Blog de ÀLEX PLANA PALUZIE
[Between laws & precedents] The purpose of this blog is to analize the legal system of Catalonia, Spain and Europe. It focuses mainly on business law and, in particular, corporate and mergers and acquisitions (M&A). It also addresses issues about economics, marketing, politics, current affairs and other legal systems different to the aforementioned.
A multinational enterprise is a kind of company that does
business in two or more countries. They play an important role in the
globalization process, take advantage of economies of scale and also use the
different states to share its risks in several markets.
We often talk about
multinationals, but we rarely talk
about the different kind of these multinationals. For this reason, in this
entry we are going to see different options to organize these companies, in
particular: i) National
multinational company/enterprise, ii)
International multinational company/enterprise and iii) Nonmultinational company/enterprise.
L'espantaocells - Joaquim Vayreda
i) National multinational enterprise: In this case the multinational has a parent company in one country
(precisely for this reason we call them national multinational), which operates
in other states through branches and/or subsidiaries. We should remember that a
branch is not a separate legal entity, while a subsidiary has a separate entity
from the parent company. Nevertheless, the subsidiary is also controlled by the
parent company. One advantage of this kind of organizations is the
simplicityof its structure.
ii) International multinational enterprise: These kind of companies have more than one parent company established
in two or more different states. So then, the structure is more complicated
than the national multinational enterprise seen before. Additionally, these
parent companies have to co-own more than one subsidiaries in two or more
countries, because if not they cannot be treated as the same multinational.
In a International
multinational enterprise one of the most important issues is the agreement (or
agreements) between the parent companies, without this agreement the management would
be chaotic. Furthermore, this agreement should be incorporated into the
Articles of Association for safety of the parties.
iii) Nonmultinational enterprise:
In this case the structure is quite simple, because the company (that is called
the principal) operate in other countries from the headquarters through other
professionals (usually an agent) operating on its behalf. As we have already
seen, in fact these kind of companies are not a real multinational, because
they do not act directly across different countries.
This type of “multinational” have to regulate carefully the
rights given to the agent, in special way the IP rights, among others (like