationals are setting up data teams to make sure that that quality is kept in standing because the data will actually be the driver and the basic for the optimization of technology to be used and the verification that the legal team is handling to make sure the output is relevant and compliant.

Rogier: Yeah. And I always used to say the digitalization of in-house legal teams has actually been going on for 10 plus years, focusing on really shaving off valuable time that they can then allocate to driving the company strategically forward. So absolutely true that AI will definitely play a role in shaving off more time to limit the administrative burden. However, an entity management system, whether it's AI-enabled or not, is only as good as it is maintained. So what is the information put into it? How is the learning of the system going forward being developed?

But most importantly, when we look at in-house legal teams, they always wanted to mitigate risk. And we know out of experience, all three of us, that mitigating risk to a local provider, a regional or a global provider, they will inform you about changes in local legislation. But it's up to the client to decipher if it is applicable to their entity in country or not. So you really have to read that newsletter or that mass email in order to know what is changing in country.

So when I look at a AI-enabled platforms, it's quite similar. You already mentioned, Myrna, the verification of information is important. But also, are those tools really integrated with each and every jurisdiction that you are operating in? How is that risk being transferred to a local provider or to an AI-enabled platform? So there's still a double-edged sword. That's what we started with, right?

Now, RJ, implementation of data is key. How would you drive it from there?

RJ: Yeah. I'm not going to pretend that I'm an AI specialist. But what I've seen and learned over the last months, when we get regular updates, as you both are aware of, the accuracy of data is key. And to the point of having fragmented or having, yeah, making use of fragmented resources, it's super, super important to create a single source of truth. And with that, certain AI mechanisms can even help clean the data and keep it accurate, as we've seen some recent examples on.

I can't touch too much on AI updates within our Entity Management platform. But there are a few examples that we'll touch upon a little bit later, where, yeah, there's some really cool stuff happening. Among others with these bulk sort of updates, but yeah.

Rogier: Yeah, we are definitely not AI experts or tech experts, for sure, RJ. But it seems that verification really stands out and the accuracy that you're uploading in the system, as you mentioned. So we're going to look at our Entity Management system in a little bit, and RJ, you can tackle one of the items on our road map going forward, because "Why CSC," I think it's best described by touching base on case studies. Don't take it from us. But let's discuss a few case studies to see how we solve their current state to a future state or preferred or required states. Obviously, we work with references as well. Again, we're here to inform you about how we tackle those challenges and make them into a future state that is workable for the client.

Now this particular one, I think, RJ, you were the one working on this recent case actually, right? It was Project Flower, I believe it was, right? It's a very sizeable opportunity.

RJ: Yeah, and you provided some helping hands there as well, if I recall correctly. We're still a little bit in the middle of the case, or at least at a next phase of this project. But in short, a widely held, privately held, German headquartered group, with a presence in 50 plus jurisdictions, decided to make one of those vertical M&A transactions, acquiring some 20 new entities across 12 jurisdictions. They stumbled upon four new jurisdictions, and we've taken it on, yeah, as a special project.

At a first step, because of the existing relationship with this client across the EMEA region, we've been asked to already try and conduct a pre-acquisition health check, so to say, on the entities of which data was made available to our client. That helped us already to map and to see how matters are organized, whether it's from a director, board composition perspective, following name change that was meant to take place rapidly following the acquisition. And depending, of course, on the jurisdictions in play, the legal entities in play here and there, you can do this in no time, whereas some jurisdictions require quite a couple of checks to effectuate, yeah, name changes for instance.

So we've effectively managed through that setup. And yeah, the reason, again, was because of the fact that the client had already engaged us in the EMEA region. And because of their somewhat decentralized operating model globally, effectively through regions and business units, yeah, the senior stakeholders within this firm thought it would be wise to try and as much as possible replicate the model that they are pleased with across the EMEA region.

So as a result, we're now not only handling the acquisition, as you know, but we're also slowly but surely, in phases, looking at the other parts of the business to create that single point of reference in our Entity Management platform, but at the same time to, as much as possible, try and create consistency across jurisdictions, having similar processes in place for certain entities to hold board meetings to manage the whole authorized signatories setup. There are all these matters which, yeah, create a lot of added value if it's handled centrally, if it's handled through, yeah, a firm, like CSC, where there's really this consistency and this central approach.

Rogier: And I believe that besides the central approach that was so welcomed in the EMEA region, their counterparts here in the U.S. region also wanted to have a single point of contact. And the beauty of our bespoke framework and the solution is that multiple single point of contacts are being able to put in place all connected behind the scenes. But I think it's important to note that especially when it comes to M&A and expanding into new jurisdictions instantly by acquiring 12 new jurisdictions and entities they're in, that we can shift quickly to make it a project, allocate resources, put an additional single point of contact on it. So we actually go beyond their preferred future state and put all the attributes in place so that everybody can move forward, not only on the client side, with the speed of light I like to say.

RJ: Correct.

Rogier: Okay. I think the next one was a very interesting one, Myrna. Recently we had a client that was a global payroll employer of records provider. They were situated in your backyard, headquartered in New York City. But they were rapidly expanding their operations, for obvious reasons, across the globe organically but also through acquisition. Anything to highlight on this particular case?

Myrna: Yeah. Thanks, Rogier. Well, actually, it was super interesting, and we have had many discussions with the general counsel and the head of accounting as they're actually also centrally trying to build out their operational model while expanding and making these acquisitions. They were working with a global law firm, which actually has local locally-run offices. So somewhat through one firm while still having dispersed contracting and contact points. And also they acquired some local businesses, for example, in Germany, where they needed to set up, integrate their operations and also their legal entity management.

