Managing Corporate Responsibility for European Subsidiaries of American Corporations

There are a number of issues facing American corporations operating in Europe that do not exist, or exist in a different form, within the US. These differences are caused by the political and social differences that exist between the U.S. and Europe.

Whereas the U.S. is a federation of 50 states, Europe is a patchwork of 50 states where the individual states have their own laws, taxation and interpretation of common rules.

Europe offers American corporations a challenging, yet lucrative market that more and more corporations, and divisions within corporations, are moving into.

Many American corporations have increased their European footprint through acquisition. This has given them access to European markets, to European know-how and a wide range of possibilities. It has also often given them a number of subsidiaries as an inheritance. These could be small sales offices in countries outside the main acquisition centers or it could be various holding or financing companies.

In larger corporations companies are being acquired, merged and divested. Partnerships and joint ventures are created in order to profit from new opportunities. Holding Companies are created either as investment vehicles for investors, for reducing risk or for tax reasons.

Operating companies are, in the most part, well run and are compliant where they operate. The problem usually lies with the unmanned holding companies. These are not the responsibility of a division. They are the responsibility of corporate.

Corporate’s problem with these companies is usually that of focus. The Chief Reporting Officer and his team have their focus towards both the Board and the S.E.C. There is not the same focus to the statutory responsibilities in Europe. Lastly, there is not enough awareness or knowledge of the issues involved.

This paper aims at briefly describing some of the issues involved together with a look at what is required to counter the issues.

Managing Corporate Responsibility for European Subsidiaries of American Corporations