And what we've seen is in particularly those jurisdictions, for example in Europe, in the Netherlands, or if you look at APAC, India, Dubai, they found that the local law firm was very well equipped to perform that legal advisory work, M&A, doing the SVA, and the contracting. But when it comes to that more operational, administrative, and compliance burden, so to speak, it wasn't very much of their priority and their focus.

So what happened was we, as CSC, stepped in. We were able to provide them with that simplified contractual framework, and we offered them one point of contact, one concierge desk, so to speak, here in the U.S. while we offered the follow-the-sun principle. And we involved the local jurisdictional experts in those European and APAC jurisdictions. And by means of that, we were able to remove those certain blockers on those administrative and compliance matters.

So one example I actually think of is when they acquired their local German business, there was one director that swiftly needed to be changed, and he resigned. And after, of course, intervention happened, the name of the entity needed to be changed, the articles of association as well. And the books and records were located in a separate office space in Berlin, while their new headquarters or principal place of business in Germany was in Frankfurt. So what we were able to do is to step in and just send a courier from Berlin to move the records to Frankfurt and to help with those transactionary scope of corporate secretarial services.

So we stepped in, changed the name of the entity and the director, worked with a notary to update the articles of association, and it actually became a very smooth sailing process, of course, all backed up by our Entity Management solution.

Rogier: Yeah. Thank you, Myrna. It's indeed a very interesting case, and it might be also good to really look at our framework a little bit more in detail of how our inner workings are. As you can see, we've discussed this many, many times.

Single point of contact is nothing new in the market, right? It's the tip of the iceberg. Most providers have it. I actually think it came 20 years ago from finance.

Ss let's look how we are organized because that's what makes it bespoke. First and foremost, yes, single point of contact. It could be more than one. CSC has a centralized hub. Our clients can decide, depending on their main location or where the one responsible is located, to put that single point of contact in his or her time zone.

From that point forward, we can actually very easily have the follow-the-sun principle put in place. Why is that important? Well, sometimes speed is needed, and we need to turn things around within a 24-hour period. So having the opportunity to work with what we call hubs at CSC, center of excellence, that are strategically located around the globe, we can communicate with each other rolling forward as the day goes by to ensure that the next day, the following day the colleagues of our clients in Australia have something tangible on their desk.

Now I think furthermore, which is very important and might actually be best explained on this slide as well, is that what our clients have access to. Sometimes our clients have access or need access to subject matter experts in country because it's not only legal driven but also tax or finance. So through our centralized team, we can set up a call or an in-person meeting in any of the jurisdictions that we have capabilities, even if they are not having an entity that we have under administration. Sometimes expansion is driving that conversation. So having access to subject matter experts, but being behind the scenes fully connected is very, very important.

Besides that, we do support our service offering with an award-winning Entity Management system. And we want to make sure you get everything out of it, which means that training on that technology is important. There are regular updates, at least three or four times a year. AI is on the road map, that RJ also will tackle on our following slide. So it's important that you get the most out of it.

I think most importantly the Knowledge Bank, right? You want to know what the ins and outs are, not from a legal advisory perspective, but based on best practices and what we do on a daily basis.

I already mentioned it slightly. Integrated completely with our service delivery framework and our overall solution is our technology. RJ, can you highlight some of the items here?

RJ: Yeah, sure. And we want to be respectful of time, right?

Rogier: Yeah.

RJ: So I'm not going to dive into all sorts of details, and I'm not going to pretend that I'm a technical engineer really able to do a proper demo. So for any interested parties, do reach out to us because we can conduct all sorts of demos to really show you the ins and outs.

But I suppose it's important to touch upon the fact, again, that it is super beneficial and important to create this single source of truth, not only for the CoSec and the legal departments, but even for other stakeholders within the firm. This can be a place where you store your data. The beauty of this system, because there are other systems out there, but you will need to maintain those yourself. We will help structure this. We will help maintain it for those entities where you would engage us, and we'll help further engineer it where you would need to. There are all sorts of user profiles we can create, up to the point where you can control everything, but also where you want to create something for a more junior person in your organization, or even an external party, to just have viewing rights on certain restricted areas or limited areas, I should say.

I mentioned something also about AI earlier. And one of the items that that we've seen some really interesting developments on and we'll expect a rollout of this later in the year is, for instance, when it's required to select certain documents to store. You may have certain minutes or finalized financial statements or whatever might be the case. So I've seen already a couple of starter functions, where you can upload certain documents and the system, through AI support, will determine where in likelihood you would like a copy of that document to be stored. So it's quite interesting. It will still leave the decision-making on you. But there are a couple of really neat suggestions, so to say, that pop up. So take a shareholder's resolution, it will be proper governance to keep a copy of same in both the entity taking the shareholder's resolution, so the shareholder in this case, as well as the entity that is affected.

Well, there are some really, really interesting developments going on. And yeah, we expect to have a concrete and usual update on that later this year.

Rogier: That's good to know. We're all looking forward to upgrades.

RJ: Yeah, for sure.

Rogier: Thank you, RJ. And, of course, we're system agnostic, even though we utilize the system internally as it supports our Government Service solution. However, if our clients have their own entity management system, now we support any off-the-shelf entity management system. But like RJ said, it's an integrated service solution technology with our Global Service offering.